Advertising has evolved from printed media to broadcast media, and now to the technological advancement that is the Internet. While this is a good opportunity to mass advertise online, there are many techniques using online databases and cookies to personalize advertisements. Yet there is another frontier for advertisers, and that is called Location-Aware Advertising (LAA). This is the summary of the behavioral targeting research by Lih-bin Oh and Heng Xu. You can get the pdf of the behavioral targeting article here: Effects of Multimedia on Mobile Consumer Behavior.
Location-Aware Advertising Research
LAA utilizes positioning and communication technologies to send advertisements to cellphones based on their locations. With this advertising strategy, users can see ads that are relevant to them in terms of personal preferences, geographical location, and even time of day. In fact, experts believe the click-through-rates of such strategy can be 5 to 10 times higher than online advertising. Of course many have expressed concern regarding location privacy, and the bandwidth limitations of cellphone networks may limit multimedia advertising content. Indeed, research in location-aware advertising is still very young. This article studies the effects of various types of mobile ads on consumers’ purchasing and intents and intention for service reuse.
Location-aware Advertising at Present
At present, most location-aware advertising is through short messaging service (SMS), limited to 160 text characters. This is called SMS marketing. But many are convinced that MMS marketing can have a strong business case as well. MMS means multimedia messaging service. In terms of permission, there are two kinds of LAA, pull-based and push-based. Pull-based involves users requesting services and information, while push-based involves automatic transmission of location based ads to users. Since privacy is important, permission based mobile advertising is better since it will increase consumer confidence.
Here are several hypotheses mentioned in this study. First is that there is a positive relationship between a consumer’s attitude towards LAA and his or her intention to reuse the advertised product or service. Similarly, the second hypothesis states that there is a positive relationship between a consumer’s attitude towards LAA, and his or her purchase intention.
The way users perceive the value of an advertisement is very important. Hypothesis 3 states that location-aware advertising is more favorable if there is a higher assessment of its value. There are several conditions that determine the value of LAA, and these are entertainment, irritation and informativeness. Hypothesis 4 states that attitude towards LAA is more favorable if there is a higher entertainment level. Hypothesis 5 a,b, and c states that the value of LAA is perceived as higher for higher entertainment level, informativeness level, and and lower irritation level. Finally, Hypothesis 6 a, b, and c states that compared to SMS advertising, MMS advertising results in greater entertainment, informativeness and irritation.
41 male and 41 female undergraduate students were recruited. They each completed a background information upon registration as a kind of control, and are turned into m-coupon subscribers. The recruits are randomly assigned to one of two groups, SMS treatment and MMS treatment. Depending on their interests, there are two kinds of ads, one for cinema, and one for casual fashion wear. The next steps were then for the students to assume an experimental setting that is as realistic to location-aware advertising as possible. Then they answered a questionnaire.
Results and Discussion
Results show that 43 percent of the consumers are more likely to reuse the LAA service for its content, which affects intent to purchase and eventually, buying. Furthermore, it turns out that entertainment value has a stronger effect on a consumers’ valuation of LAA as compared to informativeness. If a mobile ad was entertaining and fun, it was more effective. Furthermore, irritation negatively influences perception of value, but the experiments for irritation in this study is limited.
Multimedia ads, on the other hand, lean more towards informativeness instead of entertainment. It’s most likely because the Flash technology used for the MMS ads in this study are not good enough to provide high level entertainment. Irritation levels for MMS ads are also high, perhaps because users are unfamiliar with this technology.
It has been shown that LAA can have a strong impact on a consumer’s purchasing decision, if the ads are location-sensitive, personalized and relevant. Enhanced MMS can potentially improve the value of entertainment as well. Overall, the study provides the first empirical evidence in a mobile shopping location as to the effects of LAA on consumers’ decision to purchase.