Location — The Missing Link in Advertising

10/05/2016 03:42 pm ET

By Andy Sriubas

In preparing a news story, reporters are taught to answer five questions: “who, what, where, when and why”. This formula ensures that the reader is given the complete picture of what occurred. Without the answers to each of those questions, it’s very possible that readers will lose the meaning of, or draw incorrect conclusions from, the incomplete set of facts.

The same is true for the use of data in advertising. Advertisers must think like reporters employing the five W’s and gathering deep, granular and accurate information in order to build effective advertising campaigns and strategies. The quest for ever increasing “data fidelity” is part of the effort to drive more accurate and thus value-conscious marketing.

Of course, advertisers do not need nor want to know exactly “who” someone is by name (PII), instead the sale of media to advertisers has been largely focused on the “what” a person is — i.e. female, millennial, New Yorker, etc. Modern advertising engines and mixed media models are building “digital avatars” of potential customers and audiences on an aggregated and anonymous basis. But “what” someone is does not tell the whole story. Where, when and why that individual will react to a marketer’s message is as important and could change the conclusions that were originally drawn from the “what” information alone. To understand these remaining elements and complete the story, advertisers must look to location data.

Location: The New Data Gold Rush

Today, we can add depth to a person’s profile by using location data. Location data for audiences, both at a point in time and over time, gives context to the demographic and descriptive “what” data that advertisers are already gathering. With location data, we get more accurate home locale, work sites and journey patterns — the important where. This can be used to infer better psychographic segmentation as well as potential customers’ intent; think the why and when.

Additionally, information about a person’s location over time adds context, “animating” the data set, thus providing exponential value to the marketer when infused with intelligence in the form of pattern matching and basic AI. Much like watching a hurricane move over time on a weather map vs. a snapshot image of the same hurricane, that single data point can’t predict intent, direction or the intensity of the movements. However, when a storm’s movements over time are displayed in a moving image, you gain the ability to more accurately predict future actions. The same can be said for a target group of consumers.

The Mobile Revolution…Continued.

The use of location data from mobile phones is a foundational element for this new data stack. In recent years, mobile marketing has increased dramatically because of the time we spend on these devices, the one-to-one targeting opportunity and the prospects of substantial data capture. Phones and tablets are always with us, granting them huge utility points relative to all other media forms when considering audiences’ location. Together with information from beacons, Wi-Fi and apps we add a deeper dimension to the “flat” avatars built from static demo identifiers alone. For example, someone arriving at a Home Depot might be much more receptive to a message for lawn fertilizer than when they are sitting on a couch or listening to the radio at a ballgame — regardless of how perfectly their demographic profile suits the marketing brief. The fact that certain audience segments have not recently been to a Home Depot may also sway the specific offer made to that group.

Information about location completes the story. Like Indiana Jones figured out in Raiders of the Lost Ark, he needed information from both sides of the amulet in order to accurately locate the hidden Ark of the Covenant in the Well of Souls. The Nazi’s were “digging in the wrong spot” because they had only part of the data. Conclusions can be dramatically different without the full picture.

Recency Theory Comes Home

The added accuracy, provided by location data, will also influence the media used by marketers to reach audiences. As marketers’ tool sets become increasingly detailed with location data as a prominent qualifier, location-based media outlets are going to accrue (even) more value. As we discussed, location data can/will inform all media buys by adding additional context, but the value of being able to reach target demos, at the moment they are most receptive to a message, will now take on more quantifiable importance.

Erwin Ephron’s Recency Theory* can now take its place along-side Reach and Frequency as measurable must have’s in media. Location data is the element that proves the law. In today’s world, consumers, regardless of generation, are paying less attention to triggers and marketing stimulus. Thus the timing of the message must be targeted and precise. We need to find audiences when they are “in the moment” and the form of that ad must be impactful.

Mobile media inventory is a great avenue to reach consumers and high fidelity data sets (which include location data) will now point to these devices with even more frequency. But for all of their great value (I do love it), mobile’s drawbacks remain — small form factors, view-ability issues, reporting problems, ineffective ad units (in app, pre-rolls, etc.) and are easily ignored or cause aggravation. Thus mobile garners it’s best utility when complimented with another prime source.

The evolution of audience analytics fueled by location data means that billboards, transit displays and other forms OOH media become significantly more valuable than previously imagined. With a deeper understanding of consumers’ behaviors, we are now able to determine the value of a given location, at or over points in time, to an advertiser. Marketers will more accurately predict which OOH locations are most relevant for select audiences. Plus, combinations of locations driven by recency and frequency metrics, will lead to a “network effect” for ad dollars. And as such, larger format static or digital displays become the best way to deliver messages at any location given their size, dynamic creative possibilities and unavoidable nature — especially when used in combination.

The location data collected today is animating static demographic data sets into ever-more accurate pools and brings forth more insightful research. Marketers moved away from the “buckshot” approach to targeting audiences long ago. Now it needs to be done with more fidelity and at the exact right place and time. Of course advertisers are not the only ones who stand to benefit. Consumers may pay more attention when ads will take on more meaning and provide something they value on a daily basis. The system reinforces itself.

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*Recency theory refers to the belief that advertisements and promotions are most effective when they air immediately prior to the time of decision, and that the influence of ad exposure diminishes with time.

Follow Andy Sriubas on Twitter: www.twitter.com/Sriubas1

Andy Sriubas Executive Vice President of Strategic Planning & Development, OUTFRONT Media