Location-Based Ads Get Opt-In, Geofencing — But Does That Help?

Everybody knows about the Starbucks example of location-based ads: you walk past a coffee shop, and it sends a coupon enticing you inside to your phone. Most sensible people realize it’s not a great idea (see Russell’s definitive fisking of the concept), but the idea lives on. Monday’s NYT had a story about how clothing brand The North Face is starting a location-based ad program (powered by Placecast) that uses geofences to determine when to send messages to users who have opted in.

The article says that users who come within a half-mile of one of TNF’s urban stores (or 1 mile of its suburban stores) will get sent some sort of come-hither message (like “The new spring running apparel has hit the stores! Check it out @ TNF Downtown Seattle.”), and eventually, they’ll send messages to people who visit certain hiking trails or ski slopes with weather conditions or other info. Placecast has evidently set up 1,000 geofenced areas across the US that will trigger messages from The North Face to users.

It’s great that the system is opt-in; that answers one of the major criticisms of the Starbucks example. The geofencing is a slightly more advanced location technology; adding in areas other than the stores is definitely new. But do these additions make the overall concept any stronger?

That’s not totally clear. Placecast says they won’t send a user more than 3 messages per week, but it’s the content of those messages that’s more important than their frequency. If you go to downtown Seattle and get messages you aren’t interested in from TNF every time you’re near their store, how long will you stay opted in? What will be the effect on your perception of the brand? And further, what value does a “come into the store to see some new stuff we want to sell you” message offer to the recipient? Not much, I’d say — even less if it’s not well-targeted.

What seems to often be forgotten in the discussion around LBS advertising — especially models like this — is what they offer the recipient. Simply delivering better targeted ads is a benefit for marketers, and is not inherently one for customers, too. If a customer opts in to receive messages from a brand or retailer, they’ve got to offer something of value. That doesn’t mean that every message has to be a hugely valuable coupon or be something else of tangible value, but they have to be worthwhile in some way.

Every message sent out has a negative value potential. That is, each time you contact a customer there’s the potential that the message is hurting your relationship with them, rather than helping it. If you’re setting up all these geofences that will trigger your messages, and thereby increasing the volume you’re sending, it puts quite a burden on you to ensure that each message is meaningful and valuable. Location targeting doesn’t help you get around this, regardless of how well it works.

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