Location-based marketing (or geotargeted mobile marketing) has
been one of the fastest growing areas of advertising as it allows companies to categorize
users and tailor content in new ways. It is also one of the most controversial
ones in terms of data privacy and data collection. Location-based marketing uses
software that infers user activity based on data from a smartphone’s sensors. Most
smartphones have internal components such as the accelerometer (tells which
direction a user is facing) and magnetometer (drawn to the poles) that record
data based on users’ movements. The feedback from the sensors provides valuable
“context” on the user’s physical behavior.
This allows marketers to target ads based on users’ location
and habits, for example an ad can be targeted to early risers or after-work
commuters, instead of building a profile to target a population of a certain
age group, gender, etc. Location-based marketing is effective as advertiser just
need to know whether a product or service is going to get to the right
audience. Each point on the map of a user’s day (visit to the gym, work in a
tall office tower, stores visited during lunch break, etc.) helps create a
profile, or “audience segment,” that can be used to serve tailored ads.
However issues about data privacy and sharing of location through apps on the phone has brought some negative publicity and many users are not interested in sharing location data. In fact, only 35% of smartphone users worldwide are willing to share location data to get more personalized advertising. (https://www.emarketer.com/content/location-based-advertising-is-becoming-more-costly). Additionally, new restrictions on collecting location data are driving up costs for advertisers using location-based marketing.
Overall, location-based marketing sounds like a very effective way to target ads but comes at a cost of consumer privacy, which has been coming more and more of a focus recently and will even more going forward.
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