How does location-based advertising work?

How does location-based advertising work?

The other day I was on Quora (social media where people ask and answer questions of all kinds) and was asked to answer this question: how do location based ads work? (link to my original answer)

I’m in the habit, from time to time, to answer questions on Quora, though not so much asking them. Occasionally, I feel the answer could be much more. This was one of those cases where there’s much more to be said, for those interested in the detail.

Location-based, or geotargeting, works through 1 of 3 main methods.

To satisfy your curiosity, I’ve written at length about this in the past:

How location-based advertising works

Geotargeting ads can be done through 3 types of methods: 1- Manual geotargeting, 2- IP geotargeting, 3- Profile geotargeting.

However, before answering further, consider the following: do you want to target people who live in a specific are? Or people who currently are in that specific area?

You’ll see I propose you ask yourself many questions. Good marketers constantly ask WHY to ensure they’re doing the right thing, not what they assume is right.

Manual Geotargeting

local mediaThe oldest method is also least “intelligent” and simplest as it relies on buying ads only on those sites that are hyper-local in their content. Essentially, those sites whose content is of interest only to those living very close-by.

For example, these types of sites include local radio/television station website, local newspapers, local/municipal/ regional news forums, and shopping hubs. As well, several national sites have local sections of content (weather sites for example) where you can ask to only be in one specific geography.

With the manual method, you’re targeting people who likely live in the area you’ve chosen. If not, then they’re not far, or travel here very regularly to want to visit these local websites.

This is great if you want to encourage a local economy, but quite tedious as it requires you to communicate and negotiate with several organizations.

Simultaneously, this option is very, and not at all flexible. It’s very flexible in the sense that you’ll discuss directly with the media operator and so they can offer all types of possibilities you might not have had access to via programmatic means. It’s also not flexible as it’s a direct buy, with a contract, not a programmatic buy you can adjust or stop on the fly.

IP Geotargeting

ip targetingThe second, observation method, uses the IP address to achieve location-based advertising. An IP address is essentially your device’s passport number when accessing the web. All modems are assigned one when they connect to an Internet Service Provider (ISP), be it through cable, fiber or wireless. The IP assigned to you will be the closest geographically. That # will stay with you so long as you are connected to the network. As soon as you lose connection and reconnect, you’ll be assigned another number from the closed node.

Every single IP address is attached to a local “node” which has a real-world civic address (street # & phone). They carry large numbers of IP addresses from an ISP and assign them to new connexions.

When you geotarget advertising through an ad server’s capabilities, it’s done by matching IP addresses to those you’re targeting. You’ll either match postal / zip codes, phone number area codes, municipalities/cities, or provinces/states. The ad server is connected to a central IP database which is maintained up-to-date as best as possible.

With the IP method, you’re targeting people who are connected to the Internet in the area you’ve chosen. Maybe they live here, or maybe they work here. Maybe, they’ve traveled here…

So, you target your ads, assuming people using the IPs from this node are in the chose area.  There are more than a few flaws with this system.

IPs are swapped around

  • 80% precision level with a 40-km / 25-mile radius, or larger. Why?
    • IPs are not permanently assigned to a node. They get moved around wherever there’s a need.
    • So, like a postal forwarding address, when an IP gets moved, an update is sent to the IP master list. As for a DNS change, it can take up to 48 hours for all databases to sync up with the latest version.
    • You’ll likely target people whose IP address shows they are in City A, while they really are in City B (close by, or very far, who knows).
  • Precision level drops like a rock!
    • The smaller the geographical area you target, the less “on-target” your geotargeted ads will be with actual geography.
    • 25% accuracy with a 20-km / 12-mile radius – what a local car dealer would like to do.

Business Internet access

  • Most businesses with multiple offices will have a centralized IT department where their main internet access is then redistributed to their network, across a city, or across the country – all depends on the company’s size.
  • You should know that an IP is assigned to a modem, not a device.
    • So, Company A gets 1 IP for however many people & devices it has. If there are 250 of you in location A with presumably 250 computers, they all have the same IP.
    • The same IP is also used for the 100 employees and computers at location be, wherever that may be.
    • If you work for a large company with multiple offices in several cities, try this. When you’re in the office, go to Google and ask, “where am I?” to see where your corporate internet access is.
  • Also, the bulk of internet traffic is during the day (8am-6pm), when people are at work.
    • So, when geotargeting, you’re mostly reaching people when they are at work, by targeting their work location.
    • Is this who you really want to reach? Or would you rather reach people at home? Or does it maybe not matter to you?
  • Further, this applies to hotels and restaurant chains that offer WIFI as their internet access is also centralized, but not necessarily in the city you’re using it.

Proxies and VPNs

  • Anyone using a proxy, or a VPN use their internet connection, from wherever they are, to access the web or a network that’s somewhere else. It could be close, or far away, in another country maybe.
  • Whatever they do on the when through that connection, shows them as being wherever that other location, not where they really are geographically.

Profile Geotargeting

profile targetingThe final method is based on known or declared data, that is, it relies on a users’ profile data.

Most everyone online has a profile on one, or multiple sites (Facebook, Google, Microsoft, etc…). These usually include their real-world address and other personally identifiable data. You can thus target people based on where they say they live and any other data point.

Given that many of the sites with your profile are social media, they track what you do (like, share, comment) on top of what you’ve declared in your profile.

With the Profile method, you’re targeting people where they say they are.

These sites offer a few variants to geotargeting for advertising. You can:

  1. Target people based on where they say they live
  2. Target people where they actually are
    1. Depending on the platform, this may employ a mix of IP geotargeting as well recently declared information.
    2. If for example you live in Montreal but are currently visiting New York and have posted as such on your Facebook feed, you can be targeted as being in New York.
  3. Target people based on where the platform detects they intend to go
    1. If you suddenly look at several pages /groups/posts relevant to Cancun for example, the social platform will determine you intend to visit there.
    2. This comes with a set of internal rules to ensure the period you can target someone based on their potential plans make sense.
  4. Target people based on where the platform detects they have recently been
    1. Looking back up at point b), if you’ve posted that you were in New York last weekend, then we can target you based on where you’ve been.

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