Using Location-Based Services to Increase Consumer Engagement


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Location-Based Services (LBS) utilizes a mobile device's physical location to deliver relevant information to a consumer, and is creating a new means of mobile marketing.

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Using Location-Based Services to Increase Consumer Engagement

  1. 1. Using Location-BasedServices to increaseconsumer engagementApril 2010
  2. 2. :: Using location-based services to increase consumer engagement ::contents1. Executive Summary | 32. Introduction: Mobext and Cadio study | 43. Benefits of Marketing using GPS-Based Mobile Consumer Analytics | 54. Brand Challenges | 85. Brand Application Process | 96. Conclusion | 10contributors Phuc Truong Managing Director, Mobext US Sharon Bernstein VP, Insights Director Jared Hopfer Mobile Marketing Manager, Mobext US Dr. Thaddeus R. F. Fulford-Jones CEO, Cadio US 2
  3. 3. :: Using location-based services to increase consumer engagement ::1.executivesummaryLocation-Based Services (LBS) uti-lizes a mobile device’s geographyto deliver relevant information toa consumer, and is creating a new Mining consumermeans of mobile marketing. location dataAdvertisers can now overlay location patternswith existing customer data to deliver prospectscustom messages at the right time by serving Predicting behavioralunique, relevant, time-targeted offers based on patternsshopping patterns, consumer segmentations,and travel history. Mobile consumer analyticsis not limited to consumers who have high-endsmart phones; a majority of standard featurephones in the US have GPS hardware that can Protecting userstransmit location data with a consumer’s opted- privacyin consent.LBS technology allows an advertiser to yieldvarious insights, including shopping preferenc-es, competitive store visits, time and frequency MOBILEfor shopping activities, as well as travel patterns. CONSUMERArmed with additional mobile consumer ana- ANALYTICSlytics, advertisers can enhance their marketingefforts by strengthening the value of existingcustomers while using the data to supplementcompetitive intelligence. 3
  4. 4. :: Using location-based services to increase consumer engagement ::2.Introduction:mobext and CADIO STUDYIn late 2009, Mobext, the mobile time stamped and returned to Cadio’s servers in real-time. The maximum data acquisition fre-marketing network of Havas Digit- quency was 10 GPS data points per, partnered with Cadio, a mobile In the study, over 200 retail or lifestyle-relevantconsumer analytics firm, to analyze participant destinations were mapped. TheseGPS data from opted-in mobile destinations included: airports, hotels, train sta-phones to better understand con- tions, large national retailers, supermarkets, andsumer interests and habits. selected other categories.Mobext recruited Sprint subscribers to sharesemi-continuous GPS data (once every 10 min-utes) with Cadio via their mobile devices. Partic-ipation was entirely voluntary and no incentivewas offered to candidates.In order to participate in the study, the volun- Female 42% Male 58%teers signed a consent form, in effect opting intothe study. The participants were all between theages of 25-54, 58% male and 42% female. Theyresided in three different metro areas: Boston,MA, Chicago, IL, and New York City. The loca-tion data was collected for two weeks, from No-vember 25, 2009 to December 9, 2009. This timeperiod was chosen specifically to capture traveland shopping patterns associated with the longThanksgiving weekend.Participants were not required to download anapplication onto their phones, but instead lo-cation data was requested and acquired auto-matically via the Sprint network. Cadio’s serverstransmit a request for GPS data from an opted-in Sprint handset, and the request is forwardedto the mobile network via an aggregator. Sprintinitiates a network-based request to activate theGPS hardware on the handset. Once the hand-set acquires a latitude-longitude fix, the data is 4
  5. 5. :: Using location-based services to increase consumer engagement ::3.Benefits of Marketingusing GPS-Based MobileConsumer AnalyticsThe study revealed that GPS location data can within store premises, might consider expand-deliver actionable insights that inform brand ing their menu to include foods items beyonddecision-making: snacks. Smaller retailers may benefit by partner- ing with nearby restaurants in driving comple-Increase the value of mentary traffic between stores.a marketing panel The panel revealed that participants who dined out had a lower tendency to engage in fitnessBrands can append their existing marketing activities than those who did not. Conversely,panels with inferences from mobile consumer the average frequency of fitness activities foranalytics to understand the travel patterns, pref- individuals who went to quick-serve coffee orerences and lifestyles of their customers, and to doughnut locations was 50% higher compareddetermine how often they are near store loca- to those that did not visit such locations.tions. Brands can also determine where consum- The data also unveiled a link between shoppingers shop (including whether near home or work), and behavioral preferences. For instance, par-and what days of the week and times of day they ticipants who visited Whole Foods were twice asgo shopping. They can establish the lifestyle pat- likely to engage in fitness related activities