Location-based ad campaigns often use a “geo-fence”, which is virtual perimeter in which users are targeted.
Geo-fenced campaigns are most effective when they target mobile users that are within 6 miles of retail locations, according to a report released last week by Verve Mobile.
The assumption behind geo-fence campaigns is that the closer people are to a physical retail location, the more likely it is that they will show interest in an ad or offer, travel to that retail outlet, and buy the advertised product.
This assumption is supported in the data. As you can see in the chart, campaigns that target mobile users within 6 miles of a product retailer have a CTR of over 0.8%, but once mobile users are beyond the 6 mile point, CTR drops significantly.
It should be noted that the graph is best interpreted as a general guideline because the data does not control for factors like population density and the types of products advertised in campaigns.
The dramatic drop-off in performance beyond a six mile radius means that ad buyers should be watchful of their location data’s accuracy
The most valuable location data available comes from GPS receivers in mobile phones, which generate extremely accurate latitude and longitude tags or “lat-long tags,” which can then be used to target consumers near retail locations.
But relatively few mobile ad campaigns actually use true lat-long tags to target potential customers (inferior data is often marketed as if it offered the same precision).
To test the relative effectiveness of verified and unverified lat-longs, Verve Mobile ran campaigns on both. They found that verified lat-longs outperformed unverified data by over four-to-one, with a 1% click-through rate for the verified location-powered ads.
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