Location-based Marketing vs Proximity Marketing - What is the Difference?

August 28, 2016
Eirik Buer Henriksveen
Account Manager

Today we are going into details about location-based marketing and proximity marketing, to clarify the key differences and similarities between them.

New Tools and Trends

Since I have just recently started at Unacast, I am still discovering, digging into and having the need to understand many different and unknown areas. Thus I found this particular topic to be a good starting point to dive into. There are a lot of different terms that have many different interpretations, so it can be challenging to navigate through this landscape. Therefore, one important thing to do is to create a common understanding of the different terms and a clear definition of what they stand for. And as a bonus, this text will be used for training future employees at Unacast. A win-win.

Location-based Marketing

When you search for location-based marketing on the web, you will find many different definitions. Location-based marketing is based on attaining the longitude and latitude of a mobile device through GPS or cell tower triangulation. This allows to engage users through an app or on a website. In other words, it is defined as the use of mobile marketing to target consumers within a particular geographic area. Here the so-called geofence, set up by the different brands or retailers, plays an important part.

A geofence is defined as a virtual barrier, where it determines the geographical boundaries set. There are different measures for what good barriers are, in terms of being able to reach the consumer, ranging from over 50.000 meters to anything less. However, 100-meter accuracy is average and considered “good” in location-based marketing. A “rule of thumb” is whenever the brands or retailer want to interact with the consumer within a distance of above 50 meters, one should consider GPS and geofencing.

Location-based services like mentioned above aren’t precise enough to be used indoors. Location-based marketing is perfect for those who want to promote their product or service within a larger area, such as a restaurant owner who want to send a mobile ad to people who are within a specific radius of the restaurant's location. But, to unlock the truly personalized communication, you need to add proximity.

Proximity Marketing

To understand what proximity marketing is we need to define the term proximity. Proximity means nearness in space, time, or relationship. Proximity marketing is a more granular form of location-based advertising, where the communication with a consumer is timely, relevant and personal, and it is all about using the accurate location of a customer for specific and contextual communication that is not possible through basic location-based marketing. By attaining the location of a mobile device via proximity technologies, one can achieve an accuracy of only a few meters - making it possible to determine the location of a device on department or store level. In other words, proximity marketing enables retailers and brands to communicate better by more targeted and personalized information towards the consumer. The most common technologies are Bluetooth Low Energy (BLE) beacons, Near Field Communication (NFC) and Wi-Fi.

Read more: Proximity Marketing - What, How, Why?

This makes it possible to track devices within buildings and other places where the GPS is not viable.  Proximity is all about accuracy and usually within 1-2m. More precise technology, such as Ultra Wide Band (UWB) has started to see the light as well which can position the distance between two devices with 5-10cm accuracy. This means that brands and retailers can analyze and understand how long time consumers look at a particular product and brand on a shelf, how many goods and brands they are looking at, etc.

Read more: Is Ultra Wide Band the Future for Indoor Technologies?

In the end, this is a value exchange between the consumers and the brand or retailer. For consumers to share their privacy details, such as their location, they need to get something in return. This is then often personalized offers and messages.

Impact

“Without location, there is no context. Without context, mobile marketing turns into regular digital marketing.”

So what does this difference actually mean? The quote above is making it pretty clear, and it can help us to understand why the distinction above is so important. To be able to get context, brands and retailers will need something more than targeting by using GPS, because it is simply not granular enough. To get context, they need to see in more detail where the consumers are using most of their time and what they look for – this can only be done through proximity marketing because location-based marketing doesn’t give the opportunity to look into such details - for the reasons mentioned above.

Location-based marketing and proximity marketing does in the end try to achieve the same goal. However, when considering what to use, a good example to think about is whether you as a brand or retailer want to interact with a consumer in a larger geographical area, down to 50 meters at most, or if you need more precision in your communication, down to centimeters.

A combination of both can also be necessary for situations, and the most successful campaigns do often leverage both types. The most successful campaigns can seamlessly initiate the communication through location and evolve to proximity. In the end, it all comes down to the reach that is wanted and needed to communicate most accurately with the consumers, depending on the situation and message.