Targeted advertising based on a user’s location (aka location-based advertising) is one of the fastest-growing sectors in advertising. The ability to pinpoint users in a hyperlocal area appeals to marketers across the spectrum, and the ability to link the effectiveness of those ads to in-store foot traffic has been in high demand.
Yet the accuracy of the underlying data associated with user location has been called into question by numerous observers. And this issue of accuracy is even more important when the precise location of a consumer is critical to determining the success of a particular advertising campaign—for example, when a marketer needs to know that customers came into their store, and not just walked by the storefront.
Furthermore, some of the recent shifts in the industry by Apple and other leading tech companies have only further muddied the already-cloudy waters of location accuracy. And arguably the most challenging aspect of all is the incredible difficulty, if not impossibility, of auditing the results.
In this article, we cover:
1. An Overview of Location-Based Marketing
2. Sources of Location-Based Data
3. GPS Data Pros, Cons, and Accuracy Challenges
4. WiFi Data Advantage and Examples
An Overview of Location-Based Advertising
Location-based advertising (LBA), also known as location-based marketing, geotargeting, hyperlocal marketing, and proximity-based marketing, is the concept of advertising to consumers based on their physical location at a given point in time. The most common type of location-specific marketing leverages data from users’ mobile devices to display relevant content to these same users.
Although the vast majority of marketers use (or plan on using) geolocational data in their marketing campaigns, relatively few use location data as a tool for performance measurement, offline tracking, conversion attribution, or customer insight collection.
The reason for this disparity is straightforward: if you want to target consumers who have been to Times Square in the last ten days, existing technology can enable that fairly well. However, if you want to target consumers that have been to Times Square in the last ten days and measure how many walk into the bowling alley at 7th Avenue & 44th Street, most technologies have difficulty with that level of precision.
Sources of Location-Based Data
There are many different types of location-based advertising data sources (e.g., IP targeted for in-home campaigns, digital billboards, dynamic taxi ads, etc.). In this post, we’ll be exploring the pros and cons of two primary sources of location-based data that marketers can collect and use for their campaigns:
2. In-store WiFi
Because of the differing technologies involved, each of these data sources provides advantages and disadvantages for marketers looking to capitalize on the ability to tie a user’s physical location to the types of content that user is served.
Location-Based Advertising: GPS Data
GPS data is derived from the Global Positioning System, a network of over 30 satellites in medium Earth orbit that continuously emit signals picked up by receivers embedded in smartphones and other devices. Every smartphone deploys GPS technology, and almost all mobile apps that track user locations rely on GPS signals.
GPS Data Advantages
First, let’s dive into the advantages of GPS data. Because the data is more or less captured in real time, providers can leverage a user’s location almost instantaneously. Additionally, the audience size is tremendous; approximately 200-300 million devices are being tracked by GPS at any given point in time. Therefore, advertisers can target large audience sets via GPS-sourced data.
Finally, the data is also widely available to marketers and relatively inexpensive for them to obtain as many ad exchanges make this data available for targeting, and numerous companies specialize in harvesting this data.
GPS Data Drawbacks
GPS is a far-from-ideal resource for brick-and-mortar establishments looking to measure campaign performance based on the customers who visit their physical stores after being exposed to an ad. Not only can this level of attribution be expensive for marketers to realize (as many providers require a significant minimum spend threshold), the accuracy and reliability of the reporting is questionable as well.
Why? The most significant challenge of GPS data is the difficulty in determining a user’s precise location—for example, knowing whether a consumer came into your restaurant versus the restaurant next door would be especially vital for attribution. This challenge is particularly acute in dense areas—like Manhattan or Miami’s South Beach or shopping malls. This is because GPS can have precision errors due to signal obstruction and multipath errors.
Further, GPS is almost useless in determining which floor a user is on in a multi-story building. So if you need to distinguish a restaurant guest from a person going into their apartment directly above, GPS will not be of much help.
All that said, although GPS has been heavily relied upon in the location-based marketing space, more and more studies are calling the integrity of the data into question. In fact, one provider uncovered that 25% of all impressions delivered in a programmatic mobile campaign were served to customers more than 300 miles away. Another report noted that 80% of all bid stream data was too unreliable to use.
A third study found 36% of apps were showing fraudulent locations, and only 35% provided an accurate user location. For these reasons, it is estimated that 65% of all location based advertising spend is wasted.
And it’s only getting worse
Previously, users had the ability to control access to their location at the application level. Apple has taken this accessibility a step further by introducing the Precise Location option (Fig. 1), even for those applications already allowed to track. When Precise Location is turned off, a user’s specific location is not available, and only an approximation is provided.
While Apple’s introduction of the Precise Location option has brought a lot of consumer attention to the subject of location tracking, it is not the only issue that the company is calling attention to. They have also brought greater transparency to customer data that is shared across apps. Many apps leverage information from other apps to gather information about consumers for, among other things, advertising purposes.