com-terns and brand affinities of their customers to pared to individuals who shopped elsewhere.create offers and marketing messaging that are Additionally, half of the participants who vis-most likely to resonate and improve consumer ited Whole Foods also frequented other groceryengagement. stores during the study.During the study we discovered that the pan- An obvious application of this insight would beelists who preferred Dunkin Donuts were 33% for Whole Foods Market to create co-marketingmore likely to dine out than those panelists that programs with gyms or yoga studios to increasepreferred Starbucks. Conversely, participantswho went to a Wal-Mart were 60% more likely to acquisition rates; similar to the retailer and res-dine out compared to Target customers. taurant example above. Such joint marketing programs that offer complementary services/Adding onto the behavior of shopping prefer- products are not new. However, mobile market-ence and dining out, of the Target customers ing tactics can further enhance such programs bywho dined out, approximately 25% of Target cus-tomers went to a restaurant prior to going to Tar- improving the relevancy for targeted consumerget and an additional 25% of customers went to segments. Our experience shows that deliverya restaurant after going to Target. of offers via a mobile device is more impactful because users are more likely to acknowledgeArmed with this information, retailers like Tar- such messages.get and Wal-Mart, who have snack food options 5
  6. 6. :: Using location-based services to increase consumer engagement ::Strengthen the valueof existing customersAdvertisers can send offers to customers at theoptimal time for them to respond based on their Saturday 31.8% Sunday 36.4%location/proximity to a store location, knowingwhen they are likely to shop, and what they liketo buy. This makes the offer more relevant toconsumers.By leveraging location information from exist-ing customers, retailers with retention programs Friday 13.6% Monday 2.3%(i.e., loyalty cards) can create programs that focuson increasing the recency, frequency or spend Thursday 2.3% Tuesday 6.8%among the customer base. When personal and Wednesday 6.8%work travel patterns are included in the mix weare able to help brands select offer expiration Obtain competitivedates, or limited-time incentives. Furthermore,advertisers can determine which stores consum- informationers prefer in their areas and provide higher in- Advertisers can understand which competitorscentives for consumers to travel to farther loca- are in the vicinity of customers’ homes and of-tions if sales are down. fices, where consumers spend their time, andAn advertiser with shopping pattern information most importantly, which customers visit com-from its customers is able to tailor its messaging petitor stores. This can help a brand determinebased on the times in which their customer seg- where they should open new locations, or on thements choose to shop. flip side, potentially close unsuccessful locationsDuring the study, the data showed that close to (due to the competition’s footprint). Recommen-70% of all visits to big-footprint retail locations dations derived from mobile consumer analyticstook place on Saturdays or Sundays; surprisingly, can also help determine the right time for a highonly 11% of visits took place on Black Friday. Con- value special offer or promotion, to de-incentiv-versely, 25% of the people from this study chose ize customers from patronizing a competitor’sto shop on the Sunday following Thanksgiving. store. If an advertiser wants to drive awareness orParticipants got a late start on the weekends, as gain competitive share, it could determine whereshopping commenced after 2pm on Saturdays, its prospects are traveling so they aren’t wastingand close to 1pm on Sundays. They also only vis- marketing spend on existing customers.ited two stores on average each Weekend day. As an example, an advertiser like McDonald’s who has aggressively introduced their McCafeThe research also showed that Sears shoppers didnot visit any other department store. In contrast, menu items might use competitive locationindividuals who visited department stores other data to understand consumer habits relating tothan Sears always split between multiple nation- morning versus afternoon visits to other department store chains. In addition, if the data shows that segments of customers visit multiple coffee destinations inArmed with this type of insight, for retailers the morning, McDonald’s can ultimately deter-whose customers display higher loyalty com- mine whether consumers visit their restaurantspared to their other segments, it would be ben- for food purchases versus coffee purchases (as-eficial for them to reward these customers above suming in this example the data shows the otherand beyond the typical rewards milestones. visits being Dunkin Donuts or Starbucks). 6
