Why You Should Use Beacons in Advertising

November 25, 2015
Romet Kallas
Account Executive

In Unacast we talk to hundreds of proximity solution providers, retailers and brands. Often they ask similar questions about why proximity data is so valuable for digital advertising and how proximity technology can be used for retargeting. In recent campaigns with our partners, we have found that the results from proximity retargeting are vastly superior compared to digital retargeting. In this post, we will compare different forms of retargeting and explain why beacons play an important role for the future of advertising.

Current trends in advertising

Let’s begin with a brief overview of where the advertising industry is headed. Just as the entire world is moving towards automation, so is advertising. And just to be clear, programmatic advertising is no longer the future. It is already here. In 2013, the revenue for Programmatic digital display was $4.2 billion and in 2014 already $10.1 billion, which equaled half of all revenue from online display advertising in the U.S. I’m not going into detail about programmatic advertising in this post. But put in simple terms: Companies are bidding in real time, to serve you an ad, based on your online history.

The essence of programmatic advertising is automation and the possibility to leverage different data sets.

In other words, programmatic advertising does not only help to make the transactions more efficient but also the ads themselves.

What kind of data is being used and how?

One of the most effective methods is retargeting. A form of online advertising where trackers, also known as cookies, are used to track the browsing history of visitors. Based on that history, the visitors are segmented. And thanks to programmatic advertising, companies are able to retarget their website visitors later online when they surf the web. Mobile app retargeting works on the same principle. But instead of online cookies, device advertising identifiers are used. Interactions in the app will be translated into customer segments and an ad will be served based on previous interactions. According to Smartinsights, the average click-through rate of an ad is currently 0.14%. The average click-through rate for retargeted ads is considered 10 times higher. Meaning that ~1.4 out of 100 ad impressions are relevant for the customer to actually open them. I will leave you to decide if that is enough, but the rise of Ad-Block is of course not a coincidence.

So what is the problem?

Programmatic advertising is an opportunity to serve more relevant ads, but the online history alone is unfortunately not sufficient data towards relevancy.

1.4% might be considered a good result for a CTR of an ad within marketers, but I would argue that is not even close to deliver on the ambition of truly relevant advertising. Also, 80% of $4.5 trillion sales in the US are happening in brick & mortar stores. Can online history alone, affect the decisions we do in the physical space? Probably not.

So we have the technology for delivering the correct ad in realtime to the correct audience, but how do we get richer data that goes beyond online history?

Connecting offline to online

This is a sentence that has been thrown around for years now, since the launch of QR codes. Unfortunately, the QR codes were not able to deliver what was hoped and then came BLE beacons.

The reason beacons play an important role in the context of connecting offline to online is their ability to provide accurate location intelligence without extra friction for customers. In a recent post, I explained the variables and extra features you can add with beacons to your marketing campaign. Now let me elaborate more, on how retargeting with proximity data works.

What is so special about proximity retargeting?

When it comes to online retargeting, users do not currently have a say in whether they want to be tracked or not. Websites do notify that cookies are being used, but there is no option to decline. With beacons and other proximity technology, there is a choice. YOU are in charge, whether you want to receive contextual and personalized notifications or retargeting ads based on proximity. When I earlier asked if a retargeting ad based on online history with a CTR of 1.4% is considered good, I would strongly argue that it is not even close to being relevant. I’m not saying that the online history is not relevant, but it is not enough to truly understand the customer. So what’s missing?

We spend 70% of the time in the physical space, so there is obviously a lot more context to capture from our activities in the offline domain.

That was demonstrated in our recent retargeting campaign based on proximity data, with the world’s leading soft drink brand, where a retargeting ad click-through rate was 60%. Meaning that over half of the customers who saw an ad, opened it.

Beacons in advertising

As online cookies are used to analyze the customer profiles online, beacons act like the physical cookie. In other words beacons help to create accurate customer segments, with accurate interests, based on activities in the physical domain. To give you a better visual idea of how we do this, take a look in our recent post about proximity data modeling. In simple terms, we aggregate and translate the beacon interactions into context and serve them to ad platforms for retargeting. So beacons and other proximity technologies finally help us to leverage rich and contextual data. Combining proximity data and programmatic advertising, brands and retailers are able to retarget their actual visitors to bring them back to the store.

In Unacast we do not compete with beacon or proximity companies, but partner with them to complement their current product offerings with an extra layer - proximity retargeting.

We are the DMP (Data Management Platform) of proximity data and help to connect beacon companies with the advertising industry. More and more companies are starting to see the value of proximity and that is why the world’s largest beacon companies are already part of our partners ecosystem.

To sum it up

Proximity marketing is built upon trust. When customers have chosen to trust your brand or service, then do they really deserve an ad that is relevant less than 2 times out of a hundred? We at Unacast would argue against that. To win and keep the trust, we need to do better, as marketers and as advertisers. One of the opportunities is presented by connecting programmatic and proximity technologies.

Let’s start serving ads that the customers actually deserve! If you have any questions feel free to leave a comment or get in touch at romet.kallas@unacast.com