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A Small Business Owner’s Guide to Location-Based Marketing

woman looking at LBM notification

As mobile device usage continues to skyrocket, there has never been a better time for small business owners to incorporate location-based marketing into their overall strategy. Location-based marketing is quickly becoming one of the most popular marketing techniques for small businesses today. In fact, reports estimate that the global location-based advertising market is expected to reach nearly $164 billion by 2026. But what exactly is location-based marketing and does it make sense for your small business? Keep reading this guide to find out.

What is Location-Based Marketing?

Location-based marketing (LBM) refers to the process of targeting users with promotional content based on their current or past physical locations. It works by collecting location data from devices and pushing relevant information, ads or notifications to the device and its owner. 

To give you a better idea of how LBM works, here is a quick overview of a few popular types of LBM for small business owners:

  • Geofencing: Also known as “radius targeting,” this technique involves placing a virtual “fence” around your business and targeting all devices within the predefined area via SMS or app-based push notifications. This tactic is best for capturing a broad geographic audience in real-time and driving foot traffic to your brick-and-mortar location.
  • Geo-conquesting: An extension of geo-fencing, this technique involves placing the geo “fence” around a competitor’s location, in hopes of alerting mobile device users to a promotion that would pull them away from the competition and to your business instead.
  • Geotargeting: Geotargeting is a more nuanced way to target consumers based on both their location (using geofencing techniques) and their behavior data, to reach more specific users and demographics than just the consumers that happen to be surrounding a given location.
  • Beacon advertising: This tactic is typically employed inside of brick-and-mortar locations and uses a physical device, called a beacon, to target users within range of that device. When customers enter your physical location and come close to a product that you are hoping to promote, they will receive offers tailored specifically and locally to that object.
  • Weather targeting: This type of LBM tailors advertisements by using real-time location and weather data. For example, if it begins to rain in the area around your coffee shop, a push notification could appear on mobile devices in the area reading “Escape the cold rain and come in for a nice, warm coffee and free bakery item!”

Benefits of LBM

LBM enables you to reach the right customers at the right time. The precise targeting allows you to focus your marketing efforts on the people most likely to engage with your business at a given time. This can increase foot traffic to your store and help you get the most out of every marketing dollar you spend. 

LBM can also give you access to consumer data to glean deeper insights into shopping behavior and help flesh out customer personas, enhancing future targeted marketed efforts. The more you can tailor your small business ads to relevant customer profiles, the more likely you are to  see a return on your ad spend.

Considerations of LBM

Before jumping into LBM, there are some additional factors to consider. LBM only works when users opt-in to data and location sharing required by LBM technology. For device owners concerned about privacy who may not provide access to their data, LBM techniques would not be able to reach them. 

Similarly, another consideration is the group of consumers who do not have smart devices. Non-smartphone users will not have the technology built in that enables LBM tactics to target them via app and location data. Lastly, LBM is at the mercy of accurate location data. If any smart device owners have a VPN installed that intentionally skews their location data or if software malfunctions report inaccurate location information, targeting will be inappropriate and LBM tactics could have the opposite effect on users.

With over 80% of marketers citing that location data boosts the effectiveness of advertising and marketing campaigns, LBM is  definitely a small business marketing tactic worth exploring.

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