  7. 7. :: Using location-based services to increase consumer engagement :: We found that about 50% of Starbucks custom- Travel frequency – During the study we found ers visited Dunkin Donuts locations. However, if that on average, the most on-the-move group an individual visited Dunkin Donuts there was was from New York (New Yorkers spent 80% of a 67% chance they would visit Starbucks. There- their time in 2.3 zip codes), followed by Chicago fore, it appears that the volunteers in this study (2.1 zip codes), and those from Boston (1.5 zip preferred the Starbuck’s product more so than codes). On average, commute times were 20% Dunkin Donuts –as the increased visit frequency longer for participants who lived in or near Chi- was 13% higher. cago than for those who lived in or near New York City (median 72 minutes versus 60 minutes). With this level of insight, among the questions those competitors could consider: is the quality of coffee better? How is my product mix com- pared to my competitor? How important are the customer experience factors contributing to in- creased frequency? Use as a Media Planning Tool Understanding consumer travel and work pat- terns is crucial to creating the optimal media mix (either for outdoor, digital out of home, or radio advertising). Brands should determine precisely when and where customers are traveling via car for radio or out-of-home advertising (what roads Massachusetts participants were most likely to they travel, what time of day, etc.). Using work travel long-distance (defined as trips of more schedules can determine when target consum- than 100 miles in each direction) during the study, but New Yorkers were most likely to travel ers are likely to be watching television or using long-distance for business purposes (midweek the Internet. If out of the home or office, brands trips were classified as business-related, and can extend their message frequency via mobile travel during the Thanksgiving holiday period as advertising. vacation-oriented). Further, when New Yorkers traveled long-distance, those trips were shorter 80 10 than trips taken by Massachusetts or Illinois Average Commute Distance (miles) residents. As a consequence, New Yorkers wereAverage Commute Time (minutes) 9.4 more likely to travel long distance by ground 64 72 8 8.5 rather than by air. 60 48 6 Armed with work and travel data, advertisers can implement creative integrated media executions 32 4 that begin with traditional and mobile media (during commuting times in the morning); on the 16 2 PC-based Web (during office hours), and back to mobile media (when traveling). Additionally, deter- mining store “impressions” (i.e., how many target 0 0 consumers pass a brand location) and frequency Illinois New York (i.e., how often a target consumer passes a brand Commute time (minutes) Commute distance (miles) location) can also improve marketing programs. 7
  8. 8. :: Using location-based services to increase consumer engagement :: 4.By appending mobile consumer analytics to cus-tomer profiles, travel-related advertisers can de-termine when and what types of offers to make Brand(especially for leisure travel). For example, if aconsumer travels for business every other Mon-day, provide a weekend discount/incentive forthe weekend after he travels for business so asnot to interfere with his work schedule. Travel-re- Challengeslated brands can also make travel easier by pro-viding local guide content and travel directions. In order to gain access to location data, adver-Consumer shopping patterns can be determined tisers must keep consumers at the core of thisby work hours and days at the office. During the initiative; the program’s success starts and stopsstudy, we found that people in New York were with them. To successfully create programs thatmore than twice as likely to work past 7pm com- provide location data, advertisers must considerpared to people in Boston and Chicago. Restau- the factors below:rant advertisers can use this data to deliver adsat times of the day or week that match consumer Incentivizing consumers tohabits. For example, a fast food restaurant chain continuously share GPS datacould use mobile location data to engage con-sumers only if they are leaving work after 7:30pm GPS information is sensitive in regards to pri-and normally drive within 0.5 miles of a restau- vacy, and consumers have a variety of differentrant location. perspectives on whether and how this data can reasonably be shared. Younger consumers whoDigital Advertising Effectiveness are technology-engaged, and who use socialMeasurement networking sites such as Facebook, Twitter and Foursquare to name a few, are generally mostMeasuring the effectiveness of digital out of likely to share their GPS data with brands in re-home advertising has traditionally been chal- turn for appropriate incentives. Other demo-lenging. However, with consumer travel pattern graphics may be more sensitive, in which caseinformation in areas where out of home place- it may be necessary to offer more attractive in-ments are located, mobile consumer analytics centives or higher-value rewards to encouragecan now be used to accurately measure the ef- participant opt-in. Some experimentation withfect of advertising in driving foot traffic to tar- incentive structures may be necessary to definegeted stores. By measuring consumer behav- an optimal approach that will adequately secureior before and after exposure to a (mobile) ad, the participation of all required demographica retailer can precisely assess how many more segments.people are visiting a store because of a newcampaign. Brands can use this data to measure Safeguardingreturn on investment –the real-world equivalent privacyof online “cost per click” metrics. Brands should comply with the CTIA’s Guidelines for Location-Based Services in order to guaran- tee consumer rights and a defined minimum level of privacy control. Specifically, consumers must have the opportunity to opt-out of GPS data sharing at any time, and inferences derived 8
