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Location, Location, Location: Geomarketing Strategies in the Hospitality Industry

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March 31, 2011
Bill Geoghegan - Bill@LGTConsulting.com

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Ask any real estate agent or appraiser and he or she will tell you that the three most important factors in evaluating a property are location, location and location. Ask any marketing executive what the three most important factors are in the value of an advertisement, and you will get exactly the same answer.

When used in association with advertising, location has traditionally meant where an advertisement is located on a printed page, a webpage and on a television or radio program. In any media buy, the location of an ad is paramount, and will be a large factor in the pricing. The cost of a billboard ad depends on its location and the traffic that passes it each day. For an advertiser in the mobile environment, the location of the ad's viewer is even more important. Years ago, a man walking in front of a restaurant wearing a sandwich board represented location-based advertising. The people who saw the ad were true potential customers in the vicinity of the restaurant when it was looking for more customers. 

The key to effective advertising resides in communicating the right message to the right person at the right place at the right time. While a mobile ad may seem like nothing more than a smaller Webpage ad, it has far more potential value to the advertiser, although the challenges are also far greater. Here is where the location of the viewer can allow a publisher to show ads that are highly targeted to a viewer at this exact moment. For example, a person walking down a street could be a prime target for an ad from a nearby store or restaurant. However, the same ad might not have the same value for a person driving down the street due to the nature and normal use of the mobile phone, such an ad may be considered obtrusive, or even dangerous, if it interrupts the user from his or her actions.

Delivering an ad to a person who is stationary or walking via a text message might be acceptable. Causing someone who is driving to look away from the road for the purpose of reading a text message could cause a fatal distraction, but an audio ad would certainly be acceptable. Delivering the right message to the right person using the correct medium can result in ad response figures that are unimaginable in traditional media.

The important components of this targeted advertising are location and relevance. There are many mechanisms available to determine the location of a cell phone or cell enabled tablet device. However, the key resides in connecting to consumers and engaging them with information, promotions, advertising or connectivity which will positively affect their experiences by joining  their profile, preferences, device location and user interface.

There are two methods of location determination: control plane and user plan locations. Control plane location uses the network to find or locate the phone without the need for the device to be running an application and user plane location uses device resident capabilities such as GPS or localized WiFi to determine a location.

Control plane location is used in Family Finder and other applications needing location validation remotely from the mobile device, whereas user plane location is used when the device reports its location to an application that is running on the phone.

Control plane location is often referred to as A-GPS, assisted GPS. By using triangulation and signal strength information, from multiple cellular towers, it is possible for a cellular network to determine a general location for a phone when it is on. The cellular tower location facility can usually return the location of a phone within 500 to 1500 meters without any additional information from the phone.

Stimulated by the events of Sept. 11, 2001, the FCC required that by the end of 2005, all cellular phone carriers be able to provide the location of a phone to within 100 meters or less in order to provide emergency 911 services (e911). Rather than rework the cellular tower networks, the carriers required the phone manufacturers to add simple GPS capabilities to their phone offerings. In its simplest form, this GPS chip is not accessed by any application on the phone, but only by the network, allowing the ability to trace the location of a cellular phone to a distance of 100 meters or less. This information can only be used for 911 emergency calls without the permission of the caller. Even with the A-GPS, locating someone within the confines of a hotel, casino or convention center is problematic, as the GPS cannot pick up its location signals indoors.

Many manufacturers and networks decided that offering full GPS services would be an enhanced offering to their customers, so smartphones began appearing with full GPS capability. By making the location available to search-oriented discovery applications, such as Urban Spoon and Foursquare, and including driving directions and traffic information programs, the phone-based GPS became a viable alternative to the in-dash or portable GPS. Cellular network providers could supply reasonably approximate location information from their cellular towers triangulation to the phone GPS, allowing it to locate satellites much faster than if it started its search from an unknown location. Additionally, the database of roads and points of interest can come from an application-hosted database which does not rely on periodic updates of the device as would be necessary for a standalone GPS device. Because the cellular device is constantly in contact with the database supporting the application, real time information can be fed to the device, showing traffic conditions and road hazards. Other applications and services can take advantage of the location knowledge, direction and speed of the phone and use that information. For example, by following the direction and speed of phones that are in the vicinity of a road, the traffic conditions on that road can be determined.

