MBPT Spotlight: Report Finds Retailers Replacing Click-Through Rates With Geo-Precise Targeting

Geo-precise targeting for both local and national brands continues to grow, particularly among the retail category, according to global mobile-location platform xAd, which recently issued its 2013 Year-in-Review report. The report outlines trends derived from more than 400 billion location-verified ad requests on its platform.

The xAd report says the rapid growth in mobile advertising by retailers and their desire to geo-precise target consumers is indicative of the increase in the number of consumers who are making purchases via mobile devices. Geo-precise targeting leverages mobile’s ability to target users based on their specific location, making it a step beyond the standard targeting used mostly on desktop, which is based on ZIP code, city or DMA area.

“Mobile is changing the ways that consumers approach retail,” the report says. “Not only are they actually making transactions on their smartphones and tablets, but they are looking to their mobile devices to research options, find contact information and locate businesses. The on-the-go nature of mobile allows shoppers to interact with their favorite brands in ways that were never before possible.”

The top spending ad category using the xAd platform in 2013 was retail, followed by automotive, banking & finance, restaurants and telecommunications. Retailers were fifth in ad spending on the platform in 2012.

Within the retail category, big box retailers ran the most campaigns, making up 28% of the category. Home & garden and clothing & general apparel retailers each ran 17% of the campaigns. Electronics retailers ran 15%, sports & leisure retailers 10%, luxury clothing & apparel retailers 7%, malls 4% and toy retailers 1%.

The xAd report says its path to purchase data shows that 77% of smartphone-related transactions happened in person: “With the majority of smartphone-related retail purchases happening offline and the consumer expectations for close proximity, targeting is especially important for driving users to store locations.”

The report adds that in 2013, 96% of the local and national brands using the xAd platform used geo-precise targeting, up from 81% in 2012—the figure, it states, is logical because 65% of shoppers surveyed in an earlier Path to Purchase study said they expect a location to be within five miles for them to search for information about it on their mobile device.

During the fourth quarter of 2013, 40% of retailers used geo-precise targeting to reach and engage customers around their store locations and tried to entice them into their stores with limited time offers and sales that called for immediate action. Another 38% tried to target customers who were at a competitor’s store or who had shopped at a competitor in the past. And another 12% used audience targeting such as demographics, past behaviors and brand preferences.

Click-Through Rates: One Thing Leads to Another

While click-through rates offer an initial understanding of how a user engages with an ad, the report states, “the most impactful actions happen after the click.” Throughout 2013, xAd found the most common secondary actions were calls to a business. However, the secondary actions varied by industry or category.

“For retail, the most popular activity after clicking on an ad was to look up directions or maps to a store…demonstrating the power of mobile in this category to create foot traffic to locations,” the report says.

The report highlights a fourth-quarter 2013 campaign that sportswear company Columbia did with xAd to promote its Omni-Heat jacket. The goal of the campaign was to entice mobile users to come into the stores to see the item in person. Mobile users were targeted in and around the store locations with location awareness messages. Post-click users were taken to a custom location landing page that showed contact details for the nearest retailer and offered one-click access to additional product details and a map and driving instructions. xAd says the click-through-rate was 52% above the industry average.

Juli Johnson, associate media director at Columbia’s agency Butler Shine Stern & Partners, says, “Mobile, especially combined with location, can be an extremely powerful tool for not only raising awareness but bringing people into your stories. Highlighting Columbia’s innovative technology and product paired with details on the nearest retailer, we were able to drive even more relevance to the consumer and support retail partners.”

Dipanshu Sharma, CEO of xAd, says, “The rise of geo-precise targeting is a testament to how effective techniques like geo-fencing and geo-conquesting are for driving customers to visit retail locations. This is particularly true for retailers, where consumers are often looking to make a fast transaction. By the fourth quarter of last year, a third of retail campaigns on our platform had shifted focus away from [click-through rates] and towards a primary goal of driving in-store visits. This is a trend that we’ll continue to see grow in 2014.”