The combination of hyperlocal targeting and programmatic ad exchanges has opened up a whole new world for advertisers.
One of 2014’s biggest trends is the rise of hyperlocal advertising. Hyperlocal, as it’s called in ad tech circles, allows marketers to use a smartphone’s GPS data to geographically target audiences for the purpose of delivering relevant ads.
When you combine this with the ability to purchase ad impressions individually, through programmatic ad platforms that are powered by real-time bidding, marketers now have a cost-effective way to engage their audiences in a manner that matches ads to the context of their physical location.
How Does Hyperlocal Advertising Work?
When a person uses an app on their smartphone, the app may ask for permission to access the location data of the phone. For check-in or dating apps like Foursquare’s Swarm and Tinder, the app is essentially unusable if you do not accept.
For other apps, like Flixster, which allows you to find movies playing nearby, it’s not crucial to enable location sharing, but, it definitely makes the app more useful.
If an app user accepts this location-sharing request, the app will basically be aware of their GPS coordinates at all times. If the app also happens to be supported by ads, it’s highly likely that these coordinates will be passed along to the ad network or ad exchange that sells the ad space to advertisers.
Based on our company’s view into multiple marketplaces, about 44% percent of mobile inventory in programmatic ad exchanges is location-aware. That amounts to over 7 billion impressions per day — a tremendous amount of ad inventory with which to reach audiences in a hyperlocal manner.
How Is Hyperlocal Advertising Used?
Knowledge is one thing, but action is another. Once you understand that audiences can be targeted at the hyperlocal level, the next step is understanding the various targeting options available.
- Basic Radius – At its most basic level, hyperlocal simply involves creating a zone or “geo-fence” around a GPS coordinate, and targeting all users that pass through it. This zone can be as small as a few feet in radius. Most buying platforms have either a mapping integration built-in, or allow you to upload a list of GPS coordinates that you want to target.The reasoning behind basic radius hyperlocal is the same as the reasoning for targeting a particular website: you are essentially targeting a location where you believe a specific audience congregates. Targeting an audience by proxy might seem crude, but is actually quite effective in both cases.An additional use case would be for a local business with a physical location within that basic radius to target ads to people in its proximity, with the aim of driving foot traffic.
- Contextual – In the desktop world, contextual targeting usually refers to the content of a specific web page: that is, keywords, language, sentiment, category, and so on, appearing on the page. In the hyperlocal mobile world, contextual refers to characteristics about the physical location of the mobile user, such as:
- The type of location (school, shopping mall, neighborhood, building, etc.)
- The demographics of the area (gender, ethnicity, education, age, etc.)
- Specific census data (crime rate, political leanings, household incomes, etc.)
These are just a few of the examples of the types of contextual targeting data that can be used for hyperlocal advertising. It should be noted, however, that contextual data can also be used for the purpose of extracting insights about audiences from broader mobile campaigns.
What’s Next For Hyperlocal Advertising?
As technology matures, you can safely assume that the volume of information about locations will only increase, especially as we move closer to a quantified world of “smart” devices and wearable computing. And the potential applications for this targeting technology is bound only by your imagination.
For example, you could target a conference center hosting an industry trade show at a hyperlocal level. Doing so would allow you to serve mobile ads to everyone in the conference center. You could then capture the device IDs of everyone in that radius for subsequent retargeting.
Using geo-contextual and behavioral insights gleaned from that audience, you could then determine certain characteristics (such as neighborhoods, demographics, interests, and other data) that index high for that group, and subsequently launch another campaign that targets anyone with those characteristics. The possibilities are endless.
This is the world we live in today, and we are still in the early days of it. As the adoption of location-aware apps grows, and smartphone proliferation continues, the possibilities and potential for growth in hyperlocal mobile advertising will only continue to expand.