In the Era of Big Data, Location Still Matters

Stephen DeAngelis

July 3, 2013

“Location, location, location,” writes Brian Vellmure. “The concept immediately brings back to mind college marketing classes and textbooks; clear lessons from industrial age distribution models. The focus has slowly faded away, however, over the past couple of decades with the invention and growth of a digitally connected, flat economy in which we can buy anything … from anyone … from anywhere.” [“Location Revisited: Marketing’s cornerstone takes on a new paradigm,” Value Creator, 14 May 2013] The headline of Vellmure’s article reveals that he believes location still matters, even in the digital age. “For most of us,” he writes, “where we are is actually a huge driver of what we do.” I believe he is correct. Vellmure notes that the topics of “content” and “context” are receiving a lot more attention nowadays than location. “All of a sudden,” he writes, “location matters again. Though, its contribution to customer behavior is manifesting itself in a different manner. He explains:

“If I’m at the beach, please don’t send me an offer about printer cartridges. If I’m out to dinner, an offer about a local gelateria is much more likely to get opened than an email about gardening services. A growing sea of online technology companies allow our location patterns and habits to be tracked (and hopefully used for mutually beneficial purposes).”

With more and more people carrying smartphones, obtaining location data is becoming much easier. Vellmure continues:

“Emerging startups like PlaceMe, Banjo, Sonar, Friday, and Highlight automatically track your whereabouts and the whereabouts of others near you, offering serendipitous and/or more targeted ‘people discovery’ opportunities. But, without opting in or participating in any of the above, those little smartphones in our pockets are already tracking and providing plenty of information to the mobile platform vendors and application providers.”

According to Holman W. Jenkins, Jr., Google CEO Eric Schmidt is a believer in using location to target consumers. Back in 2010, he wrote, “Mr. Schmidt is a believer in targeted advertising because, simply, he’s a believer in targeted everything: ‘The power of individual targeting — the technology will be so good it will be very hard for people to watch or consume something that has not in some sense been tailored for them’.” [“Google and the Search for the Future,” Wall Street Journal, 14 August 2010] He continued:

“Let’s say you’re walking down the street. Because of the info Google has collected about you, ‘we know roughly who you are, roughly what you care about, roughly who your friends are.’ Google also knows, to within a foot, where you are. Mr. Schmidt leaves it to a listener to imagine the possibilities: If you need milk and there’s a place nearby to get milk, Google will remind you to get milk. It will tell you a store ahead has a collection of horse-racing posters, that a 19th-century murder you’ve been reading about took place on the next block. Says Mr. Schmidt, a generation of powerful handheld devices is just around the corner that will be adept at surprising you with information that you didn’t know you wanted to know.”

Holman finds the possibilities both fascinating and frightening. Vellmure prefers to focus on the fascinating potential of using location data to push information to consumers. “Until now,” he writes, “the emerging benefit and value of location data has struggled to find its legs in a meaningful way.” Marketing and mysteries have a lot in common. In a mystery, the police try to find a suspect by matching them to motive and opportunity. In a retail setting, marketers try to find consumers in a similar way by using motive and opportunity. The motive for consumers is provided by their product or service preferences (as determined by big data analytics). The opportunity arises whenever a consumer is searching online for a particular item or service or when they are near an establishment offering such goods or services. Vellmure concludes, “Understanding transactional and behavioral patterns and merging them together will arguably allow marketers to offer more precise offers and interactions based on a deeper understanding of their customer’s current context.”

One reason that location continues to matter is that most people still enjoy shopping in traditional stores. According to a 2012 study, even “though consumers are using their mobile devices more than ever to find deals and research products, they still love their brick-and-mortar stores.” [“Consumers Are Still Brick-and-Mortar Loyalists,” BusinessNewsDaily, 11 April 2012] The article reports, “Regardless of the venue, though, the consumer is still in control. Today’s consumers take a highly personalized path to purchase, utilizing devices including PCs, smartphones and tablets, according to a study of more than 1,000 consumers.” That’s why the combination of mobile marketing and location data is likely to prove effective.

