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Digital Proximity and Location-Based Marketing

Obviously, one of the most valuable aspects of mobile marketing is that the phone is with its owner all the time. Many brick-and-mortar stores may have had a hard time using the traditional Internet to drive foot traffic, but location-based marketing turns the tables and gives them an incredible opportunity to get people into stores (evaluated in the industry as cost per pair of feet, or CPPoF). Mobile promotions reach potential customers when they are most likely to make a purchase. Location-based services (LBS, sometimes also called near LBS, or NLBS) are digital systems that broadcast digital messages to enabled devices within a specific radius or proximity. According to Robert McCourtney, from Metamend, the following advantages can be seen from location and proximity marketing (paraphrased here):

  • A captured target—The consumer is already in or near your place of business. A customer is much more likely to come through your door if a competitor's store is a 20-minute drive away but your store happens to be right around the corner from where they are standing (and you have what they are looking for).
  • Increased impulse buying—Real-time delivery of advertising can prompt benefits of immediate response—for example, "Come in within the next 30 minutes and receive 20% off your meal."
  • Development of one-to-one relationship marketing—Consumer purchasing history can be examined, thereby enhancing future marketing messages.
  • Direct marketing spending effectiveness—True targeting of promotional materials, meaning materials are delivered electronically and on demand, as required. There's no hard copy waste or excess printing inventory.
  • Psychological nurturing—The consumer feels like a somebody, building brand recognition and loyalty.
  • Increased return on investment (ROI)—Repeat or additional consumer purchases during a visit. Time-based incentives or promotions can be sent to increase the total value of the sale.

Proximity and Location-Based Marketing Technology

For retailers, marketers, and independent advertisers, proximity and location-based marketing efforts generally leverage one of five technologies described in detail in upcoming sections of this chapter—Bluetooth, WiFi, infrared (IR), near field communication (NFC), and ultra-wide band signals (UWB).


Bluetooth technology uses radio bands to transmit signals to Bluetooth-enabled devices, including mobile phones, handheld computers, and laptops. With this technology, a small server can be placed in any location and set to send out coupons, barcodes, applications, vCards, vCal, video, MP3, MP4, and text messages (also known as BlueCasting). It generally works in a circular 100m radius, but like all signals, it can be hindered by thick concrete walls or other obstacles. Bluetooth marketing is generally used to simultaneously target shoppers in a retail location, as well as passersby outside the retail location (see Figure 6.4).

Figure 6.4

Figure 6.4 Small Bluetooth beacons can be placed just about anywhere—signs, posters, or kiosks, for example—and can broadcast coupons, barcodes, and more.

Bluetooth broadcasting systems can also be set up in posters or worn by promoters, to encourage passersby to enable their Bluetooth devices and download promotional information about a product or event. Some brands are even placing Bluetooth broadcasting systems in bars and clubs, and even at the beach or at music festivals to engage the local audience with mobile media and promotions. When the server is set up, it can be programmed either to broadcast the same message throughout the day or to broadcast different messages at different times of day.

All Bluetooth devices have specific numbers associated with them that never change. When a Bluetooth-enabled handset enters the range of the server, the server captures that number and information about the handset. It then queries a database to ascertain what, if any, communications have been sent to that device previously. The server then sends back content that has been optimized for that particular handset or particular user. Specific protocols and dependencies can be programmed into the system to determine what communication should be sent, and different messages can automatically be sent based on those dependencies.

The European chapter of the Mobile Marketing Association (MMA) has set a list of Bluetooth marketing guidelines for the United States and Europe. These focus mostly on the opt-in process and how to ensure user privacy. The full set of guidelines is available here: http://bloo2.bluetooth-zone.info/files/Proximity-Marketing-Guidelines-V1.0_082808.pdf.


WiFi technology basically broadcasts and receives a short-range radio signal to provide Internet access for Web-and WiFi-enabled devices. Companies can use WiFi marketing in a couple different ways to create brand awareness.

You can broadcast a signal to send a message to potential customers in a particular radius, as described earlier with Bluetooth marketing. You can also take a more passive approach and send marketing messages over the WiFi signal while your potential customers access the Internet on their mobile phones or laptops. The simplest of these methods involves including marketing messages in the name of your WiFi network so that when potential customers select your network from the list of available networks, they see your marketing message. This is especially valuable if you suspect that customers are coming to your establishment to take advantage of the WiFi but are not purchasing items or driving any revenue for your company.

CoffeeCompany, a Holland-based chain of coffee shops, used WiFi router names such as OrderAnotherCoffeeAlready, BuyAnotherCupYouCheapskate, BuyaLargeLatteGetBrownieForFree, or TodaysSpecialEspresso1.60Euro. Although they have not yet reported any statistics, they believe that it was a good way to ensure that patrons understood that the WiFi was really not free, and they were expected to buy something.

Another way to use WiFi for your marketing efforts is to create a sponsored WiFi system in which people who login are presented with an advertisement that they must watch before they are given full access to the Internet. The WiFi network operator can also set time limits on the use of the WiFi so that people who use the Internet are prompted to watch another advertisement after they have been online for a certain amount of time. This type of marketing is commonly used in airports and business parks, which have a captive audience of people who want to access the Web.

Radio Frequency Identification (RFID)

RFID technology allows items to be "tagged" to or tracked using radio waves. The tags are very small and require no batteries, so they are frequently used for product tracking and asset management. RFID chips can also be used to store and send information from static displays or posters to phones that are capable of reading an RFID signal. For marketing purposes, RFID is usually used with devices that send a radio frequency to the chip, activating it so that it may pass a message, much like in a Bluetooth transmission. The message can be a URL, phone number, email address or a promotion code.

Near Field Communication (NFC)

Near field communication relies on high-frequency messages to be sent and received from two enabled devices, each sending its own signal. Near field–enabled devices can be used like smart cards that are waved over a reader, but in a marketing scenario, the mobile device is waved over a poster or other off-line marketing material. This type of smart card technology is already widely used in cards that allow people to access locked buildings or garages, in many public transportation systems, and as a form of payment at some stores.

The main way mobile marketers are using this technology is by embedding chips into billboards and displays (see Figure 6.5). The range of NFC is much shorter than Bluetooth, reaching only about an inch and a half, so the person receiving the marketing message must swipe their phone over the sending technology to receive the message. NFC is already being used widely in Japan, where users can pay for goods by swiping their phones over a receiver at a register. Many anticipate that this technology will be widely used for mobile ticketing, mobile payment, personal identification and even used to turn a mobile phone into a building or garage access key.

Figure 6.5

Figure 6.5 An RFID tag used at Walmart. Image under the terms of the GNU Free Documentation License, Version 1.2.

Ultra-Wide Band (UWB)

Ultra-wide band communication uses a large portion of the radio spectrum to transmit broadband communication at a short range, requiring very little radio energy. Ultra-wide band transmissions can share a variety of different narrow band radio signals without interfering with those transmissions. Its uses are very similar to those of Bluetooth technology, but it is less widely adopted.

InfraRed (IR)

Infrared is one of the oldest and most limited forms of broadcasting mobile messages. It was tested in the early 1990s but has limited range, reaching only about a foot from the broadcasting beacon. Some laptops and phones are equipped with infrared technology, but it has not been universally adopted by handset manufacturers. These limitations make infrared less desirable than other more universally accepted technologies available.

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