The effectiveness of location-based advertising: when, where, and to whom

Abstract

Location-based advertising LBA enables marketers to target consumers by time, distance or personalisation. To explore the effectiveness of LBA, we conducted a large, randomised field experiment, which sent short message service to 11,874 users. The findings are threefold. First, distance, time and personalisation separately increase sales purchases, which we confirmed. Second, the interaction of these factors becomes more complicated. We find that the effectiveness of time-based ad is contingent upon consumers' location and vice-versa. Third, non-personalised messages targetting mobile users near sale point in real-time are more effective than personalised messages. Our results suggest that understanding the when, where and how of LBA strategies is crucial for managers. Marketers can save money by carefully designing their LBA campaigns.