The Importance of Location in Targeted Marketing

Stephen DeAngelis

March 19, 2013

Walter Loeb recently reported that Macy’s has done well merging its retail and eCommerce channels using a strategy it calls “MOM” (My Macy’s localization, Omnichannel, and MAGIC selling strategy). Loeb reports that the strategy has resulted in more satisfied customers and increased sales. [“Macy’s Loves MOM, And Consumers Do Too,” Forbes, 27 February 2013] Loeb briefly explains the MOM strategy:

“For more than three years the company has worked on specific localization – ‘My Macy’s – which focuses on having each store feature merchandise that is relevant to customers who live and shop in that area. … The customer has responded enthusiastically to the My Macy’s strategy. The Omnichannel strategy allows for extraordinary service to customers. In addition to warehouse fulfillment of purchases from in-store, on-line or mail order customers, Macy’s now has 292 stores that participate in the fulfillment of orders – to insure that the customer receives better service as purchases are delivered quicker than ever before. By the end of the year management expects to have about 500 stores participating in this program. Magic selling is the third key initiative. Through new training tools, associates are taught how to be more engaged with the customers and how to be more empowered so that they can make decisions on the selling floor. It is an important step ensuring more caring and responsive customer service.”

Although every letter in MOM represents an important part of the strategy, in this post I’ll focus on just one aspect of that strategy — tailoring products by location. According to Loeb, Macy’s uses big data to understand differences between customers in different locations. He writes, “Whether it is Latino or Asian customers, the selection of fashion merchandise, as well as the taste level and sizing of the clothing, is often very different from store to store, and requires a trained buying staff. In some cases this localization program requires special advertising and displays, and there is much less of a cookie-cutter approach to buying across the company.” As noted above, both Macy’s and its customers have been happy with the results.

A blogger, who calls herself Beans and writes for ContentsEqualMoney, believes that location is going to drive one of the next big things in advertising. She asks, “What if you could advertise to potential customers based on their vicinity to your product or service?” You don’t have to imagine such a scenario, she writes, because “this is one of those ‘the future is now moments.” [“Location-Based Advertising: Data-Driven Marketing for 2013, CEM Blog, 15 February 2013] Location-tailored, in-store merchandise and location-based, targeted advertising are obviously highly complementary strategies. Beans asserts, “You can combine analytics and principles of personalization with mobile location services to get in on what might be the next transformative trend in mobile marketing.” She continues:

“I discussed the recent convergence of technology with overwhelming amounts of information in my recent post on big data. We know that businesses have access to more and more demographic data and huge amounts of analytics, and that the sheer volume can sometimes lead to decision-making paralysis. The same is, in many respects, true for consumers, too. How many ads do you see in a day? How many product reviews do you check out before making a purchase or using a service? So many it’s hard to keep track of them, right? Search Engine Watch recently predicted that one of the biggest challenges for 2013 is going to be breaking through all of that growing noise to make your business’ voice heard over everyone else’s. They also pointed out that consumer purchases continue to involve mobile devices at higher percentages with each new survey, from the research to the buying phase. So, the question is, how do you project the most salient image of your business while integrating mobile technology?”

The answer to breaking through the noise, she asserts, involves making your advertising more mobile, personal, and local. “Those three words,” she writes, “hold one of the keys to maximizing your ROI in 2013.” She explains:

“The ‘mobile’ is obvious, of course – … the mobile market is booming both in terms of usage and consumers using various mobile devices to make purchases. But if you pair it with ‘personal’ and ‘local,’ you can ride the mobile reinvention train to a huge boost in sales. A recent Clickz article discussed the concept of ‘personalization’ in recent years, as we’ve shifted to integrate multiple devices and huge amounts of technology into our lives. The author suggested that recently, the idea of personalizing a consumer experience has started to shift from the ‘if you liked this book, you’ll probably like this one’ that we’re all familiar with from sites like Amazon, to a model of a ‘user experience’ that creates a unique system for each individual. This system crosses over domains from one device to another, and in some ways even from the physical world to the digital and vice versa. And therein enters the ‘local’ aspect. Mobile technology like smartphones and to some extent tablets have already bridged the divide between the physical and digital worlds; we have the internet with us everywhere, safely in our pockets. For businesses, the trick is to now make a personalized digital experience based on a physical location.”

The most personalized experience you can offer a customer is making them feel like they are your only customer — a market of one. For more on that topic, read my post entitled Marketing to the Individual. Beans writes, “Conceptually, location-based advertising sounds great.” Do you sense a “BUT” coming on? There is one, but it’s not as deflating as you might think. Beans explains:

“Let’s say you run a brick-and-mortar store. Your customer gets an alert for a sale at your store, or they receive an awesome coupon that will expire in half an hour, when they come within a mile of your physical location. They throw on the brakes, pay you a visit, make a purchase, and your location-based ad campaign is a resounding success. [A] Forbes’ article on whether or not location-based advertising is the future of mobile marketing complicates the matter a little bit. For the most part, consumers apparently will not stop what they’re doing just because they get an alert on their phone saying that they’re near one of their favorite stores. The vast majority of purchases are planned, say the authors, not impulsive, so you’re not likely to catch that many customers who weren’t already thinking about buying from you. And of course, th
ere are myriad privacy concerns when it comes to tracking potential customers’ locations. However, location-based advertising remains a very attractive next step in mobile advertising, and it’s already happening. The recent launch of Google Now offers a function to alert Android users to nearby attractions, events, and even photo opportunities. JiWire, a company that specializes in location-based ads, has already brought this kind of targeted advertising to multiple airport hubs in the United States, using WiFi hotspot locations rather than phone-based location services to advertise for nearby businesses.”

Given the fact that shoppers on unlikely to stop what they’re doing to respond to an advertising alert near them, it would be appear that location-based advertising may best be used in a mall-like setting (i.e., when consumers are already involved in a shopping environment). Nevertheless, Beans insists, “Now is the time to adopt a location-based advertising strategy. The key here is to make sure that your ads are not only relevant to your audience, but are hard-hitting enough to make potential customers stop in at your business as they’re driving or walking past it.” She offers “a couple of concrete ways that you can optimize your location-based ad campaign.” They are:

  • Use predictive analytics. Physical location is a narrow field, sure, but you want to make sure you’re targeting the customers who really want to buy. Pay attention to behavioral data, and use it in conjunction with location data to direct your efforts to relevant consumers.
  • Make strong, short-term offers. Potential customers are more likely to turn into definite customers if they receive a location-based offer that requires them to act now, and provides an impetus to do so.
  • Optimize local SEO. Even if you decide to forego your own campaign, make sure your web presence carries all the necessary information about your location and hours, so that third party searches like Google Now will alert nearby potential customers to your existence.

I would add that you take a page from Macy’s playbook and tailor your inventory to your location. It doesn’t matter how close to your store a consumer approaches, he or she won’t walk in if what you offer does not suit their tastes or preferences. The more tailored the inventory, the more likely it is that a consumer will become a customer. In the Forbes‘ article cited by Beans, Sense Networks CEO David Petersen, told its author, Steve Olenski, “Some of the early failures in mobile advertising are due to poor timing and sending irrelevant offers to consumers because they aren’t based on behavior and location data.” Sending irrelevant offers to consumers is the opposite of what targeted marketing is all about.