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The Evolution of Hyperlocal Marketing: Tapping into Spatial Behavior

September 29, 2017 at 12:35 PM

How often do you leave home without your phone? Your customers rarely wander more than a few feet from them. Most think their cell phones are sleeping sweetly in their pockets and purses when they’re not being poked or stared at. Actually, mobile devices are constantly busy gathering information to help us when we work, play or shop. Phones follow the routes we take and “see” what shops and services we use. Then they link that data to the websites we search. We show and tell our phones what we’re interested in; they do their best to show us more of it. Noting location is critical to helping us find the people, places, products and information we’re looking for. In turn, marketers have been quick to jump on this opportunity and are ushering in an era of location-based ads. They're leveraging the location data collected by customers' mobile devices to best serve their needs in real-time through the use of hyperlocal marketing.

Savvy advertisers personalize the ads they serve to the owners of those phones. Personalized hyperlocal marketing is more relevant to potential customers. It makes for higher conversion rates. Local awareness ads show customers information based on their interests, and do it at moments when they’re most likely to respond.

When you advertise a physical location to a passersby on their mobile, you take advantage of their proximity to your business. Location-based ads result in more immediate spikes in store visitors than ads that don’t take take current location into account. When you address an immediate consumer need right where your customer is, you create a "micro-moment." An example is showing a Greek food lover an ad for a great Athenian café when she’s nearby at dinnertime. Hyperlocal marketing lures and captures the right audiences. Local-awareness ad campaigns result in higher sales than ads without a current location component.

Hyperlocal marketing is also more cost-effective than traditional marketing. It avoids advertising overreach and the extra cost of marketing to large areas in hopes of finding a few clusters of your target customers.

As Steven Rosenblatt writes in Adweek, “Thanks to mobile, advertisers can get a real understanding of consumers based on the places they visit in real time. Location is the cookie of the real world, and companies can use mobile-location data to target consumers and measure success, constantly refining and optimizing campaigns with daily data insights.”

Hyperlocal Marketing: Tried and Tested over Time

Though local-awareness marketing is the hot thing right now, it’s actually been around for years. In 2010, Google introduced hyperlocal ads to show users the distance from them to an advertiser’s business. Google has made many improvements over the years. In early 2017 they converted existing and new AdWords ads to a location extension ad format. These ads include information on store location and hours. They make it easier for searchers to find businesses that are nearby, open and available.

Facebook launched their Local Awareness Ads initiative in late 2014. Facebook serves these ads for businesses within one mile of the search origination site. These are now the standard for small business hyperlocal advertising. Many businesses who find the Google AdWords platform confusing find Facebook's  platform easier to use. However, Facebook’s option still requires technical know-how. Small business owners frequently find their platform challenging to use.

Hyperlocal marketing using Facebook's Local Awareness AdsWith Facebook’s Local Awareness Ads, marketers can target nearby consumers to provide
local offers and directions to the nearest store location. Source: Facebook.

Common Methods for Targeting Local Consumers 

Methods for filtering local awareness ads include location-based, sensor-based and beacon-based segmentation.

Location-based ad segmentation by distance radius: Early local awareness ads were aimed at people within a five-mile radius of a location. More recent radius targeting allows a business to tighten the radius to three- or even one-mile circles. A one-mile radius is now the standard limit for a hyperlocal ad radius. The radius model gives a general idea of a reasonable distance for a customer to travel. However, what might be a five-minute freeway drive in a suburb can take an hour to reach by subway or bus in a crowded city. A radius doesn’t account for travel time or physical barriers like lakes, bridges or traffic

Hyperlocal marketing using Google AdWords custom location targeting around SeattleUsing AdWords targeting to draw a 10-mile radius around Seattle is a great way to gain exposure throughout the greater Seattle area. However, not all of these targeted consumers will be probable customers. While 10 miles may not seem like a great distance, many of these consumers will have to take a ferry (Bainbridge Island), an hour-long bus route (Renton, Shoreline)
or a toll route (Bellevue). Source: Google AdWords.

