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Been to Starbucks lately? Or stopped at DSW for those shoes the fashion bloggers say you simply must have? While the places where you shop may vary, one shopping habit remains constant: You're bringing your phone with you.
Given all that our smartphones can do, it's no wonder we think of them as extensions of ourselves. Whether we're looking up reviews or finding the nearest location of a clothing store, we'd be lost without them.
Marketers and advertisers are falling in love with smartphones, too, thanks to location-based technology. With this innovation, advertisers are now able to better understand what drives consumers to spend, by examining both what they're doing on their mobile devices and where they're doing it.
We asked Monica Ho, xAd's senior vice president of marketing, why location-based targeting is now seen as more effective than desktop cookies - and what that means for the future of mobile
Interview conducted by Business Insider Studios and edited for length.
BI Studios: How have advertisers traditionally used cookies to target customers on their desktop computers?
Monica Ho: A cookie is a tiny file that is stored on your computer so that every time you come back to a site it recognizes you by giving you a unique identifier. There's no issue with privacy since a cookie doesn't tell me who you are. Instead, it shows me the kinds of behaviors you've exhibited in the past and the sites you've visited.
Some cookies even capture how many pages you visit within a site, which is how earlier desktop marketers were able to target online users. They would say, "OK, somebody who's visited Vogue and looked at online coupons and this sort of content is probably a mother." By bringing all of this data together, marketers got a sense of what type of audience a person fit in without knowing exactly who that person was.
Why is this becoming less effective?
MH: Cookies work on browsers. So if you use some sort of browser - whether it's Firefox or Chrome - the technology works perfectly, even on a mobile device. The problem is, cookies don't work within a mobile application, and a lot of activity that's happening on a device is happening within apps. I may have my favorite type of site that I go to for sports or a site I like to go to for travel information. If I frequently visit that site, then I'm going to download the site's app because it gives me a more streamlined experience. But once you actually use that app, mobile browser cookies stops working.
Explain how location-based targeting is replacing the cookie.
MH: These days, mobile is at mass penetration. Eight out of 10 adults carry a mobile device, so more and more people are now taking the internet to places they're physically going. Before, it used to be that you had to use the internet where you had access - either at home or at work. Now, mobile devices give you the internet in the palm of your hands. I can research the different options I have for the refrigerator I'm going to buy while I'm in the store looking at refrigerators. I'm bringing the convenience of the internet into the store, and that's powerful for shopping.
But what's even more interesting is that, as a marketer or advertiser, I'm able to see that a device is accessing content at a store like Home Depot. And similar to desktop cookies, these location-based mobile signals are anonymous.
What's the advantage to using location targeting compared to a desktop cookie?
MH: Mobile location is the new intent variable. When you think of where you are, where you've been, or where you're going, that's a far better indicator of your intent than the types of sites and applications that you've visited. You could be researching or daydreaming online, but when you're out and you're visiting locations and spending time at these locations, you're doing it for a purpose. You're actually planning to visit a coffee shop, a mall, or a retailer to purchase things. These location-based behaviors all align really well with what marketers really want to understand - your real-world shopping behaviors.
Will the location-based cookie completely replace the desktop cookie?
MH: I don't think this new location data that mobile has enabled will ever replace the digital cookie. I think there's still a lot of value in the cookie for tracking and understanding what a consumer does online. But for mobile, if you want to understand the full consumer journey, you have to combine both the digital and the physical behaviors. In fact, the "Mobile Path to Purchase" study we recently did with Nielsen showed that even though mobile consumers were researching what to buy on their mobile devices, over 70% of the actual purchases and conversions took place offline.
Over the next five years, consumers will start doing more and more on smartphones and tablets. It used to be that you had to stay in one place to access the internet, but now the internet is with us - and we're using it - wherever we go. Think of mobile as creating the Internet Of Places, instead of the Internet Of Things. And so in order for marketers to really make their mark in mobile, they need to understand this new data element of location, and how to best harness it to support and amplify their overall media mix.
To learn more about location-based targeting's impact on mobile advertising, visit xAd's website.
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