With the iOS 14 rollout, Apple gave users visibility into this practice and asked users to opt in to cross-app data sharing. These changes are already having a big impact on app developers and mobile advertising. Recently, Facebook put out a blog post explaining that the company is expecting a greater than 50% drop in publisher revenue generated by ads run on their platform due to these new changes.
For example, if a user were to opt out of cross-app data sharing, Facebook’s ability to track “off-site conversions” would be limited, as that reporting is reliant upon cross-app data sharing. Therefore, conversions that previously would have been attributed to Facebook as a referring source channel will no longer be attributed to them. (This impact is the reason why Facebook has been so vocal in trying to persuade Apple to reverse this decision.)
But Facebook is not alone in being affected—most apps will face significant declines in location-based data quality. Estimates vary as to what percentage of the population will opt in to this tracking, but at least one estimate puts the number at under a quarter of all users. That is to say, the efficacy of the channel could drop by over 75%!
The result within the industry will be the further degradation of the quality and accuracy of app-based data. So what is the alternative?
Location-Based Advertising: WiFi Data
In-store location data can also be collected via WiFi, which occurs when a user’s mobile device pings a wireless router inside of a brick-and-mortar location. Because most smartphone users have their devices set to automatically seek WiFi signals at all times and because most devices look for these signals approximately every thirty seconds, these device interactions with a WiFi network can serve as a proxy for foot traffic.
The disadvantages of WiFi can be described as limitations of breadth—the breadth of range and breadth of users. Because WiFi’s range is limited (usually to around one city block), this data source is not a good proxy for determining user sets at a larger scale (e.g. all users in Chicago). In venues where wireless networks are configured (e.g. large stadiums), breadth of range is not an issue, but where there are no networks, there are obvious gaps (e.g. Central Park).
WiFi Data Advantages
The advantages of WiFi data are numerous. Here are just a few reasons why your business should consider relying on WiFi data over GPS data.
WiFi is much better than GPS at determining a user’s precise location.
Because networks can be configured and invisible lines drawn, merchants can have a much stronger level of confidence about a user’s presence in a location. And this applies not only horizontally but also vertically, so multi-floor buildings are less of a challenge. The result is fewer false positives.
WiFi data comes directly from phones’ interaction with the network rather than apps.
This distinction is important because a user does not need to engage with a particular app or view a particular advertisement in order for a provider to collect data. As long as a user’s WiFi signal is turned on, and that’s the default setting, the user’s cell phone will be sending a signal that is captured by the wireless router. The result, again, is far fewer false negatives.
WiFi data can leverage both the presence and absence of a ping.
With GPS solutions, the provider does not know why a user stopped registering at a location. Was it because the user walked out, or did they stop using the app? A WiFi network can be configured to only count a user when that user has been recognized for a minimum amount of time—what we at Adentro call “dwell time.” Thus, there is a much higher degree of confidence through WiFi data that a user is in a location for the time required to be a customer (and not just passing by). This improves the quality of the data for targeting purposes and ensures the accuracy of measurement in attribution.
WiFi data is not impacted by industry changes associated with app location tracking.
Because the data collected comes from the phones’ interaction with the network rather than an app, recent industry changes won’t have a negative impact on WiFi data.
In summary, while GPS data is useful for marketers looking to target users within a broad area, it may not be accurate enough to measure campaign performance due to the increasing amount of false positives/false negatives. Ultimately, WiFi-based data offers the best option for precision targeting and measurement due to the many benefits outlined above.
WiFi Data in Action
Let’s look at a real-world success story: Primanti Bros. This Pittsburgh-based sandwich shop had used geofencing in their advertising efforts but was still lacking visibility into campaign effectiveness.
Understanding that consumers are generally willing to provide their email address to gain access to free WiFi, Primanti Bros. implemented Adentro’s custom WiFi portal to capture in-store guest information. The connection between their WiFi and the Adentro marketing platform helped solve their measurement challenge.
Using Adentro, Primanti Bros. was able to track walk-throughs of guests who came into the restaurant after being served an email or online ad—and that’s not just customers who use the WiFi, but anyone who stays on-site for a specified amount of time. In this way, Adentro can tell who is simply walking past the restaurant, who is actually a customer, and whether or not they were exposed to an advertising campaign.
“We’ve used modeling and geofencing before,” says Ryan Wilkinson, Director of Marketing at Primanti Bros. “But with Adentro, we know the exact number of people who see our ads and then come into the restaurant—this gives us a ton of visibility into the effectiveness of our campaigns. While we do a fair amount of takeout and curbside, our bread and butter is still in-room dining. The ability to optimize media for physical walk-throughs is critical.”
In summary, WiFi technology can drastically improve the success of your location-based advertising efforts. It gives you a competitive advantage when it comes to targeting your advertising and, subsequently, gaining actionable insights on both in-store customer visits and online conversions.