When the traffic is not moving, a warning can be sent to the phone letting the driver know about the traffic conditions on the road ahead. By downloading a smartphone resident application, that warning can be delivered in the form of an audible alert rather than a distracting text message. Global Alert Network is working with local entities, such as TV stations, within select cities to provide location-based traffic and weather alerts to be delivered both in text and audio to any registered cellular phone entering a specific geographical area.  This is known as geofencing.

Similarly, severe weather warnings and other alerts can be delivered even when phone users are not looking at their phones. These alerts translate to the ability to geofence areas to deliver the right message and alert at the right time and right place. The same applies to in-property systems.

Coming soon to a building near you, the hand off between network, GPS and indoor location solutions will take connecting the consumer to in property information to a new level. Directions and tracking will allow property managers to track all mobile phones and actually communicate with those who opt in to in-building tracking and communication.

There are now systems under development that can track traffic, not only on the roads, but of all the cellular devices moving within a very small area.  The owner of a specific storefront location can install an inexpensive piece of hardware that can count every cellular-enabled device in the vicinity.  With nearly everyone now carrying some sort of cellular device, the count can be quite accurate.  The owner of that phone is not identified, but by knowing the type of phone and carrier, an application can make very accurate demographic predictions about that person. With additional application software on the device and the acceptance from the owner, the phone becomes more than just a blip on the screen; it becomes an extremely focused target for an advertising opportunity. 

The meteoric growth of Web/e-mail-based discounting services like Groupon and Living Social shows that a large number of consumers are looking for targeted discount offers. A location-based, time-based offer takes this concept one dimension further, by allowing a business to make immediate offers to individuals who are in the proximity of the business and have agreed to receive such offers.

Imagine the ability to know a guest has arrived in your city at the exact moment he arrives at your property and knowing exactly where he is at any given time to provide him with information and offers to enhance the consumer experience and revenue opportunities.

The Mobile Marketing Association has set guidelines for the use of messaging, location and communication to consumers, mobile phones and devices. In addition, each carrier also has its own policies to which it must adhere. A mobile marketer must provide a user with notice, which is an easily understood and quickly discoverable description of the terms and conditions of a marketing program. Users have the right to control which mobile messages they receive and to control when and where their location is allowed to track and detect the consumer. The MMA states that mobile messages, location and communication should provide control and value to the user through product and service enhancements, reminders, sweepstakes, contests, requested information, entertainment or discounts.

In order to monetize their programs, many companies are listing location-based services as one of the components of the phone that is used by their program. The user must accept the use of the GPS or other LBS facilities to use the program. In some cases, such as issuing traffic or weather warnings, the messages offered by these programs are very location specific and are sent to all users who have opted in to that service.

In other cases, the location of a user is merely one criteria used to determine which advertisement is most pertinent at that moment in time. Through LBS, a publisher can determine the location, direction and speed of a user, along with some known or estimated demographic information and select those ads that represent immediate opportunities to the user of the phone.

Along with historical information collected about the phone user, those ads which are most likely to be viewed and converted are presented to the user, and the best method of delivery can be determined, based on both the capabilities of the phone, and the method of transportation detected from the GPS. Now add ILS-codes (i.e. interior location services or enhanced location facilities used indoors) to GPS and tracking consumers from outdoors to indoors and the ability to deliver a consumer to a specific location can make for exciting user experiences as well as great revenue opportunities.

At 5 p.m. a phone user moving at walking speed past a restaurant which has been geofenced might be offered a two-for-one dinner opportunity with a coupon displayed on the user’s phone. The same user traveling at the speed of a car or bus might be offered a completely different ad for the same venue, because that user is less likely to convert immediately.

One of the difficulties in knowing the value of an advertisement or offer is being able to track actual conversions. By knowing the phones that have received offers, and having the ability to track that phone into a very small location, like the host desk of a restaurant, the conversion of that ad can be measured with extreme accuracy.  Commissions can be offered for actual conversions of location-based ads.

The new key to effective advertising is sending the right message in the right format to the right person at the correct location with information of value. Of course, the analytics derived from knowing a person’s location only helps to refine the way a business should communicate information to its customers. Today’s sandwich board is an offer made to a cellular phone.

Bill Geoghegan is a consultant in Las Vegas. He can be reached for comment at Bill@LGTConsulting.com.

©2011 Hospitality Upgrade
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