You are walking through a busy uptown neighborhood of shops and restaurants, glancing at your smartphone, when suddenly an ad pops up on the screen with an offer from the establishment just a few yards away.

How did that happen?

Welcome to the nascent days of hyperlocal advertising. As Ratko Vidakovic, VP of Product & Marketing at SiteScout, explained in an August 18 post on marketingland.com, hyperlocal advertising is this year’s hot marketing tool. Simply put, the ad technique uses the GPS tracking on a smartphone to locate the user and deliver custom ads from nearby businesses.

As Vidakovic noted, when the format is used in conjunction with platforms that allow for live bidding on individual ad impressions for smartphone apps, it makes for a cost-effective way to deliver ads in context with a potential customer’s location.

In a sense, hyperlocal advertising is a marketer’s back door to an audience, in that they reach customers through apps rather than text or email. When certain apps are activated, the app asks for permission to access the phone’s location information. If the user denies the request, the campaign never gets off teh ground. But many apps themselves will not launch unless the user grants location data permission. Foursquare,and dating apps Tinder and Swarm were cited by Vidakovic as popular platforms that requore location permissions.

Once enabled, the app will recognize the user’s GPS location at all times. And accroding to Vidakovic, that’s where a marketer’s fun begins.

“If the app also happens to be supported by ads, it’s highly likely that these coordinates will be passed along to the ad network or ad exchange that sells the ad space to advertisers,” he wrote.

According to Vidakovic, less than half (44 percent) of the available mobile advertising in programmatic ad exchanges (the real-time purchase platform) is location-enabled. Yet that still amounts to more than 7 billion impressions per day.

Vidakovic wrote that use of hyperlocal ad campaigns will be bound only by the a marketer’s imagination as technology matures and location information becomes the norm. “For example, you could target a conference center hosting an industry trade show at a hyperlocal level. Doing so would allow you to serve mobile ads to everyone in the conference center. You could then capture the device IDs of everyone in that radius for subsequent retargeting,” he noted.

By utilizing location context and behavioral insights gleaned from a targeted audience, a marketer could determine certain characteristics that are prevalent within the group, then design future campaigns to target anyone with the same characteristics, according to Vidakovic.

“This is the world we live in today, and we are still in the early days of it,” he wrote. “[T]he possibilities and potential for growth in hyperlocal mobile advertising will only continue to expand.”

Reference:

Vidakovic, Radko. How Hyperlocal Mobile Advertising Changes Everything; MarketingLand.com. August 18, 2014.