By Chantal Tode
February 1, 2013
Targeting smartphone users at a hyper-local level is one of the big promises of mobile advertising, but until recently, inventory levels were low. As more inventory becomes available, advertisers need to understand what works and what does not in hyper-local targeting.
From understanding the different types of location information that is available to knowing how narrow or broad to define a geofence, hyper local targeting comes with its own set of challenges. However, when done right, hyper local campaigns can drive strong results for marketers.
“Hyper local targeting is probably the biggest win in mobile,” said Howie Schwartz, CEO of Human Demand. “That is something that desktop can’t do – it can’t do location at that level.
“Hyper local is probably the biggest thing that is going to push mobile advertising this year,” he said.
“On the advertiser side the demand is 100 percent there. In Q4, we had three times the number of campaigns that required hyper local targeting.”
Over the past year, there has been a significant increase in the volume of hyper local inventory as a percentage of overall inventory, per Mr. Schwartz.
The increase in hyper local ad inventory is being driven by publishers getting permission from their consumers to share location.
However, publishers need to be sure they give consumers a good reason to share their location.
“Asking location for location’s sake I don’t think goes over very well with consumers,” Mr. Schwartz said.
“There needs to be a value exchange,” he said. “If I’m giving you my location, I want to know I am getting something of value in return.”
Travel apps and weather apps are good examples where they there is a clear exchange for providing location information.
Publishers are pushing to add more hyper local mobile ad inventory because they see the benefit in the form of higher effective cost per thousand impressions.
While there is not always a lot of demand for in the auction space for generic mobile impressions - one of the reasons why the value of mobile inventory is lower compared to desktop inventory - impressions with location information available see much higher levels of demand. As a result, advertisers are bidding higher for these impressions and see lower win rates compared to non-location mobile ad inventory.
“It is not just a matter of the advertisers paying more,” Mr. Schwartz said. “The ecosystem values hyper local inventory higher and you see more bids in auction.”
Drawing the line
One of the challenges that advertisers face with hyper local targeting is defining the geographical area to target.
With hyper local targeting, the urge is to try to reach consumers who are nearby a retail location, such as within a three block radius.
However, this can result in very few impressions being served because there may not be that many addressable mobile devices entering such a narrowly defined area. It may make more sense to target to a ZIP code or otherwise broaden the scope of the campaign.
“This is the biggest issue we saw last year but now advertisers are becoming better educated on how to set these campaigns up,” Mr. Schwartz said. “The most successful ones have a little bit of a broader location.”
Advertisers also sometimes do not understand that there are different types of location data. This is not always the fault of advertisers as not all vendors clearly communicate the source of their data.
Latitude and longitude data is the most precise data for hyper local targeting. This data is gathered when consumers opt-in to provide their GPS coordinates and is the best source for targeting down to a several block radius.
Ads can also be targeted based on an IP address or a WiFi location. However, these are typically not as accurate as GPS information are should be used when targeting to the ZIP code or city level.
“It is very important that the advertiser understand where the hyper local inventory is coming from,” Mr. Schwartz said. “The problem in the industry is that there is not enough transparency when it comes to knowing the source of the location.
“If your vendor isn’t making it very clear about how location information is being derived, you can have a lot of false positives,” he said.
One tactic advertisers may want to consider when embarking on a hyper local strategy is trying to reach consumers who are nearby a competitor’s location but still in the advertiser’s general area. Human Demand call this competitive geofencing.
For example, a quick service burger restaurant could select all of the other quick-service burger restaurants in their area and deliver ads when mobile users get within a certain range of these locations.
“We had a lot of success with this in the fourth quarter and there has been a lot of interest in it so far this year,” Mr. Schwartz said.
“The results are really strong for this strategy,” he said. “We’ve seen one-and-a-half times the click-through rate with competitive geofencing versus a basic geofence campaign.
“The click-to-call rate is three times higher and the click-to-map rate is nine to ten times higher.”
When doing hyper local mobile ads, it can be just as important if not more so to consider metrics such as click-to-call and click-to-map over click-through, per Mr. Schwartz.
“If your consumer is within striking distance of a competitor’s location and clicked-to-map for your store – that is the biggest win that we should be talking about,” Mr. Schwartz said.
Chantal Tode is associate editor on Mobile Marketer, New York