Opinion: Location profiling is the next frontier in audience insights

Andy Stevens is svp of research, insights & analytics at outdoor advertising company Clear Channel Outdoor.

“I know that half of my advertising dollars are wasted,” the king of modern advertising John Wanamaker once said. “I just don’t know which half.” Now, thanks in part to location-based data, out-of-home (OOH) advertisers are getting ever closer to deciphering which of their ad dollars are well spent.

In the early days, demographic targeting was the gold standard for segmenting audiences according to shared traits like gender, income and age. As Internet usage grew, in came more sophisticated ways of targeting ads based on behavioral attributes. Digital campaigns allowed advertisers to target audiences based on how people browse the Internet, purchase products online, and share information on social media. This gave advertisers a huge advantage over the previous model. But even behavioral profiling has limits.

The critical point about behavioral tracking is that many of the advances have been limited to the virtual world. With the exception of surveys and focus groups, we have very limited information about where the buyer goes when they are not on their computer. This isn’t just a small miss for advertisers expected to spend budgets wisely with measureable ROI, it’s a huge blind spot.

According to data provided by comScore, the bulk of sales in the U.S. still take place in the physical world. In the first quarter of 2015, 14.7 percent of retail sales took place online — the highest share ever. But the remaining 85.3 percent took place in brick-and-mortar retail stores. Digital behavioral data is incredibly rich and has given us an unprecedented ability to understand how consumers move through the purchase process, but it only covers a small part of the buying that takes place. Information about a buyer’s location opens up a new frontier of valuable consumer data to complement online browsing and purchasing insights.

With location data, time is also integral to what we learn about a person. Say an individual visits Yankee Stadium three times a month. The logical conclusion would be that the person is a sports fan, right? But what if the person went on a Saturday night, for a Jay-Z concert? Then the profile changes from a sports to a music fan, and possibly a young person. Now imagine the person visits Yankee Stadium for a Jay-Z concert, but only stayed two minutes. Maybe they took a wrong turn, or they are dropping somebody off.

Thanks to the proliferation of smart phones and the increasing amounts of time people are spending outdoors (often due to longer commutes) we now have the ability to identify anonymous movements about where people go. This location data adds an exciting new layer to the mix.

Location is particularly important to out-of-home since the medium is inherently location-based. In the past, out-of-home advertisers relied upon traffic data and census data to calculate ad exposure. By using mobile technology, we can access rich and nuanced profiles of people who walk, drive, or ride past out-of-home properties.

There are two ways this helps advertisers sell:

It provides data on where the highest concentrations of people are located.
If we want to target MLB fans, we could look at a number of seed audiences: people who went to baseball grounds (while a game was on), people who browsed baseball sites and people who use baseball apps. We can use mobile data to create heatmaps of where these people go throughout the day, which inform us of the best out-of-home locations to use.

Conversely, we can profile a location.
This would show where else the viewers go and better understand the type of advertising messages that might appeal to them. For example, if we know that a location is regularly passed by people who eventually end up at a golf course, we now know that this could be a good place for advertisers wishing to reach golfers.

When advertisers truly want to target a specific audience, they shouldn’t only think about what consumers do online. They should think of where they go in the world, and how this information can be used to run campaigns that target them more effectively. With location data already being used to plan smarter out-of-home campaigns, Wanamaker would surely be happy to know technology has brought us a better understanding of where our ad dollars are truly being spent.

Image courtesy of Flickr/台灣水鳥研究群 彰化海岸保育行動聯盟


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