July 9, 2022
min read

What is Location Based Advertising?

The advertiser’s field guide to Location-Based Advertising. What it is, how it works, and why it matters for your business.
What is Location Based Advertising?What is Location Based Advertising?

If you’re not familiar with Location-Based Advertising, you may have at least heard of geofencing. Maybe you’ve come across the term hyper-local targeting.

If not, we have nothing but good news. First, hyper-local targeting and geofencing both describe the same thing: Location-Based Advertising. Second, Location-Based Advertising is the future of digital marketing; it’s personalizedto your audience, precision-targeted to reduce ad waste, and as trackable as any digital media. Here’s the best part: Powerful as it may be, Location-Based Advertising remains relatively untapped by small- to mid-size businesses.

This is the perfect opportunity for you, the reader of this article, to get a leg up on your competition.

Location-Based Advertising, Defined

Location-Based Advertising is, for the most part, what it sounds like: serving tailored digital ads to consumers in specific, localized areas. It’s about ad messaging that fits the viewer’s daily routine.

As stated previously, the types of ads served in Location-Based Advertising are entirely digital:

  • Internet Display: Also called internet banners or banner ads, these are ads that appear on websites and mobile apps on desktop and mobile devices. They can be served as static JPGs or PNGs, or be animated with HTML5.
  • Video Display: These are essentially video ad banners that take up the same ad space as standard Display ads.
  • Connected TV: Streaming video services like Roku and Hulu accommodate Location-Based television campaigns. Advertisers can run 30- to 60-second TV spots on these streaming networks, whether watched on mobile devices, desktops, or smart TVs.

An Incredible Opportunity

What makes Location-Based Advertising truly exciting for advertisers is its scalability; campaigns can be targeted as broadly or as narrowly as the advertiser chooses.

For example: Let’s say a hailstorm hits a city, causing more damage in some areas than others. A local roofer can advertise its services, but confine its advertising to the hardest-hit neighborhoods. There’s virtually no wasted ad spend, as the message fits what the consumers are going through.

But serving ads in a single neighborhood is an example of a more broadly targeted campaign. As stated earlier, Location-Based campaigns can be drilled down even further.

Imagine a professional conference. For kicks, let’s say it’s at the Bellagio in Vegas. This year, one large advertiser can’t make the conference, but they still want to engage with attendees. Enter geofencing, a powerful Location-Based advertising method (more on this later). The advertiser creates a geofence around the Bellagio, and serves their message within. It’s an entire ad flight, confined to a single building.

The brand may not have a physical presence, but it can still speak to attendees as they roam the blackjack tables. It’s as targeted as advertising gets—the ad only appears on specific attendees’ devices, only when they’re at the Bellagio.

If you’re starting to see Location-Based Advertising’s potential for your business, you’re on the right track.

How Location-Based Ad Campaigns Work, in 5 Steps

Location-Based digital campaigns are set up slightly differently from other forms of advertising, mostly in terms of strategy. Here, we’ll lay out the steps in order. If you’re still wondering how this all works, this section will help clear it up.

Step 1: Audience Discovery

The most powerful ad messages come from knowing the customer intimately. Location-Based campaigns begin by defining exactly who to target, down to distinct individuals. We use third-party data to group individuals into audience segments based on who they are, what they do, what they like, and more.

Step 2: Location Defining

This is where the “location” in Location-Based Advertising comes from. Put simply, it’s all based on geofencing: creating a virtual “fence” around a location, within which ads will be served. Anything you see on a map can be geofenced—from houses and office buildings to cities and states. An extension of this is geoconquesting, which is geofencing your competitors’ physical locations. In other words, consumers in your audience will see your ad while strolling through your rival’s store.

It’s important to note here that who will see ads is based on your chosen audience, even within each geofence.Think back to our two examples from earlier. In the hail-damaged neighborhood geofence, it’s likely that everyone is a potential customer, so it’s okay if every homeowner sees the roofer’s ad; in the Bellagio geofence, thousands of regular hotel guests won’t attend the conference, and won’t be served ads. (Hint: This is how Location-Based Advertising helps eliminate wasted ad spend.)

Step 3: Creative Design

Understanding a consumer’s environment is vital to understanding the consumer’s behavior. By tailoring ad messages to key demographics and audiences within an area, advertisers can create messages that make sense to those within.

Step 4: Ad Serving

The geofence is drawn, and the creative is written and designed. Within those parameters, it’s time to serve the ads on websites and apps the target customer will likely visit. This targeting is carried out through four key methods:

  • Contextual: Ads placed on websites, webpages, and apps that contain information relevant to the content of your ad
  • Demographic: Ads placed on websites, webpages, and apps that match your customer’s personal (demographic) data
  • Behavioral: Ads placed on websites, webpages, and apps your customer is likely to visit based on past browsing and shopping habits
  • Retargeting: Continuously serving ads to customers who visited your website

Step 5: Attribution

As with all digital marketing, ROI tracking is explicit and in real time. Since we know where the geofence is, and we know who saw the ads within your geofence, we can track viewers who saw your ads in the target zone and visited your store or website. Your store or website is called the conversion zone—where the conversion happens.

Final Thoughts

At the beginning of this article, we mentioned three key benefits of Location-Based Advertising: it’s personalized to your audience, as campaigns are based on raw customer data and ad messages can be tailored to specific personas; it’s precision-targeted, with ads being filtered first by audience, and then by location, reducing wasted ad spend; and it’s trackable in real time, with direct conversion attribution and virtually instant reporting.

If you’re not running Location-Based Advertising campaigns, you’re in the majority—for now. It’s time to get started and see what precision advertising looks like.

By Darryl Sykes CEO of

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