As marketers become more familiar with location-based targeting, they are shifting from geotargeting to more precise methods for reaching mobile users on the go.
The share of national brand campaigns using "geo-precise" techniques such as geo-fencing or targeting based on location-specific consumer behaviors increased to 58% in the first quarter, up from 27% in the year-earlier period, according to the latest report from location-focused mobile ad network xAd. Conversely, the proportion of campaigns relying on geotargeting -- including zip codes, cities and DMAs—fell from 64% to 40%.
Run-of-network, which does not include any specific type of targeting, fell to 2% from 9% a year ago.
The 58% share of what xAd calls geo-precise campaigns, however, marked a steep drop from 81% in the fourth quarter of 2012, when holiday season promotions drove up the level of location-targeted mobile ads by retailers and brands.
xAd CEO Dipanshu Sharma said advertisers are increasingly attempting to target mobile audiences based more closely on their exact location than wide geographic areas in connection with better results. Its report highlighted a case study in which Pinkberry used a one-mile geo-fence along with search-based behavioral targeting to promote its new "Pinkberrygreek" yogurt with $1 discount and a buy-one-get-one-free offers.
The ads click through to a landing page that is specific to the nearest location as well as options to save the coupon presented, get the address, phone number and map and directions. Within the first two weeks, the yogurt chain said the effort had doubled the benchmarks it set for the campaign.
xAd noted in its report that while geotargeting is commonly used in desktop advertising as a way to raise local market awareness, the approach is less effective in driving immediate online or offline actions, like luring people nearby to a Pinkberry with special offers.
The company says its location-targeted ads overall perform better than the industry average for either targeted display or search, at 0.6% to 0.5%, and 8% to about 5%, respectively. But it said that its highest level of location targeting also carries higher-than-average CPMs.
When it comes to industries using mobile-location ads, financial services/insurance, telecommunications and restaurants were tops in the first quarter. That’s fairly consistent with 2012, except that financial services moved ahead of telecom into the No. 1 slot, and restaurants replaced travel. Other top categories in the quarter included health and beauty, auto and retail.
The south, which has the highest proportion of smartphone users (38%) and tablet users (37.3%), continued to be the region most heavily targeted by mobile advertisers, according to xAd. Houston was the most ad-targeted city, followed by Chicago, Los Angeles, Philadelphia and Miami. Five of the 10 cities most targeted by marketers were in the south.
The findings are based on xAd’s network and campaign data spanning 200 brand campaigns from January through March. The company’s network reaches about 100 million mobile users a month, or almost three-quarters of the U.S. smartphone audience of 137 million.