The final module of Squared Online sees Squares work in groups to create a whitepaper that sells their ideas on how a major digital trend will affect an industry. For our latest whitepaper showcase we're taking a look at a series of reports from students who joined us from Perfetti Van Melle, who look after brands such as Smint, Chupa Chups, Mentos and Fruit-ella.
Following the first Perfetti Van Melle whitepaper on Influencer Marketing and the second on the importance of mobile in emerging markets, we're closing out with this piece on how geo-targeting can drive in-store sweet sales.
Everybody talks digital and mobile, but one big question seems to remain: how can digital actually help us to drive physical in-store footfall and hence sales? Especially in the impulse-driven confectionery industry, which is still less relevant for online purchase channels?
There is an up-and-coming technology that is aims to do just that: mobile geo-targeting. This whitepaper will give you an understanding of how mobile geo-targeting works, how confectionery brands can profit from it and which risks and regulatory implications need to be watched in order to enjoy its benefits.
WHAT IS MOBILE GEO-TARGETING?
Geo-targeting is the process of personalizing a marketing message to consumers based on their geographical location. When an IP address of a device – which indicate a specific location – is used for marketing purposes it is called geo-targeting.1 However, geo-targeting becomes much more interesting and impactful when linked to real-time location-based marketing. In order for real-time location-based geo-marketing to work, consumers need to share their location based information, which 70% of consumers are willing to do if the benefits of sharing are clear to them. Geo-targeting shows high potential to drive sales in confectionery as secondary actions exceed the industry benchmarks. These positive results are true across all industries.2
A distinction in the following real-time location-based marketing tools can be made3:
- Geo-Aware Ads detect the real-time location of a mobile user and serve a location-appropriate message. The message can be adjusted to fit local conditions, season, weather, events and the like. For example, a coffee shop may display different coupons for tourists in Times Square than locals in Brooklyn
- Geo-Fencing sets a perimeter around a physical location and serves mobile ads to users in that specific area. The ads may or may not include creative messages acknowledging the user’s location or include location-based features such as a store locator. For example, a car service can target ads only to users that are within half a mile of an airport or train station
- Geo-Conquesting is a variation of geo-fencing, where a perimeter is set around a competitor’s location and ads are served to mobile users in that area. So you can deliver the ad to your consumer when they are near your competitor to entice them to do business with you instead
WHY IS IT A PROMISING MARKETING AND SALES TOOL?
Being part of consumer packaged goods (CPG), selling confectionery is largely driven on impulses of consumers: there is no nutritional need for the product – appeal and appetite is generated by physical confrontation with confectionery products and packaging when passing them in store or at check out. Recent years show substantial reduction of shopping trips in various formats in US as well as in Europe.4 This retailer rationalization is driven by shoppers moving online, and to shopping less in general - all leading to less time spent shopping. For the confectionery impulse category this reduces the opportunities to sell. Since retailers have a huge interest in generating traffic, geo-aware ads and geo-fencing offer many opportunities to generate impulse for confectionery and generate traffic to specific store nearby for actual sale / delivery.
The CPG sector is one of the fastest growing segments within the location-based ad category, coming 3rd place in the US with 14% of all location-based ad spends, after Automotive (15%) and Retail sector (28%). However this is still a very small number as according to eMarketer as only 18% of the CPG companies use Geo-Targeting technology to deliver location based notifications. There is room for a lot of growth as 23% of the shoppers have an interest in receiving personalized messages based on their location with additional 46% with low to medium interest.5
HOW TO DO MOBILE GEO-TARGETING?
For the confectionery/CPG industry, there are two areas of recommended strategy/tactics for the optimal use of mobile geo-marketing tools:
Use Proximity targeting / Beacon technology
For the CPG and hence confectionery sector, more precise targeting through proximity marketing tools such as beacons (wireless devices that send radio signals to mobile phones) is the key. McDonald’s in Georgia, USA tested beacons at their locations with positive results: within a week they had 18,000 offer redemptions for the promoted items. McChicken sales increased by 8% and McNuggets by 7.5% vs. the previous month.
Their shoppers embraced the location-based offers. As per a study conducted by Swirl, with beacon technology, there is a 73 per cent increase in the likelihood of purchase. Customers are likely to open and engage with beacon triggered content and spend 60% more while their visit to the stores.6 The key here however is to have personalised messages based on the proximity parameters and not use generic messages. According to a Business Insider Intelligence report, beacons drove $4 billion sales in US in 2015 which is expected to rise ten folds to $44 billion by the end of 2016. For confectionery brands that do not own their own stores and/or apps, a cooperation with a retailer or coupon apps would allow access to a broad target group when using beacon technology.
