Proximity Marketing Is Driving Retail

The rising use of smartphones means two major things to marketers: data and advertising space. Consumers now have devices that know where they are in the world, and they have continuous access to screens that can be used to deliver advertisements. This has created the newest form of marketing: proximity marketing.

Proximity marketing means that when a customer gets close to a business, that customer may receive an email or an advert that shows what that business has to offer. If it's lunchtime and the consumer is near a restaurant, the consumer may receive a menu suggestion and a voucher for that restaurant. This may seem a little big brother-like, but it turns out that just over half of people questioned would happily share their location with marketers to deliver timely and relevant adverts.

What this means is that retail has a new tool to encourage growth. Of course, most businesses have engaged in some form of proximity marketing for years with billboards advertising gas stations on highways and restaurants placing sandwich boards on busy routes to promote products. However, neither of these are as useful as a smartphone.

Marketers can use the data from a smartphone to track where a person has been, what stores that person has visited and even what that person's friends recommend via Facebook or Google Plus. This builds up a picture of what a person is likely to want to eat or buy. This is merely an extension of the famous Target pregnancy dataset — and how the company apparently predicted a woman's pregnancy before her father knew. The difference is, however, that this uses data mined on typical visitation patterns as well as what a person has bought in the past.

Proximity marketing might seem a bit creepy to some, as it relies on knowing everything about you. What Target does with its pregnancy coupons is intersperse other non-pregnancy-related items among its pregnancy coupons so that it doesn't look as though it has tracked exactly how far along its target customer is. Proximity marketing could do the same thing, although it would be a fine line between offering the consumer sufficient adverts and overwhelming the consumer.

While it's possible to deliver plain adverts through proximity marketing, consumers don't feel as though these work as well, with 63 percent stating that a coupon was the best form. There's a good reason for this: people enjoy feeling as though they're getting a deal. A restaurant can add value by including a free drink with a meal, for example, or a retailer can offer a small discount or a buy one get one offer.

In general, however, proximity marketing offers benefits to both consumers and advertisers. On the one hand, it ensures that consumers receive adverts that are relevant to their interests, and on the other, it offers advertisers a way to maximize their return on investment and focus their marketing efforts.

Photo courtesy of Stuart Miles at FreeDigitalPhotos.net