Location-Based Advertising (LBA): An Effective Marketing Strategy

Industry forecasts predict spending on location-targeted mobile advertising to exceed $32 billion by December 2023 — up from $21 billion just three years ago. A Factual report says 90 percent of marketers believe location-based advertising (LBA) grows customer bases by 86 percent and increases customer engagement by 84 percent.

When it comes to marketing strategy, location remains an important, powerful data source because it bridges consumer gaps between online and offline life. Data-driven tools, including newer distribution channels like SMS, enable brands and marketers to deliver more personalized, relevant content to target markets wherever they access media.

How LBA Works

This 21st century marketing strategy combines location tracking with mobile ads. Consumers receive relevant brand messages based on their physical location. How does it work? Let’s say you’re walking by a local cafe. Your phone might ping with a text message of the cafe’s daily specials.

But LBA isn’t always quite so direct. Marketers can use customer data — like ZIP codes — to send messages targeting a broader geographic area. Businesses with multiple locations find this LBA approach useful to differentiate who receives which message.

Regardless of how it’s used, LBA enables brands to create SMS messages for mobile targeting, sending customized advertisements based on criteria like customer:

• purchasing behaviors;
• demographic information;
• geographic location in relation to a store; and
• weather.

According to a Pew Research Center survey conducted in early 2021, 85 percent of Americans own a smartphone. In the age 18-29 and 30-49 demographics, that percentage jumps to 100 percent. And it’s 97 percent among 50-64-year-olds. With such a high percentage of consumers easily reachable via text, using LBA to increase brand awareness and market outreach makes good financial sense.

LBA Strategies

Having recognized LBA’s value, marketers are using these strategies to incorporate the tool into their marketing mix:

• Area codes: In theory, everyone sharing an area code lives in the same general location. BUT people do also keep their numbers when they relocate. Therefore, a more reliable use case for area codes might include scenarios covering an extensive geographic area — e.g., a large region or an entire state. If your data is limited, starting with this area code LBA strategy is a good first step.
• Automatic conversations in "Workflows": A feature unique to SlickText is what we call “Workflows.” This text messaging advancement allows marketers to reach specific niche markets with LBA. Workflows can intelligently interpret customer chat sentiment and automatically funnel customers into other streams for further segmentation.
• Text words: Text words are the SlickText verbiage for what other softwares call keywords. Consumers use them to join a brand’s text list. Companies with multiple locations should create location-specific text words to help sort people from each location onto the appropriate list. For example, a library with two branches might use SOUTHSIDELIBRARY or NORTHSIDELIBRARY as the text words.
• Web sign-up forms: Brands can encourage consumers visiting their websites to sign up for SMS messaging. All that’s required is adding a field to segment lists by location such as state, city or ZIP code. While not everyone uses web forms for consent, brands that use web forms in their marketing strategies can easily create them.

Why LBA?

LBA benefits businesses because it’s easily personalized, timely and allows brands to target specific audiences. From the service-related sector to small businesses and global brands, companies benefit from using hypertargeted marketing techniques. This approach consistently drives traffic to brick-and-mortar stores, increases sales conversions, and engages more customers.

Matt Baglia is the CEO of SlickText, a text messaging platform that allows brands to customize messaging.