Proximity marketing: When worlds collide

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Alex Romanov, iSIGN Media
Alex Romanov, iSIGN Media

The way retailers reach out to potential customers evolves as communication methods and technology advance. Print ads in newspapers, radio ads, television commercials and direct mail flyers are still prominent in the advertising toolbox, but electronic communication channels have opened up new avenues for messaging, including web ads and email campaigns.

The rise of mobile technology brings even more new possibilities, providing advertisers with a method to communicate with potential customers in a uniquely personal way. This development has been met with some trepidation, and science fiction writers have imagined a world in which the physical and digital realms collide, making personalized ad messaging inescapable to passersby.

The reality makes for less compelling storytelling but a more pleasant shopping experience for both consumers and retailers: Proximity marketing merges the physical and digital domains by using mobile devices to reach consumers at the greatest point of influence, providing bargains for shoppers and increased sales and consumer insights for retailers.

What is proximity marketing?

Most adults in North America now carry mobile phones with them wherever they go, and the majority uses their devices to go online. They use smartphones to communicate with family and friends, get access to news and entertainment and find local merchants for products and services they're interested in purchasing.

Proximity marketing leverages the ubiquity of mobile devices to send messages to user smartphones when they come within range of a store. A transmitter—typically associated with a digital sign—sends a message via Bluetooth or WiFi to alert the consumer about an offer, which the potential customer can select or decline. If the consumer provides permission, a wireless message is transmitted, at no cost to the mobile device user.

The message can be as simple as a discount coupon or as elaborate as an interactive game. Consumer privacy is completely protected since they have an opportunity to choose whether or not to receive the message, and no identifying information is collected. Transmission range can extend as far as 300 feet or can be customized to a much narrower field to reach consumers in a particular section of a store or mall.

How do retailers and consumers benefit from proximity marketing campaigns?

Research shows what common sense suggests: Consumers are most likely to buy when they're in sight of products and services in which they've shown an interest by their presence in a retail outlet. Proximity marketing gives merchants an edge by reaching consumers in that venue on their mobile devices.

Retailers who have targeted merchandising strategies to move specific products can benefit greatly from proximity marketing because it allows them to quickly change messaging as inventory levels fluctuate. Merchants who need insight into potential customers' preferences can also benefit from a proximity marketing strategy because, even though it doesn't collect identifying consumer information like phone numbers and names, it yields precious data on consumer buying habits and message effectiveness—all in real time.

Consumer response rates vary according to offers, location, and traffic, but in general, proximity marketing campaigns generate much higher returns than traditional ads, and they're usually much more affordable.

The main benefit to consumers is the obvious one: a chance to receive offers on items for sale in an establishment they've shown interest in by visiting. Another advantage is proximity marketing's ability to cut through the clutter. People are bombarded with messaging constantly, wherever they go, and much of the content is irrelevant to them. Proximity marketing is more targeted since they only receive it at the point of sale.

Proximity marketing campaign deployments are generally received positively by consumers. A recent installation at a leading North American convenience store chain didn't garner even one complaint, and the messages did help to drive sales increases. The consumer who is most receptive is also in a highly desirable demographic: tech-savvy customers with disposable income.

What types of merchants should use proximity marketing?

Proximity marketing, which combines the digital and physical worlds in a new way, offers many advantages to both consumers and retailers. It's an agile ad strategy that allows merchants to make changes on the fly to improve message effectiveness and reach sales targets on specific items. It provides amazing consumer insights.

Proximity marketing respects customer privacy, leveraging technologies that come standard with virtually every smartphone and mobile device to send messages at no charge and without collecting personal data. Given these advantages, merchants who want to gain greater ROI for their ad spend and target consumers with relevant messages should evaluate proximity marketing to see how it can enhance their revenue and profits.

Alex Romanov is CEO of iSIGN Media.

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