  • Location-based ad segmentation by city or zip code: These methods are also imprecise. Many cities have a single zip code for tens of thousands of people. Clusters of buyers are spread across multiple neighborhoods, or dispersed across segments of nearby cities. Without further filters like age, income, education or type of housing, segmenting by city or zip code is of limited use.
  • Sensor-based segmentation: Capturing mobile data when people approach or enter a business can be very useful. Mobile data show how they spend time in the area. When they enter a business, people show a higher intent and likelihood of converting. But mobile data can only be captured from mobile devices with location sharing enabled. The majority of people pay little attention to the sharing status of their devices and the business applications they use on them. However, growing numbers of consumers now disable sharing. This leaves large population segments unreached and untargeted by sensors.
  • Beacon-based segmentation: Wealthier or larger businesses sometimes deploy beacons throughout their stores. These track and communicate with customers through their mobiles. Customers who view apps while in a store may be rewarded with discounts or in-store coupons: “Drop by our cafe on the second floor and scan your screen to save $2 off a latte!” The most technologically aware businesses take advantage of “mobile moments.” These tempt consumers with targeted hyperlocal app content. This segmentation is effective and boasts the highest degree of precision. It is also prohibitively expensive for the average small business. What’s more, it demands a high level of technical expertise and infrastructure to establish and maintain.

Beacons and mobile technology allow retail giants to personalize their location-based marketing effortsLarge retailers like Macy’s and American Eagle use beacons as a form of hyperlocal advertising to engage
at shoppers at key points (beacons) throughout a physical store. Source:

Layering In Spatial Behavior

Online and offline businesses find that location-based data makes targeting prized market segments easier and more precise. When advertisers add locational filtering to hyperlocal marketing campaigns, they spend less money but reach more relevant audiences. And now, Spatially has introduced the next evolution of hyperlocal marketing. We enrich current targeting options by following the physical movements of people in key customer groups as they move around local regions. Our spatial analysis determines where these groups of customers live, work, shop and play. The Spatially Ads platform notes where a business’s target demographic groups spend time and when they visit the business area. Then, Spatially Ads layers this detailed information about customers’ observed movements through the physical world, known as spatial behavior, over location-based data. This provides deep, powerful market insights.

You’re no longer limited to a search radius around a given location. Spatially finds clusters of the most promising customer segments within a given distance of your business. This information allows greater granularity and more precise, selective targeting. Spatially Ads then serves ads to the people most likely to visit your business area. These are the people most likely to convert from strangers to customers.

What does this mean to your business? Consider this: Just because you find a consumer nearby, that doesn’t mean you’ve discovered a probable customer. That person needs a reason to venture into your business area. If you include all people within a given radius in your targeting, you risk bidding on clicks and impressions that are unlikely to result in sales. Instead, focus on those in the surrounding area who commonly spend time near your location and who meet your other filtering criteria (such as profession, spending habits, gender, etc.). You’ll see a bigger lift in sales, and your ad dollars will go further.

A Tale of Two Consumers

Adding a spatial layer to your hyperlocal marketing allows you to target your most probable nearby customers

Imagine you own a restaurant and want to drive foot traffic to your store. You have two options: traditional hyperlocal marketing and behavior-based (spatial) local marketing. Let’s consider the people each style of marketing is likely to target.

Using Traditional Hyperlocal Marketing

Because of his proximity, Branden seems like the right persona for your business. He lives within an easy drive of your location. He also meets your core targeting filters of age, gender, job title, relationship status, interests, hobbies. Using a traditional hyperlocal marketing strategy that doesn’t take Branden’s actual spatial behavior into account, he seems an appropriate target for your marketing efforts.

It’s reasonable to expect that Branden might visit your business. But Branden is unlikely to become a repeat customer because commuting to your location means going out of his way. Branden lives within a mile of your business, but he commutes in the opposite direction. He prefers to dine in his quieter neighborhood over spending time in the lively urban core near your popular restaurant.

Nevertheless, you’ve targeted Branden and served him your latest ad. Your return on ad spend (ROAS) is likely to hover around 1:1. Branden may click on your ad (costing you $10) and buy a meal (giving you $10). But his patronage will be a one-time transaction. (In reality, the cost of Branden’s click will be less than $10, but we’re also accounting for the clicks you had to pay for that didn’t result in a purchase.)