  9. 9. :: Using location-based services to increase consumer engagement ::from mobile consumer analytics must be appro- tion needed to develop a LBS mobile advertis-priately safeguarded through the use of modern ing program.encryption and firewall technologies. Step 2Technology Identify questions of interestlimitations Advertisers should reference Section II above toTechnology can be a barrier for LBS marketing determine the types of actionable insights thatinitiatives. Programs in less urban areas may be they wish to receive from a mobile consumermore successful as there will be fewer challenges analytics collecting data in areas without tall buildingsor signal-blocking concrete. Step 3Another challenge for marketers involves sorting Choose project parametersthrough the massive amount of data to deter-mine which data points are relevant to their mar- In collaboration with partners such as Mobextketing efforts. Stringing together the GPS paths and Cadio, advertisers should select the follow-of thousands of participants, overlaying time of ing parameters:day, day of week, as well as targeting advertising • Program duration (number of weeksby content, quickly becomes a large task. It will or months)be important for marketers to have a defined fo- • Desired sample size (determined bycus for this type of program. required statistical significance) • Geographies of interest (suburban or semi-urban areas are more GPS-friendly5. than densely urban environments) Step 4Brand Determine incentive structure and secure consumer opt-insApplication Leveraging GPS data through a LBS programProcess starts and ends with the consumer. Brands must obtain explicit opt-in permission both for con- sumers to share their GPS data with a firm such as Cadio and for consumers to agree to receiveOnce advertisers’ address the challenges, they marketing messages via their mobile device orneed to create a framework for their LBS pro- through another channel. In order to increasegram. As such, advertisers are recommended to the probability of customer opt-in, incentivesfollow the steps outlined below: or rewards for individuals must be offered. The form of currency varies based on the type of pro-Step 1 gram, the targeted demographic segments, and the program’s duration.Partnering with the right providerProviders of mobile consumer analytics technol- Currency types include:ogies, such as Cadio, and agencies, like Mobext, • Cash rewardcan help advertisers create the backend founda- • Loyalty points 9
  10. 10. :: Using location-based services to increase consumer engagement :: 6.• Free merchandise• Discounts and coupons• Customer recognition• Customer preferential treatment conclusionAdvertisers should start their LBS marketing pro-grams with existing marketing panels (with con-sumers who have already opted in to share their Deep data mining of GPS tracesinformation). Appending inferences derived from mobile phones provides newfrom mobile consumer analytics to existing cus- types of inferences that are robusttomer profiles will allow advertisers to iron out and reliable.any kinks, and also capture valuable location-based inferences with which to build improved Advertisers can use mobile consumer analyt-segmentation profiles. ics to uncover both lifestyle-relevant and com-Advertisers can obtain opt-in consent via any merce-relevant characteristics of existing seg-channel –including Web-based sign-up, text mentations, helping advertisers engage in moremessage opt-in or consent via a smart phone effective conversations with existing consumers.application. Brands that already have retention- Mobile consumer analytics can also bring Inter-based programs, such as points-based loyalty net-style click through metrics to the real, may find it convenient to simply offer bo- Now it is possible to build a bridge betweennus points to those who register, as an incentive digital ad exposure and real-world offline con-to participate. sumer behaviors.Step 5ActivateDuring the program, GPS data is acquired andprocessed and actionable inferences are derivedaccordingly. Depending on the scope of the an-alytics, results may become available in real-timeor after the end of the data-sharing period.Step 6Close the loopMobile consumer analytics provides actionableinsight into the effectiveness of each digital ad-vertising campaign. Return on investment datacan help guide strategic decision-making to op-timize the marketing mix and engage in morerelevant conversations with the consumer. 10
  11. 11. About Mobextwww.mobext.comMobext is a specialized mobile marketing agen-cy operating within the Havas Digital family ofagencies. With offices in Europe and the Ameri-cas, Mobext is recognized as an agency leaderin bringing brands to engage within the mobilechannel. Its core offering includes mobile strat-egy, consumer activation and media. Its rosterof clients are globally recognized brands rang-ing from many sectors including automotive, fi-nance, retail, entertainment and consumer pack-aged goods companies.About Cadiowww.cadiomobile.comCadio, Inc., headquartered in Cambridge, MA,is a pioneer in the emerging field of GPS-basedmobile consumer analytics. Cadio’s proprietaryconsumer analytics engine processes semi-con-tinuous streams of GPS data to generate action-able inferences about consumer interests, habitsand behaviors. Cadio’s approach protects con-sumer privacy while maximizing value for brandsand advertisers. 101 Huntington Avenue - Boston, MA 02199 ::