The reopening of the U.S. economy is bringing more people out of their homes, reviving interest in location-based mobile marketing. As pandemic restrictions are lifted and more people are vaccinated, they have greater freedom to visit stores, restaurants, theaters, car dealerships and other businesses that are vying for their attention.
Amid this shift in consumer habits, marketers seeking to reach Apple's customers are confronting the significant change to its privacy policy. The tech giant last month updated the software that runs the iPhone to ask customers for permission to share a device identifier used for online tracking with apps and websites.
The change was significant for marketers, considering that about 47% of the 247 million smartphone owners in the U.S. use an iPhone, researcher eMarketer estimated. So far, only 6% of iPhone users nationwide have consented to be tracked, according to mobile advertising and analytics firm Flurry. The low opt-in rate suggests marketers will have much greater difficulty in their behavioral targeting of ads.
"That's definitely going to present major challenges for advertisers looking to use location-based targeting," said Jesse Rosenschein, vice president of digital and account strategy at media agency Mediassociates. "As device ID unique identifiers are deprecated, we're really moving from an individualistic targeting approach from an audience perspective. Likewise, from a location perspective, we're going to be moving from a more precise approach to a more approximate approach."
That shift was already taking hold in the ad industry. Before Apple had changed its privacy policy, location data company Foursquare had measures to protect the identities of consumers. Those measures included a minimum audience size threshold to avoid narrowing consumer segments into personally identifiable groups, and not sharing raw location data or where people lived, according to a blog post.
Consumers venture outside
While the surge in e-commerce helped to drive growth in advertising on shopping sites like Amazon, a location-based approach to marketing will become more vital in reaching consumers who want to get away from their computer screens. Store visits, a key indicator of people's shopping activities, rose 3% from a year earlier during the first quarter, the first annual gain since the onset of the pandemic, according to location data company Placer.ai. It found that weekend visits to apparel stores had rebounded significantly, indicating that people were willing to spend more time at malls.
The gain in store visits is likely to be stronger throughout the remainder of the year as consumers get more adventurous. The portion of consumers who said they felt comfortable visiting a mall rose to a post-pandemic high of 62% this month from 23% a year ago, according to a tracking study by researcher Morning Consult.
As marketers seek to reach consumers on their smartphones, including iPhone users who aren't opting into tracking, contextual targeting has taken precedence. Amid the changing data privacy landscape that has made personalization and targeting more difficult, 70% of advertisers last year said context had become more important, according to a survey by researcher Advertiser Perceptions.
"Contextual targeting uses strategies that are independent of a persistent, unique identifier," Mediassociates' Rosenschein said. "Regular contextual targeting is based on online behaviors, while location-based contextual targeting is based on their real-world behaviors. It essentially uses specific geofences and location coordinates that represent places where consumers are likely to be engaging in specific activities."
Data from mobile carriers
Marketers also can find rich sources of data about people's behaviors from mobile carriers such as AT&T, T-Mobile and Verizon. The companies have undertaken a variety of efforts to leverage their consumer data into advertising sales, but faced significant competition from companies like Facebook and Google that have gathered rich sets of data.
T-Mobile last month began automatically enrolling subscribers in a program to share their web and mobile-app data with advertisers, unless they choose to opt out, according to an announcement. The company doesn't share personally identifiable information with advertisers, and instead ties the data with identifiers that are grouped into an audience segment such as "sports enthusiast."
There are limits on what kinds of data T-Mobile uses or shares, including precise location data for advertising unless consumers give permission to do so. U.S. law also prevents the company from sharing "customer proprietary network information" such as call logs that are considered highly sensitive.
Marketers also can geotarget consumers who have opted in to receive push notifications from a store or restaurant chain. For companies that have loyalty rewards programs, those notifications can be a powerful way to engage consumers who are most likely to make a purchase. Apps typically give smartphone users the options to share their location data and to receive push notifications about special promotions.
"It's almost like a modernized version of out-of-home," Rosenschein said. "As a consumer is in a specific location, they're served a push notification, versus the type of location-based targeting that happens after a consumer visits a location in the real world."
