Imagine receiving a text message that your favorite online shop is hosting a pop-up event in your city. It comes at just the right time. You were in town and looking for something to do that weekend.
That precise targeting is a result of location-based marketing. Using time and place data, businesses can respond to weather conditions, local events, and individual behavior patterns to serve customers the most fitting marketing material.
Here’s how location-based marketing works.
What is location-based marketing?
Location-based marketing (LBM) uses online and mobile device data to target users based on location or location history, helping brands deliver more relevant content to potential customers. Companies can use real-time location data to encourage customers to take a specific action. For example, a local business might use location-based advertising to notify a customer that they’re less than half a mile from a boutique.
LBM can boost customer engagement. “So many elements of our lives are digital—the way we shop, communicate, connect,” says Anna Decilveo, head of merchandising and brand partnerships at Shopify. “LBM gives brands an innovative way to cut through that noise and connect with their customers locally.”
5 types of location-based marketing
With LBM, companies either collect location data and deliver messages through their apps or purchase ad space and location data from third-party providers. Here are five ways companies can leverage this data:
1. IP targeting
IP address targeting uses a target customer’s unique IP address to determine their specific location. Google uses IP targeting, for example, to collect users’ IP addresses and display local listings in Google search results when a user searches for “Thai restaurant” or “parks near me.”
You can set up location-based targeting in Google Ads to deliver content to users in a specific geographical area.
2. GPS targeting
GPS targeting works similarly to IP address targeting but uses GPS data to target users. Through this method, you can deliver personalized messaging to app users via push notifications.
If there’s an unexpected cold snap in one of your target regions, for example, you might send customers in the area a message like, “Feeling chilly? Visit our online store for 20% off cozy knits.”
3. Geofencing
Geofencing uses GPS technology to create a virtual border around a specific area, like a physical store or event space. For example, you might geofence a conference your target audience attends and then send targeted messaging to users who enter the geofenced area.
4. Geoconquesting
Geoconquesting involves geofencing competitor locations—like their retail store or local event—and encouraging users to consider your brand as an alternative. Geoconquesting campaigns often offer promotions or discounts to incentivize customers to choose your company over another.
5. Beaconing
Beaconing is similar to geofencing, but instead of using GPS coordinates to create a border, the area revolves around a connected device (a beacon). Also called proximity-based marketing, consumers receive messaging when they come within the range of the beacon technology.
3 tips for using location-based marketing
Here are three tips to help you plan and implement location-based marketing campaigns:
1. Gather consumer data
Location-based data collection can help you understand customer behavior and optimize your location-based marketing strategy. “Review customer segments to identify which locations are most relevant to your brand,” Anna says.
If you’re struggling to reach a specific customer segment, for example, you might analyze location data and discover they attend upscale farmers markets. You can then employ hyperlocal marketing, a highly focused LBM strategy, to target the parks or specific blocks that host these markets.
Where consumers spend time also provides valuable insights into their needs and preferences. Combining location data with other marketing intelligence can shape your overall marketing strategy, improving customer experiences and boosting brand engagement.
2. Localize creative
“Develop creative that is specific to the market,” Anna says, adding businesses see better results when they “include products that are bestselling in that location,” and “tailor language and assets so they speak to nuances of the city.”
Localizing creative assets and refining marketing strategies for different markets takes time, but it can pay off in more personalized connections with your brand. “It’s worth the additional effort to create localized creative, both assets and copy, instead of using generic creative across cities,” Anna says.
3. Optimize timing
Consider when you want customers to receive your messages. Is it as soon as they enter a specific event space? Or right before they realize they’re hungry for lunch? Maybe it’s a day or two after an in-store visit.
Timing your campaigns can yield better results, avoid wasted spend, and preserve audience trust. Here are some scenarios to consider:
- Retargeting visitors to your store. You might geofence your store and deliver targeted messages to visitors at 11 a.m. two business days after their visit. This strategy allows you to target existing customers with promotions and reach out to casual browsers—even if you didn’t gather any of their information.
- Minimizing privacy concerns. Imagine receiving a dating app advertisement the moment you walk into a divorce attorney’s office. Ethical location-based marketers respect user privacy by anonymizing data and informing users of location-sharing options—but certain real-time ads can still make consumers uncomfortable. Consider delaying delivery to minimize privacy concerns.
- Targeting event visitors. Many locations have different visitor sets throughout the day. Say you’re geofencing a conference event space; you’ll have access to folks setting up the event in the days before it starts, access to attendees during the event, and access to only a few people at night. Choose your time frame to maximize reach with the right audiences and avoid wasted ad spend.
An example of location-based marketing
Companies can use LBM to design innovative, interactive brand experiences. Consider the following location-based marketing example:
In August 2024, cult-favorite beauty brand Glossier promoted the release of its brow product Boy Brow Arch with an LBM-powered scavenger hunt. Four days before the public launch, the company put up gigantic branded posters containing unique QR codes in Los Angeles, New York, and Chicago. Customers who found the posters could scan the QR codes through Shopify’s Shop app to gain early access to the product. The Shop app would then direct winners to the nearest Glossier store, and Shopify’s location-based technology ensured that only users who located a poster could access the product.
“Layering on an interactive experience that’s unique to the location and market—like we did via the Glossier scavenger hunt—provides an unexpected and exciting touch,” Anna says.
Location-based marketing FAQ
What are privacy concerns with location-based marketing?
How effective is location-based marketing?
Location-based marketing strategies enable more precise customer targeting and provide a better understanding of consumer behaviors and preferences. They can be an effective way to acquire new customers, boost sales, and build customer loyalty.
What are the disadvantages of location-based marketing?
Location-based marketing works by leveraging location data from apps on mobile devices, but this information is only available if the consumer enables location sharing on their devices. Businesses also need to design apps with location-tracking capabilities or work with location-based platforms to collect data and deliver messages.
