Where Does Geotargeting’s Convenience Turn Creepy?

Geotargeting, also known as location-based marketing, offers customer data in real time. However, frivolous use of data may scare more customers than it attracts. Marketers must find a sweet spot between personalization and surveillance.

There’s a whole ocean of data under the feet of marketers, bubbling and ready to burst like a well of oil. In 2015, nearly 1 million new mobile social media users were created each day, according to We Are Social—that’s an average of 12 new users per second. 

In 2016, 76% of American Facebook users checked their account each day, according to Pew Research Center, creating data, liking and commenting along the way. 

By 2020, there will be 2.87 billion smartphones worldwide, eMarketer reports. Of these devices, a report from Pew finds it likely that 90% will have location services turned on—giving marketers the ability to track every step users take.

Perhaps the most powerful way to take advantage of this geyser of customer-tracking data is geotargeting, also known as location-based marketing. Data-focused marketers salivate at visions of sending a notification to smartphones as soon as customers pass by a shop, increasing ROI and perhaps nabbing a long-overdue promotion. 

But customers can be creeped out when brands cross the thin line between knowing them like a friend and knowing them like a stalker. Customers walking into one section of Walgreens, for example, and receiving a notification on their device that tells them to head over to another section of the store may find the corner shop’s level of knowledge a bit unnerving. 

“I don’t know if you’ve experienced what that’s like when you go into a store but it’s a little creepy, and it is kind of annoying to the consumer,” says Michael Jones, North American general manager of retail merchandising network Anatwine. “There’s a delicate balance.”

Data collectors may feel a sense of awe at this delicate balance, not to mention the level of data they now have access to, but the reciprocity with and trust of consumers lies in protection of this oceanic ooze of data. VIZIO, a producer of smart TVs, paid $2.2 million to settle charges from the Federal Trade Commission and the Office of the New Jersey Attorney General after VIZIO collected viewing data on 11 million consumer TVs without consent. 

Geofeedia, a social-media monitoring platform, passed locational data about people at protests and large gatherings to the Chicago Police Department. The Chicago Tribune reports that after the ACLU revealed Geofeedia’s interactions with the police via a document dump, the company cut 31 of its 60 employees.

However, there are also many useful, convenient ways to use location-based marketing. Marissa Tarleton, CMO of coupon-code conglomerate RetailMeNot,​ says her company has geofenced all major shopping areas in the U.S., or set up a radius of space around shops wherein customers who a have a business’ app or a device capable of receiving messages automatically receive notifications from businesses. She says more than half of RetailMeNot’s customers provide location data and in return receive “relevant, timely content targeted to their preferences.” RetailMeNot’s retail customers are seeing a tenfold return on investment with its new mobile attribution system. In Tarleton’s view, mobile is “the link between digital and physical worlds.”

Clearly, there’s a line between accruing insights and intruding on customer privacy; the reputation of the brand lies on that line, as marketers look to land on the side of great geotargeting rather than careless creepiness. 

Know What You’re Getting Into 

Before adopting new technology, marketers must learn how and why it works. Location-based marketing has two broad use cases, says Greg Sterling, vice president of strategy and insights of the Local Search Association​: One use case is geofencing, the other is behavioral targeting, which tracks consumers’ location and analyzes where they go. The latter should sound familiar to anyone who has tracked consumer web browsing with cookies.  

“Let’s say I’m McDonald’s and I want to see how many of my customers also eat at Chipotle because I’m trying to understand who my competitors are,” Sterling says. “I can figure out who has come to McDonald’s and who has also gone to Chipotle within a certain period of time in the aggregate.”

Even without consumers registering and signing in, Sterling says businesses can figure out who went to both restaurants in a window of time and analyze data like gender, age and zip code by looking at aggregate data. This may help determine what percentage of loyal McDonald’s customers are also eating at Chipotle, for instance. 

“I’m identifying their audience and advertising to them at some point later,” he says. “I can also identify an audience and advertise to them in real time so I can combine the methodology. I can figure out who goes to fast food restaurants more than once a month, and I can target them when they’re in competing fast food restaurants.”

Start With the Customer 

To marketers eager to try something new, geotargeting often looks like a shiny ball, says Jones: distracting, but with no discernable purpose. Instead of focusing on what technology to adopt, Jones suggests companies start by questioning the value brought to the customer.  

One example of this again rests on the back of Walgreens and its more than 8,000 U.S. locations. In a city like New York, for example, people likely come out of the subway within walking distance of a Walgreens. Jones says location-based marketing could spot these customers and offer them a coupon to get them into the store. This is a simple but useful method to use a retail store’s large footprint. It’s a noninvasive introduction to the value of geotargeting for the customer.

Don’t Take Advantage of Data Privilege

Access to a customer’s phone—with all of its photos, phone numbers and personal information—is a privilege that should not be taken for granted. Jones says marketers must think about the value they are providing to customers in this trade of privacy for convenience. 

Both Groupon and Yelp have been good examples of providing value to customers, Jones says, as they first ask the app downloader to turn on location services so they can receive more accurate information. For a customer walking down the street and looking for a restaurant, being able to see what’s in proximity from Yelp or what deals are nearby in Groupon is enough of an incentive to keep location services on. When this privilege is not respected and notifications begin randomly popping up at every street corner, brands may lose customers. 

“That’s the key: Put yourself in your consumer’s shoes and ask if you are driving some kind of value by asking them to give up more of their privacy,” Jones says. If consumers find themselves swiping away notifications, they’ll likely be annoyed by the sender.

SMB Marketers May Have to Wait

SMB marketers can use geotargeting, too—any business can, Sterling says—but they may have a hard time finding a meaningful use case. 

“The paradox of real-time targeting is that it can be very personalized, very customized and can capture people with very high intent—somebody at the mall is likely to be shopping for stuff in the stores at the mall,” he says. “But the audience sizes go way down if you’re doing real-time [targeting] in a very specific place. It has high conversion, but low audience reach. … Small businesses can use it, but use cases for them are narrower.”

For example, a small retail chain with an app can send a welcome message with coupons to anyone who comes into the store, but it will be harder to get value. When it comes to geotargeting, Sterling puts it simply: “Scale matters.” 

It’s still early for location-based marketing, and brands are still learning where the line lies between valuable and vexing. As they work to delineate the line, Jones says geotargeting technology will continue to improve and, before long, become a marketing mainstay. 

“When so many people are relying on their phones and want information, it’s just a matter of time before it becomes something that both sides learn how to use,” Jones says.