In theory, targeting consumers based on real-time location is undoubtedly effective. But in practice, many marketers struggle to quantify this value.
The challenge stems from a few factors. Brands and their partners are contending with a data quality problem. For location data to be effective, it needs to be accurate and that is not a given. In fact, only 30 percent of user coordinates in mobile ad tech are accurate enough to use for effective targeting, according to a 2018 MMA report.
But with accurate, precise and timely data, you can derive significant benefits across the lifecycle of a marketing campaign. When you devise your strategy, you can consult location data to better understand your customer and customer journey. You can improve your creative by building ad experiences that reflect these insights. Next, you can use location data to inform your targeting and build audiences based on historical patterns or real-time behavior, using customizable geofences to serve the right message at the most opportune time. Finally, you can use location data to connect cross-channel marketing to understand what is working, produce and measure foot traffic, and optimize campaign performance.
These use cases all sound well and good, but how do you quantify their value? More specifically, how do you, calculate the role quality location data plays in these campaign tactics?
In addition to struggling to procure location data they trust, some marketers find quantifying location data’s value tricky because they lack a proper framework. A recent study by Forrester Consulting commissioned by Factual tackled this challenge. Its analysis pinpointed the concrete benefits of using accurate location data and assigned these benefits a dollar value. Here’s how:
Using high-quality location data can increase foot traffic by improving scale, accuracy and reach. This leads to greater profitability. Forrester calculated that profits are uplifted by $2.5 million, conservatively, over three years by using high-quality location data in your marketing.
When trying to drive in-store foot traffic, brands often use cost-per-action (CPA) to assess the value of their campaigns. Using high-quality location data can improve the accuracy of campaigns and, in turn, reduce the average CPA. For example, customers reported that their average CPA dropped from $3.75 to $2.00 when using Factual location data. That is a cost reduction of 47 percent and accounted for over $493,000 in CPA savings.
More effective optimization
When brands have access to detailed, timely reporting and fresh location data, they can optimize their campaigns to derive more value. Forrester’ study calculated a $378,000 uplift from continuous targeting optimization, an improvement of 15 percent. It’s worth noting that the quality of campaign reporting it takes to reap benefits of this size are not a given. Some location data providers do not provide reports until weeks after the campaign has served, which obviously makes optimization challenging.
The ability to reach the right consumers using location data can increase customer lifetime value. Forrester didn’t quantify this in its study, but it did report that some people who made a purchase as a result of location-based targeting became “regular” customers, driving additional revenue and decreasing the need to target these shoppers with future marketing.
Greater scale, without sacrificing precision
First-party data is valuable but limited in scale. By mapping audience data to location data, marketers can scale their campaigns and serve customers and prospects ads that reflect their state of being, based on their location.
These benefits add up to substantial gains. Forrester concluded that using Factual location data in advertising led to $3.4 million in benefits, 202 percent ROI, and 47 percent CPA savings over a three-year period. The report also found that customers can justify the cost of their investment within the first campaign.