Location-based advertising is a time-honored marketing concept. A highway billboard that reads “Gas and Food Next Exit” is but one of many classic examples of advertising specific to a location and/or leveraging proximity to bring in customers. The rise of mobile marketing, however, brings a vast array of new and potentially powerful tools to bear, and promises to open innovative and highly effective methods of reaching prospects and customers. This white paper examines the synthesis of mobile technology and location-based advertising and outlines how the combination of the two offers new possibilities in marketing.

The Value of Proximity

There’s an obvious value to sending marketing messages to consumers who are near your location and can respond immediately. For instance, if you were running a chain of restaurants would you rather send an ad to potential customers who were sitting at home watching TV or reading the newspaper, or to those standing fifty feet from one of your locations feeling hungry?

In the past, location-based advertising was generally passive in nature, most usually signage either in a location itself or somewhere nearby, for instance a roadside billboard.

Mobile technology brings a number of important additional benefits to this equation. First, virtually every consumer in North America, Asia, and Europe carries at least one mobile device with them at all times. Thus at any given moment every single prospective customer within shopping range of an advertiser’s location is reachable, should the appropriate form of communication with them exist.

Second, more and more mobile phones include tracking devices, allowing marketers to customize information based on consumers’ location at any given time. Moreover, the two-way nature of mobile marketing communications between consumer and advertiser means that prospective customers can provide their location to the advertiser (or a network of advertisers) and receive in return specific offers or other information. For example, a mobile user might go to an advertisers’ mobile website (WAP) and get directions to the nearest location as well as an incentive coupon or the details of in-store specials.

Third, mobile marketing programs are capable of delivering promotional messages, coupons, discount offers, and other incentives that are highly time sensitive as well as location sensitive. Thus consumers might receive a coupon for a dollar off a sandwich at lunchtime, a 2 for 1 coffee discount first thing in the morning, and so on.

A growing number of mobile users are comfortable using their phones for applications other than voice; this increases the potential success and viability of the 2U2 Mobile Networktm.

Establishing a Dialogue

Mobile marketing can do more, however, than simply provide time and location sensitive information. The essence of a mobile campaign is that it establishes a dialogue between the advertiser and prospective customers, one that they both benefit from and are invested in maintaining.

A common way to start this dialogue is for the advertiser to launch a mobile-based contest with prizes that customers will perceive to be valuable. Traditional media ads include the line “Text WIN to 889988 to win Prize X”. It’s quick and easy for people to enter and the value—a worthwhile prize—is clear.

The advertiser builds a database of potential customers who have pre-selected themselves as interested in the advertiser’s products and who have responded to a call to action and are thus much more likely to remember the advertiser’s brand as well as any promotional messages that accompany the contest information.

Moreover, these customers have opted in to direct communications with the advertiser. As long as the advertiser continues to provide information and promotions that customers perceive to be valuable, the relationship will be strong and customers will pay attention.

Bringing Location and Mobile Together

Combining location-based advertising with the ongoing dialogue at the heart of mobile marketing creates a powerful marketing tool. Companies are able to communicate directly with potential customers who are close to their location, interested in their products, and open to making a buying decision immediately.

The result is a marketing campaign that is highly targeted and cost-effective for advertisers. Provided that advertisers are creative in devising promotions that will appeal to their customer base, it is also a campaign from which these customers will derive great benefit.

Examples:

A commuter sees a billboard advertising the daily specials for a chain of take-out pizza shops. He follows the link to their WAP site and receives a list of locations in his neighborhood and a coupon that provides a meaningful discount if used within the next hour.

A user texts a transit company looking for schedule information. The text reply contains the pertinent data as well as links to WAPS customized to the location and time of day—pizza and DVD rental offers at dinnertime, coffee discounts in the morning and so on. Again the user must opt in to receive the actual offer and thus will not consider the marketing message to be spam.

A user pre-registers with a specific retailer or shopping mall, requesting time-sensitive coupons via their mobile device. The next time they walk in to the retailer in question the GPS device on their phone triggers a text with in-store specials or other discounts or coupons. These may be available to the general public or they may be limited to mobile customers only, thus rewarding those who opt in.

Conclusion:

Location-based mobile advertising offers tremendous opportunity. Advertisers can reach customers in real time at the very moment they’re making buying decisions and can also prompt them to make a decision at a point when they can respond more or less immediately.

A key factor in the success of these campaigns is the perceived value of the content being sent to customers. Because mobile marketing unfolds as a dialogue between customers and the advertiser, it is crucial that customers believe that they are benefitting or stand to benefit from the conversation.