Not a bad investment, but not your ideal customer, either.

Using Spatial Hyperlocal Marketing

Now let’s consider what happens when you add behavior-based (spatial) intelligence to your hyperlocal marketing strategy. Kelly meets all the same core targeting filters that Branden did. But Spatially has discovered something important that makes Kelly a much better target for your business. Kelly lives within the same driving distance of your location as Branden. She also passes by your store on her way home from work each day. This makes her much more likely to visit your store after seeing your ad. Since she doesn’t have to go out of her way to patronize your business, her visit to your restaurant requires a smaller investment of time and energy.

In the second case, your margin is likely to be high. Kelly has the potential to become a repeat customer if she continues to pass by your restaurant regularly. The cost per click is the same, but your returns will grow exponentially over time.

Clearly, you'd rather spend less money on your ads while aiming them at your most likely conversions and repeat customers. Accurate targeting means spending ad dollars reaching out to people like Kelly instead of Branden. The cost of reaching out to Branden wiped out your entire profit margin. The money you spent reaching Kelly with spatially aware hyperlocal ads will be returned to you many times over.

Success at the Intersection of Location and Spatial Behavior

Tying spatial patterns to traditional hyperlocal marketing lets marketers advertise with great precision. In addition to prioritizing repeat customers (the Kellys of the world), bridging the physical and the digital worlds allows you to:

Linking spatial behavior to hyperlocal marketing efforts is powerful. You can aim your ads at the people most likely to become repeat visitors. This can lead to a significant return on your advertising investment. And that provides your business with a powerful financial incentive to pay for acquisition.

For example, let's think of a bakery. Its average customer pays $5 per transaction. The bakery has no incentive to pay $10 to acquire a customer unless that $5 transaction will be repeated regularly. But what if that bakery acquires a customer who buys a pastry on the way to work every morning? Now the business can look forward to regular profits well into the future.

Personalize the Customer Experience at Scale

Personalization provides more relevant and satisfying customer experiences. Three-quarters of customers say they're more likely to buy from retailers who recognize them, remember their purchases or offer relevant recommendations based on purchases or preferences. And 63% of consumers say they think more positively of brands who offer valuable, interesting or relevant content.

Consumers are more likely to buy and recommend brands that promote positive customer feelings. Personalization leads to good experiences. Those lead to more engagement and purchases. Indeed, 77% of consumers have recommended or paid more for brands that excel at personalization.

Personalizing your hyperlocal marketing message means making it relevant not only to the person but to other elements that make up a perfect micro-moment. Targeting your customer by location and serving up ads at a particular times makes a big difference. To see just how important this is, let’s compare two Seattle neighborhoods at two times of day.

Seattle’s waterfront comes to life during the day. It bustles with tourists, but quiets down after dinner. Most of its activity comes from infrequent visitors. They tend to go to other neighborhoods after dark. Hyperlocal ads for waterfront businesses are most relevant when sent during the day. They also perform best when aimed not at locals but at visitors.

Seattle’s Capitol Hill neighborhood, on the other hand, has many restaurants, cafes and small businesses. They do steady business during the daytime hours. But this neighborhood truly comes to life at night. Then it becomes one of the city’s most popular bar and nightclub destinations.

The target customers in these two business areas behave very differently. They respond to different messages. So you’ll want to craft your hyperlocal marketing outreach to match their different interests. Account for your target customer's knowledge of the area (or their need for guidance). Know which products, services or activities they’re looking for. Then reach out in the moments and places when they most want your business.

Using Spatially, you can target exactly where your customers live, work, and play for more cost-effective hyperlocal marketing.

These similarly-priced restaurants are just a mile apart, but spatial patterns show big differences between customer bases. The target markets for Ivar’s Acres of Clams (highlighted in blue and found on Seattle’s touristy waterfront) and Elysian Brewing Company (highlighted in red and found in Seattle’s more residential Capitol Hill neighborhood) are located in very different parts of the city. There is little overlap in the areas where each group of customers lives, works and hangs out. By layering spatial behaviors over hyperlocal marketing data, each establishment can target its most probable customers—either tourists looking for
a taste of Seattle’s famous chowder or locals looking for a great microbrew.

