Now & Next is a feature written by the ExchangeWire Research team. Every three weeks, we review the latest research, provide impartial insight and analysis of current trends and provide predictions for the future of advertising and marketing technology. This feature focuses on Location Targeting.

Location has been a building block for marketers for over 100 years. In the offline world, whether a brand is delivering leaflets or planning where to open a new store, location has been a key piece of data in that decision making process.

The popularity of smartphones has created a valuable opportunity for marketers - to reach their audience throughout the day, wherever they may be.

To date, most mobile marketing tactics have focussed on executing miniature versions of desktop advertising campaigns using behavioural, audience and contextual targeting. Optimisation means better engagement or lower CPMs.

Smartphones provide marketers with location data. In a desktop world, this is somewhat irrelevant as the location is static, but in mobile location data is gold.

Marketers who can overlay the data they already have about a consumer with location data (for example, beacon recognition, NFC, IP address, WiFi network or geo-fencing with a marketing platform) brands can create more relevant, more engaging experiences.

There are several examples of brands using location targeting today.

- Proximity targeting drove over 18,000 store visits for KFC.

- The use of dynamic fencing resulted in a 64% lift in CTR for Philips.

- Geo-fencing resulted in three-times the usual campaign engagement for Adidas.

ExchangeWire spoke to Charlie Johnson, VP UK and Ireland at Digital Element about the benefits of location targeting. “Location targeting is non–invasive, marketers have the ability to geo-target without the need for user opt-in. This provides marketers with scale and targeting.”

Johnson revealed that in the past there have been challenges to location targeting, she said: “What has been the challenge is to harness volume. Opt-in to GPS services is quite low. Nielson found that 85% of all mobile users in Europe are doing so via WiFi, not 3G or 4G, which adds to location targeting challenges.”

Johnson points out that there is still someway to go before location targeting is perfect, she said: “The holy grail is knowing a consumer is standing outside John Lewis and knowing that they’re in the market for women’s fashion. But that level of granularity is rare.”

One of the biggest challenges for media planners and buyers is marrying location data with the other data sources that are used to inform campaign decisions and maintaining scale.

A quick win for brands is to tailor website content based on location data. For example, if you know a user is in Birmingham, and you’re Selfridges, show the user a homepage with information about events and promotions taking place at the Birmingham branch. Or, if a user is miles away from one of your high-street stores, show them a homepage filled with online deals.

Further down the line, it will become common practice to marry first-party consumer data with demographic data from third parties and location data and feed all that data through real-time bidders.

Previously, marketers have steered away from hyper-local-level targeting because it lacked volume and reach. However, in the last year or so, many new IP addresses have opened up reducing the area covered by a single IP address. Johnson said: “What we’re seeing now is despite a pushback on cookies, marketers using IP-device-derived data have seen increased reach because more IP ranges means accurate location targeting.”

This has positive implications for SMBs operating only in local areas. Previously, many forms of advertising were closed to such businesses because there was simply too much wastage. This is good news for regional publishers who may have struggled to monetise their online audience in the same way as their national counterparts.

There’s also merit in the ability to understand what users in close proximity are doing. It stands to reason that there is some common ground between people who live on the same street; therefore, if you see a cluster of purchases from one IP address or public WiFi spot, a real-time campaign targeting other users in that location could prove fruitful.

It is vital that brands understand the importance of distinguishing between implied and intentional action and act considerately remembering that on the other end of the ad is a person who can make or break your mobile strategy in a heartbeat.

The value is not in simply getting a sale, but in deepening the relationship with an individual customer.