Cell phone

Location-based marketing is no novelty, but it is growing and evolving. Asif Khan, founder and director of the Location Based Marketing Association, says 88% of retail and restaurant companies worldwide used local marketing in 2019, up 8% from 2018. 

Annual spending on technology — platforms, solutions and hardware — is expected to reach $57.4 billion globally by 2021, with geotargeted advertising expenditures rising to $39.4 billion. “That’s just under a $100 billion market,” Khan notes. “This is a mature part of marketing.”

In the National Restaurant Association’s just-released 2020 State of the Restaurant Industry report, roughly nine in 10 consumers say they would pay attention to restaurant specials that are communicated via app. Three out of four say they’d likely pay attention to variable pricing if a restaurant offered it (for example, a reduced price during off-peak hours). These approaches might be even more compelling if the restaurant targeted customers nearby.

However, techniques of location-based marketing are now changing thanks to the European Union 2016 General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), which went into effect in January. 

Unless consumers in those areas have previously signed up to receive a brand’s messages on its app or a platform like Facebook or Twitter, it’s very difficult to approach them individually. Such regulations may spread in other jurisdictions in coming years. 

These data privacy laws “now require very strict updated consent from consumers before you can do any targeted marketing — there are no unsolicited messages,” Khan explains. “In the early days, there were experiments around, ‘We see you’re walking by our restaurant, here’s a coupon to come in.’ Under the new regulatory framework, that’s not easily done.”

Instead, marketers have turned to data from website cookies, Facebook and other social media patterns to target audiences that follow common patterns. Geolocation data from GPS tracking of mobile phones allows “geofencing” of consumers within a small area. 

These consumers “visit the same types of places or exhibit other common behaviors,” Khan says. “If we know they’re likely to be interested in what we’re offering, we can target an ad. The market has shifted and modernized; location-based marketing is now about audiences instead of individuals.” 

Two success stories:

  • McDonald’s Sweden conducted a campaign last summer, using Instagram to promote widespread distribution of picnic blankets with a built-in QR code. When scanned on a mobile phone, the QR code provided customer geolocation so that orders from a nearby McDonald’s could be delivered to picnickers in a park. The campaign boosted not only the brand’s mobile orders but also its Instagram fan base.
  • Burger King in Mexico City, with help from Google and Clear Channel Outdoor, turned the city’s horrible traffic jams into a buzzworthy social media campaign. The brand purchased digital highway signage to prompt motorists to pass their time while paralyzed in traffic by downloading the Burger King app and ordering a Whopper combo. The app’s geolocation feature enabled meal delivery via motorcycle from a nearby Burger King to each app user’s idling car. 

Pointers for geotargeting

To keep your company ahead in today’s location-based marketing game:

  • Seek partnerships with social media companies, from Facebook and Twitter to Google and Yelp, that know how to mine their vast trove of consumer data to benefit your brand. 
  • Keep up to date on changes in platforms and uses of social media. Millennials love the immediacy of Snapchat, posting photos that soon disappear. That makes it a perfect platform for restaurants offering 24-hour coupons. But Pinterest, where “pinned” images became a permanent record of the user’s interests, also is being exploited by marketers: the Kroger supermarket chain has joined the trend of posting recipes, offering its own on its Krogerco Pinterest page. 
  • Consider teaming with organizations that offer adjacencies to your products and services: retailers where your customers frequently shop; sports teams; music groups; local restaurant associations, chambers of commerce, colleges and universities. However, the depth of data that can boost such efforts is usually only available from the corporate level of these potential partners. 
  • Call on franchisees to test ideas. Experiments in location-based marketing can be tried selectively and regionally, then rolled out chain-wide if they prove successful. 

There’s no better way to stay on top of the latest marketing trends than to gather with your peers at the National Restaurant Association Marketing Executives Group conference, May 13-15, Revel Fulton Market, Chicago. Register here!