There are other ways that location data can be used to benefit lives beyond targeting ads to specific individuals. Grant Shippey writes, “Imagine interpreting hyper-localised data in order to help you better understand what products your customers actually wanted and how they wanted these products presented to them? It could quite literally change the way you do business.” [“Nice from far, but far from nice: big data can help retail bring everyone ‘up close‘,” memeburn, 21 May 2013] In previous posts, I’ve noted the fact that the world is becoming ever more urbanized; but, the residents of most cities are not homogeneous. That is why “hyper-localization,” as Shippey calls it, is so important. He explains that “the hyper-localisation tools allow you to”:

“Operate with the market surrounding a store and not just those who frequent it. This information could help you better manage logistics, stocks and market and communicate more effectively. Prospect new store locations with a better understanding of which areas are more or less suited to the overall brand, which areas are easier to service and access. Develop greater efficiencies across a business network as data feeds back from all points matched to local data concerning neighbourhoods. In present times, where business is more competitive than ever, micro or localised insights will give an organisation a superior advantage. Having a hyper-localised level of data at your fingertips allows for a perspective that is ‘up close and personal’ with the immediate customer base.”

Shippey concludes, “In present times, where business is more competitive than ever, micro or localised insights will give an organisation a superior advantage. Having a hyper-localised level of data at your fingertips allows for a perspective that is ‘up close and personal’ with the immediate customer base.” In the case of location data, having it “at your fingertips” often means seeing it on a map. Vindu Goel writes, “Maps that are dynamic, adapting to current conditions like traffic or the time of day, are the most useful of all.” [“Maps That Live and Breathe With Data,” New York Times, 10 June 2013] Charles Golvin, a principal analyst at Forrester Research, told Goel, “Context is everything — where you are, what other people have said about where you are, how to get there, what’s interesting to do when you get there.” You could add to that list, what you can buy when you are in a particular area.

We are all familiar how maps and GPS location data have combined to help us get from one location to another; but researchers have been creating digital maps for over half a century. The field of geographic information systems (GIS) allows you to digitize data and “analyze patterns and relationships in geographic space — relationships between certain health patterns and air or water pollution, between plants and climate, soils, landscape.” [“Geography: Mapping the future with Esri,” by Susan Spano, Los Angeles Times, 7 April 2013] In fact, the kinds of things that can be usefully analyzed using GIS are only limited by the imagination. Spano continues:

“The applications moved quickly beyond the laboratory; businesses started getting engaged, then cities realized they could have a centralized GIS database, updated about road changes, sewer lines, building permits, land-use plans. States and national agencies started to embrace these same ideas for making better decisions, communicating more effectively and encouraging collaboration between departments. The key word is integration. GIS organizes geography into layers. Engineers maintain their layer, planners theirs. There are layers about sociology, geology, climatology, hydrology, etc. GIS is the only technology that actually integrates many different subjects using geography as its common framework.”

It doesn’t take much imagination to understand how retailers and manufacturers could benefit from the information that can be obtained when point of sale data is overlaid on geographic locations.

There is another movement afoot that claims to go beyond GIS. It’s called neogeography. Back in 2006, Andrew Turner explained neogeography this way, “Neogeography means ‘new geography’ and consists of a set of techniques and tools that fall outside the realm of traditional GIS, Geographic Information Systems. … Essentially, Neogeography is about people using and creating their own maps, on their own terms and by combining elements of an existing toolset. Neogeography is about sharing location information with friends & visitors, helping shape context, and conveying understanding through knowledge of place.” [“Crisis Mapping, Neogeography and the Delusion of Democratization,” by Patrick Meier, iRevolution, 17 March 2013] Proponents of neogeography believe that it can help countries prepare for crises as well as support the development process. Meier, however, believes that too much of the data that could be useful in helping developing nations grow or cities becoming more resilient is owned and horded by corporations.

Spano believes that “understanding should precede action.” People are recognizing more each day how powerful and informative geographical-based analysis can be. That’s a good thing, because location does matter.