How Location Targeting Is Transforming Retail

One of the biggest marketing puzzles for owners of brick-and-mortar businesses is mobile advertising, figuring out how to benefit from the constant parade of people wandering around staring at their smartphones and looking things up on them.

How can you tell if those tiny ads actually work? And how do you connect them with what people do in real life? Most importantly, how do you make things easier for the customer? Seattle-based Placed is trying to solve all of those problems by collecting billions of data points from people's mobile phones about their locations when they use certain apps and, potentially, see mobile ads.

Vague location isn't all that helpful. Businesses need precise information to take real action and target the customer based on where they check their phones. A new restaurant in an area with heavy commuter traffic, for example, might target ads for people on their way home from the office or run a promotion designed to attract them based on the places they currently visit. 

"Actionability in location is directly tied to accuracy, and proximity is only part of the solution," Placed CEO David Shim says. "Ninety percent or more of the time the closest business to a person’s latitude/longitude point wasn't the place they were visiting."

It's easy to know generally where someone is — the street or neighborhood they're in — but very hard to know which stores they visit. Placed has managed to get past that with models and algorithms to get beyond just "close." Five million visits to businesses have been confirmed by the people who have opted to share their location data, helping refine and validate their approach.

The potential is huge. Location targeting can help businesses figure out when people stop going to a particular store and start going somewhere else, as well as give them a sense of why. What's more, businesses can also target people not only when they're walking by a store, likely on their way somewhere else, but at the places they tend to make decisions about where to shop, such as when they're leaving work or during their lunch breaks. 

In an age when privacy is a top concern, Placed gets its data entirely from people who opt in and elect to share it. Partners, usually apps, are very clear about how the data will be used and where it's going. Placed has the world's largest opt-in panel of smartphone location data, and the company processes over 100 million location measurements a day. 

Placed, which launched in early 2011, is one of the leaders — if not the leader — in the location space and the effort to connect the physical and online worlds. Their growth has shot up recently from partnering with other apps. Since the spring, the size of the company's community and the amount of data it collects tripled, according to TechCrunch. 

When business customers asked for the ability to measure the impact of ads on driving in-store visitors, it created Placed Attribution, a service that helps link ad exposure to in-store visits and measures the impact of targeting particular audiences. This new service launched in August, and the response has been "overwhelmingly positive," Shim says. Massive ad networks like Millennial Media, Verve, and xAd quickly signed on. 

The physical businesses of the future aren't going to be able to ignore this kind of data, or they'll be beat by competitors who use it. The key is creating a better experience for customers. 

For instance, one retail client was testing a new store format and used Placed to understand how shopper behavior changed outside their store. The data they got back helped them change the product mix and in-store messaging based on where shoppers went after visiting the store. 

"The more you understand who your customers are and what they do in the physical world, the better you can serve them," Shim says. "Placed provides a lens to view consumers’ offline behaviors."

Location targeting through mobile apps is still new but is already influencing what stores offer and how they market themselves, based on learning about their customers' lives and habits. 

Tools like Placed facilitate this process faster and on a larger scale. It's going to be exciting to see how businesses use it.

Read more: http://www.businessinsider.com/placed-location-based-targeting-2013-10#ixzz2jQtbTO7O