Local targeting allows marketers to send highly specific messages to a very narrow group of shoppers. Such messages are usually more relevant to the targeted audience, and consequently tend to lead to higher conversion rates and improved ROI over national campaigns that include more general messages.
Two capabilities must be present for effective local targeting: identification of the geo locations that are the focus of the campaign, and the advertising mechanism that enables marketers to reach an audience exclusively within a targeted individual or set of geo locations.
Geo-based POS data together with geo-targeting capability embedded in some digital media platforms can be an ideal combination to achieve effective geo-based campaigns.
Point-of-sale (POS) data collected at retail channels is innately geo-based. For example, we can easily aggregate retail store sales of a particular brand/product within a certain geo level (e.g., DMA). In a similar vein, marketers can calculate indices such as CDI (Category Development Index) and BDI (Brand Development Index) for each geographic area in the U.S. BDI and CDI are widely adopted metrics for marketers.
BDI relates the percent of a brand's sales in a market to the percent of the U.S. population in that same market. CDI relates the percent of a category's sales in a market to the percent of the U.S. population in that same market.
When the objective of a marketing/advertising campaign is to gain greater sales from existing customers, marketers will focus campaigns on high BDI areas. When the campaign’s objective includes winning away customers from competitors, marketers will target areas that have a low BDI score but a high CDI score.
Either way, POS data will help marketers find those areas where they need to concentrate ad dollars.
Digital media platform managers will incorporate this intelligence into their targeting engines. Today’s digital media technology has advanced to a point that most platforms (if not all) possess the capability to prioritize every single cookie based upon its IP address.
In practice, despite being anonymous, a computer’s IP address does point out the rough geo location where the computer comes online. Therefore, if the POS intelligence shows that it is a high-priority location, a relevant display ad will be pushed out to that computer, whereas when it is coming from a low priority area, no ad will be shown.
Geo-targeting with this precision is actually not new for marketers, but in the past, it has been primarily confined to direct mail in the financial, insurance, automotive industries. It is somewhat cutting edge in the CPG and retail worlds especially when applied to digital media.
As digital marketing continues to displace traditional television, radio and print advertising, successfully incorporating geographic-based targeting into the marketing mix will become increasingly important for CPG and retailer decision makers alike. Given the level of competition for shoppers’ minds and wallets, no CPG or retailer decision maker can afford lost opportunities.