Geotargeting by Advertisers and Government Agencies

Geotargeting by advertisers, which is the practice of sending advertisement based on location, has gained increased importance for companies marketing their product in recent years. With mobile phones being ubiquitous, more than ever advertising content is sent to users based on their locations. Methods used to understand who to advertise to and how that spatial data are used are now of great interest not only to advertisers but even government services.

Geotargeting by Advertisers

Geotargeting was typically done by users selecting on  a site where they are located and information would then be delivered. Non-static IP, or Internet Protocol, addresses are more commonly used today, where users gain specific IP addresses based on their location. Tools such as ping and traceroute can find what address is used and that allows sites to know roughly where a given user is located. When a mobile user receive advertisements, more commonly today it is an advertisement specifically made for that location and likely coupled with some profile information on the person. A recent study showed that location-based advertising can be powerfully effective for advertisers and vendors, as users typically prefer promotions or benefits such as discounts for services if those services are located near them. In other words, geotargeting is more effective when those advertisements are ranked by distance a person is to a given vendor providing a potential service or benefit to a consumer, whereas more distant benefits or services are less attractive to consumers, even if a company pays to rank their advertisements higher on service provider sites.^[1]

Advertisers are also integrating purchase history or other data shared to customize advertisement that combines these data with location. As one enters a store, for instance, user data made accessible could inform the advertiser if you had purchased similar products to what that store has offered and if any other similar products might be of interest, including any discounts or benefits that might be on offer.^[2] With recent attention to how companies access third-party data, more companies are using their primary data, that is data they have about a consumer based on direct purchases or information consumers share with them, in how they advertise based on geolocation. This will also likely mean that trends in the use of artificial intelligence (AI) in marketing will increasingly evolve directly from companies learning to use their data in different ways. For instance, not only will they use purchase data, but geotargeting may also include ways to predict future interests. Companies have tried out using planning data a consumer shares to predict which product would likely be of interest. As an example, if you are planning a holiday, then advertisements also look forward in time to see what might be of interest based on where you are going. This still opens up questions about how much data consumers knowingly share and if consumers are always aware that they are sharing such data, even with primary vendors who promise not to sell their data.^[3]

Geotargeting by Government Agencies

While geotargeting has become increasingly important for advertisers, government services have now begun to use geo-targeting to inform people about potential threats to infrastructure or provide information on emergencies. Given that data sharing is also an issue for government services, local governments have begun asking users whether they would be willing to share data so that information relevant to them depending where they are, including flooding information or other possible hazards, could be sent to users using geo-targeting methods comparable to advertisers.^[4]

Geotargeting can be a controversial way in which advertisers have targeted consumers, where data given by consumer behavior is often used by advertisers. Increasingly, companies have responded by using primary data they collect, resulting in more advertisers, rather than third-party companies, to use geotargeting. New trends in geotargeting will mean that more AI-centric advertisements using geolocation will likely become more pervasive. Government services are now seeing the benefits of geotargeting and are now adapting similar methods to provide government services and information to registered users. 

References

[1]    For more on the effectiveness of geotargeting coupons or services that may benefit consumers, see:  Molitor, Dominik and Spann, Martin and Ghose, Anindya and Reichhart, Philipp, Effectiveness of Location-Based Advertising (February 23, 2020). Available at SSRN: https://ssrn.com/abstract=2645281 or http://dx.doi.org/10.2139/ssrn.2645281.

[2]    For more on evolving technologies based on geotargeting, see:  Beauvisage, T., Mellet, K., 2020. Mobile consumers and the retail industry: the resistible advent of a new marketing scene. Journal of Cultural Economy 13, 25–41. https://doi.org/10.1080/17530350.2019.1611623.

[3]    For more on new methods by advertisers on using geolocated data, see:  https://www.fourthsource.com/gdpr/the-marketing-trends-that-will-shape-2020-24078

[4]    For more on how local governments are using geotargeting, see:  Simola, J., 2020. Privacy issues and critical infrastructure protection, in: Emerging Cyber Threats and Cognitive Vulnerabilities. Elsevier, pp. 197–226. https://doi.org/10.1016/B978-0-12-816203-3.00010-1.