Build Customer Loyalty by Retargeting Existing Customers

Retargeting (also known as remarketing) reminds visitors of your brand after they've left your business. Retargeting most often refers to pixel-based retargeting. This method tracks customers after they visit a business website but don’t complete their purchases. A retargeting provider then serves them ads from that business during their visits to other websites. When you retarget, only people who have already shown interest in your site receive your ads. You pay only to reach the audience most likely to convert.

By incorporating spatial behavior, you can retarget customers after they visit real-world locations. Aim your hyperlocal marketing initiatives at people who pass by or visit your business. Then target those who have visited your competitors’ businesses. You can serve them your ads using platforms like Google AdWords and Facebook ads. You can now prioritize potential customers by targeting the most probable new or repeat customers. Put more energy into those who are likely to provide the highest lifetime value to your business.

Test New Locations, Products and Ideas Before Investing in Them

Testing business scenarios is one exciting use of spatial behavior data to solve real-world brick-and-mortar problems. You can now model and test options before making a heavy investment in time or resources. First apply the lens of spatial behavior to available demographic and psychographic data. Then model multiple possible new locations before moving or expanding your business. Test new products, ideas and ad campaigns on whatever target markets you choose. Model all options before engaging in full product investment and build-out or starting a full-scale ad campaign.

You can also use spatial behavior insights when you do A/B testing with demographic or interest groups. Target people’s interests and observed behavior in different marketing campaigns. Then compare conversion rates. You can run affordable targeted marketing campaigns using Google AdWords search ads, or use Facebook to aim hyperlocal marketing at highly focused audiences. This is an affordable way to model and test a variety of messages on multiple market segments. Home in on the people most likely to convert. Customize your offers to build brand loyalty. Then reward the customers who provide you with the most consistent business.

They’re Customers, Not Coordinates—Maintain That Human Touch

Spatial analysis reveals the unique charms of a locationAt Spatially, we believe each neighborhood—each block—has its own distinct character. And we’re committed to helping small business owners understand and leverage the unique attributes of their trade area. Image source: Seattle Times

Using location-based data gathered with the help of mobile devices to reach your customer base doesn't seem warm and fuzzy. It even sounds like it could distance you from your customers. On the contrary, it actually helps to maintain and build personal connections. Hyperlocal marketing keeps the behaviors and goals of your customers front and center. No more targeting too many people, then hoping and praying that they travel to your business. Now you can make decisions based on verified, real-world data about actual, real-world people. When you see where customers spend their time, you know where and when they want to find you. Tap into their spatial behavior to get to know their needs, pain-points and pleasures to a depth never before possible.

Just as every customer is unique, so is every location. To truly understand a location, you need to know who spends time there, see when people go there and know what they’re looking for. When you know your market, you can make generalized assumptions about who the people in it are based on things like their median income, marital status, work locations, etc. Then you can craft compelling hyperlocal marketing campaigns that speak more directly to the needs of your target customers, so you can achieve personalization at scale.

Customers expect personalization from their favorite businesses and top brands. Now small local businesses have access to the kinds of personalization technology used by online and big-brand businesses. Your customers aren’t just coordinates on a map, and you don’t treat them that way. Location awareness ads help you keep that human focus in your marketing campaigns, too. Just focus on the ways that your customers actually interact with the physical world.

Use hyperlocal marketing to cater your content to the unique attributes of each market cluster or trade area. Target your most likely repeat customers by their probable lifetime value. Watch your return on marketing investment climb, and say goodbye to wasted clicks. Spatially Ads amplifies the impact of your local awareness ads with powerful spatial behavior insights.

At Spatially, we’re proud to be a leader in hyperlocal marketing. We make location data accessible and actionable for small business owners throughout the U.S. Get started today by connecting Spatially Ads to your Facebook or Google AdWords account. See what all the hyperlocal hype is about.


Learn more about Location Intelligence:

Location Intelligence: A Quick Guide for Modern-Day Businesses

Geodemographic Segmentation: The People Behind The Coordinates

Right Customer, Right Place, Right Time—Put Them Together with Location-Based Advertising

How Small Businesses Can Leverage Location Intelligence

5 Ways To Grow Your Business With Location Intelligence

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