Magazine Winter 2015 Research Highlight

How Effective Is Location-Targeted Mobile Advertising?

Mobile advertising that is targeted based on a consumer’s location can be effective — particularly with customers who have a high level of interest in the type of product you’re selling.

Zheng Fang, Xueming Luo and Megan E. Keith Reading Time: 3 min 

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Advances in mobile communication and geo-positioning technologies in recent years have presented marketers with a new media channel: location-targeted mobile advertising. Location-targeted mobile advertising involves the provision of ad messages to cellular subscribers based on their geographic locations; this allows marketers to deliver ads and coupons that are customized to an individual’s tastes and geographic location and the time of day.

Although location-targeted mobile advertising seemingly offers businesses tremendous potential given the ubiquity of mobile devices, there has been little empirical evidence about the immediate and cumulative effectiveness of such advertising. Our research was designed to address this gap.

In our study, we obtained data from one of the world’s largest mobile service companies. This Asian mobile service company (which wishes to stay anonymous) has partnerships with cinemas and sells movie tickets via mobile phones. The mobile company provided us with data about more than 3.2 million consumers who had been exposed to the company’s mobile-ad app for movies over the course of a year. In response to the location-targeted mobile ads, consumers could inquire about movie information, book tickets and select seats from the app. If consumers were physically within a given geographic proximity of participating cinemas, they received location-targeted mobile ads via text messages that informed them about what movies were playing in the nearby cinema and how to purchase tickets by phone. If, after reading the location-targeted mobile-ad messages, mobile subscribers knew they were interested in a movie, they could respond by immediately booking seats and paying for the movie tickets via their phones. Customers also had an option to call a company hotline to get more information about a given film.

Besides location-targeted advertising, the mobile company also promoted movie ticket sales via mobile ads that were targeted by behavior but not consumer location; the company randomly selected and sent mobile-ad messages to those consumers who had responded to previous mobile ads and who had purchased movie tickets in the past three months. The company also promoted movies via instant message ads that appeared when a mobile user logged onto the company’s website. Once a mobile user logged onto the site after confirming his or her mobile account, the service provider could deliver a targeted instant message ad via a pop-up window on the company’s website.

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About the Authors

Zheng Fang is an associate professor of marketing at the Business School of Sichuan University in Chengdu, China. Xueming Luo is the Charles E. Gilliland Distinguished Professor of Marketing, Strategy and Information Systems at the Fox School of Business at Temple University in Philadelphia. Megan E. Keith is a graduate of the MBA program at Missouri State University.

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Comments (2)
Wim Rampen
Here's a theory: many people that come close to the movie theatre actually are on their way to the theatre.. Sending them ads might just be a good way to have them buy through self-service, but they would have bought anyway..
Efres Belmonte
The value of this article is very low and not to the standard of what I expect from Sloan. Telling me that consumers who manifest interested in something, movie going in this case, are 37 times more likely to consume than consumers who have low interest in consuming and that there is a hallow effect. 
Well, that's not discovering America. 
Mobile advertising has, in my opinion, other challenges: privacy,  push-pull dilemma,  GPS and battery life issues, motivating participation, etc.