Location-based technology has come a long way from geofences. As mobile usage grows, location data has become more granular, providing marketers with greater opportunities to fine-tune their messages—but it has also created more complications.
Apple, for example, switched on its iBeacon technology on Friday to send customers’ tailored messages depending on their exact location in an Apple store. IBeacon is designed to transmit a signal that enables other nearby iOS 7 devices to send messages tailored to the device and the area of the store the owner is standing in.
This technology, installed in devices running iOS 7, is more precise than the GPS and Wi-Fi signals that are traditionally used to estimate a consumers’ location.
Other retailers have also implemented in-store location technology. Macy’s, for example, has teamed up with the app Shopkick, which uses iBeacon, to let consumers flag items they are interested in and receive alerts about those and similar products as they move through the store. Other retailers that are implementing Shopkick’s app include American Eagle Outfitters, Best Buy, JCPenney and Target.
The upshot is that more detailed location data can power richer segmentation and, ultimately, more relevant ads and offers, said James Smith CRO at the mobile ad firm Verve, which offers location-based solutions. “Advertisers see location not just as a tool for driving traffic, but also as a targeting tool,” said Smith. “They can use historical location data to better understand their customers and build better segments.”
Retailers, for instance, could take into account the aisles that customers linger in and those that they zip through and send offers tailored to their behavior.
But here’s the downside: as location data continues to become more detailed, marketers will also have to work harder to make sense of their data, said Duncan McCall, CEO and founder of location-based data provider Place IQ.
Retailers will need ways to analyze consumers’ in-store behavior to give it context, McCall explained. To get any value from their data, retailers must “have the infrastructure to map the data” in addition to “the right hardware, customer service and customer relationship to get people to download your app in the first place,” he said.
David Shim, founder and CEO of location analytics firm Placed, agreed with McCall. He added that while advances in location data are certainly increasing, the widespread adoption of sophisticated technology, such as iBeacon, could take years. “There’s a lot that has to be done before a company can implement new technology,” he said, “and so I think we’ll see more testing and more experimentation in 2014.”
Shim also noted that not all location data is automatically useful. “Ad networks and exchanges have told us that 15% to 30% of their inventory has location data tied to it but at varying degrees of usefulness,” he said. “They might have lat/long data but they don’t know where it’s coming from, for example. There’re a lot of limitations in terms of data availability in the marketplace.”