Insight of the Week: Location, Location, Location

Mobile devices allow shoppers to buy items from anywhere in the world with a single scroll-and-tap. But what happens when users are presented with ads from real-world locations? Are they more likely to buy at those stores over others?

A research team took a look at this idea and put the concept of so-called “geotargeting” to the test.

This week’s insight: By advertising to customers who lived nearby a competing business, companies were actually able to recruit new customers from their competitor’s client base.

Research study: “Geo-Conquesting: Competitive Locational Targeting of Mobile Promotions” by Nathan M. Fong, Zheng Fang, and Xueming Luo, Journal of Marketing Research, October 2015.

What they did: The research team tested three different types of ads served up to customers located in different areas, including nearby the advertiser’s store and nearby a store run by a competitor of the advertiser.

What they found: When users saw ads touting discounts at the advertiser’s store nearby, they were less likely to take advantage of the deal, indicating to researchers that they were tired of deals from local businesses. Yet when they were presented with discounts while located nearby a competitor’s store, they did take advantage of the discounts at the advertiser’s store, even though it was farther away.
To the researchers, this indicated an important point: it’s easy to oversaturate local customers, eventually driving them away from your business. Instead, they argue, consider targeting customers from a competing business, avoiding exhausting your core customer base and driving interest and engagement from a different pool of would-be shoppers.

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