As the mobile ad market grows, so do the stakes for providing contextually relevant ads. Geo-targeted ads on mobile devices are getting a boost from companies like Google, Foursquare and Twitter, which are in various stages of rolling out new ad units that leverage location data.
In a blog post yesterday, Google announced ads will begin to appear in its Maps apps after a user performs a search. If you are in New York City, for example, and search for a gardening shop on Google’s Maps app, an ad for a nearby gardening supply store will appear at the bottom of the screen.
The ads will be identified by a tiny purple box labeled “Ad” and will include a name, short description and travel time estimate. When users click on the ad, they will receive the same information that appears in a natural search result, including the address, hours of operation, reviews and a click-to-call button.
Advertisers are charged on a cost-per-click basis when a user first clicks on the banner ad and will be charged a second time if a user clicks on the link to the business's website, asks for directions or calls the business. Serving ads for local shops and services when users indicate they are looking for those types of businesses makes sense, but brands can’t stop there, commented David Shim, CEO of location analytics provider Placed.
“When you start to incorporate where the consumer has been in the physical world and what else they have searched for, that’s when it [geo-targeted ads] starts to get interesting,” Shim said.
Two weeks ago, Foursquare launched a self-serve ad platform that allows small businesses to deliver ads based on users’ locations, i.e. check-ins, and similar businesses they have already visited, increasing the chances that users will find the ads relevant.
Given Google’s propensity for connecting its many properties and data sets, it’s only a matter of time until it incorporates historical activity into its Maps ads, noted Shim. “If I’m using Google Maps to get directions to the hotel that I’ve already looked for, it doesn’t make sense to show ads for nearby hotels,” he added. “With all the data that Google has, they’ll want to put something else in front of customers.”
Companies are using a wide variety of geo-targeting strategies to serve ads at different ends of the marketing funnel, noted Darrin Clement, CEO of Maponics, a location-based data provider.
“It is interesting to see that Google's ads are search-driven, as you'd expect, and in this case they have the goal of directing you to a destination and influencing the selection of where you are going before you get there,” Clement said. “Meanwhile, Foursquare is taking a much more ‘experiential’ approach to geo-targeting ads. They target based on your check-ins, and your current activity… You might think of this approach as an impulse buy at the checkout line rather than a planning tool.”
Twitter is pursuing geo-targeted ads as well and is reportedly developing a geo-fencing capability that will let retailers show promoted tweets to people who open its mobile apps within a certain distance from their stores.
Regardless of which strategy companies use, the winner will be the one that leverages the most accurate data, Clement maintained. “As long as you are basing your approach on ultra-precise data,” he said, “each approach to geo-targeting will be effective in the right circumstances.”