Improve and use understanding of shopper behaviour
Google has found that 84% of smartphone owners use their phone in a physical store.7 Geo-targeting can help to improve shopper behavior and hence to customize message content and delivery.
- Develop geo data to create contextual audience profiles to help drive in store sales over time. Discover the places in which shoppers live, work and play to create rich user profiles that can be targeted. Location data is the “cookie” that unlocks the places your shoppers visit outside of your locations
- Retarget shoppers with an affinity for specific brands or retailers based on the locations they have visited in the past. For example, people with a higher dwell time in the confectionery sections can be retargeted at the checkout to reinforce the purchase decission process
- Localize your creative dynamically with information on pricing, store locations, and local deals or promotions for each specific store
- Take full advantage of location data by using it in your planning process to better understand the types of people visiting your locations
- Aisle specific communicaiton can be pushed to consumers helping them with what they are looking for, interesting facts about the product in the aisle
WHAT ELSE CAN MOBILE GEO-TARGETING DO FOR YOUR BUSINESS?
Geo-targeting allows focus on a specific market or area, resulting in more relevant messaging and a better return on investment. The key benefits that CPG brands can have with this technology are8:
- Higher Relevance within a smaller geography: Communication can be tailor-made which can help attract customers into stores with locally relevant offers and communication.
- Cost Optimization / Reduction Brands can save media monies as geo-targeting allows focused communication to audiences directly.
- Flexibility and Testing: Different routes – e.g. offers in different geographies within one country - can be tested and content easily adapted based on the results.
- Geo-Fencing as a new way of Gorilla Marketing: It helps you run a communication campaign without your competition even knowing about it or if the competition is running a big offer, one can directly communicate with the customers and get them to buy your brand with an even better offer.
WHAT RISKS NEED TO BE WATCHED?
- Infringement of Privacy: Multiple brands might use the technology to communicate with the same audience which could lead to infringement of privacy and users not sharing geo spatial data anymore.
- Targeting can be a challenge: While it is possible to reach users in a limited geography, more information might be required to reach the exact audience. Eg: For a kids' confectionery product geo-targeting would make sense if the communication is served only to mothers in a certain age group.The possibility of this depends on how much information is the audience ready to share
- Multiple languages are a challenge: If targeting a population in India, for example, then content should be available in multiple languages, as there are so many spoken throughout the country. Outsourcing for translation can be time and money-consuming
WHICH REGULATORY IMPICATIONS NEED TO BE REGARDED?
Before using geo-targeting, the most important rules to take into consideration are of course customer location data collection and usage codes, regulations and standards for mobile devices. On the other hand, because of it is relatively a new technology, there are some regulatory gaps presently.
For instance, in UK, in the CAP Non-Broadcast Code, there are some rules about location data collecting under Online Behavioural Advertising but with an exception on mobile devices. 9In the U.S., data collected by providers of third-party mobile applications (i.e., not pre-installed on a device) is outside the scope of the Federal Communications Act and the Federal Communications Commission doesn’t regulate data collected by mobile app providers that are not also telecommunications providers.10
However, the rising interest of businesses using mobile geo-targeting leads to an increasing interest in this topic at regulatory institutions. As an example in the US, the Network Advertising Initiative (NAI), - a self-regulatory and trade organization in the US - has recently provided detailed guidance regarding how its members should work with precise geo-location data. The NAI Code often has the practical effect of law and must be examined seriously.11
All in all you can say that the regulatory implications of mobile geo-targeting need to be considered carefully locally for each country, taking into account existing laws and advices of institutions for mobile devices (Eg. in case of cooperation with the mobile app of a strong retailer or coupon offers: if available through the iOS8 system, the system prevents the mobile app from accessing a user’s location data when the mobile app is not in use, unless the user affirmatively allows such collection in response to a system-level prompt). In addition, the general advertising rules of course need to be considered before starting a geo-targeting campaign as well as the competition codes, standards and regulations for Geo-Conquesting.
SO WHAT AGAIN IS MOBILE GEO-TARGETING?
Mobile, location based geo-targeting is a new opportunity to get in touch with the consumers close to the physical POS and drive in-store footfall by relevant content offered.
The early state of this technology bears a few challenges that need to be handled. At the same time it offers a great chance to take advantage of a less crowded competitive environment when it comes to the offer of confectionery products.
- www.trackmaven.com, www.marketingterms.com
- Kantar Retail Consultants Shopper Scope 2007 - 2015, October 2015, GfK Ecommerce Seminar April 12th 2016, Food Retail GfK Netherlands