Mark(et) on the move

Location-based advertising allows marketers to target their audience based on location using mobile technology and, in a growing segment, using audio in rail vehicles and buses. A 2018 U.S. SAM™ survey by BIA found that, overall, U.S. businesses invest about two-thirds of their total marketing budgets (promotions plus advertising spending) in advertising on local media ad channels. BIA Kelsey also estimates geotargeted ad sales could reach more than $32 billion by 2021.  

For non-professional marketers, location-based advertising can be framed using the perennial conundrum of “what’s for dinner.” In this scenario, you’re on a train or bus and as you approach your stop, you hear an announcement or receive a notification on your phone that a pizzeria is promoting half-price pizza night. If this restaurant is across town, it probably doesn’t help solve the issue of dinner. However, if the pizzeria is a block away, dinner is more likely to be served.

A 2015 article published in the International Journal of Engineering Research & Technology determined that consumers who were served a geo-fenced, or location-based ad, near the advertiser’s store were 3.9 times more likely to check in at the store than those who were not exposed to the ad. Additionally, the article reported that these consumers were also 23 percent less likely to visit a competitor.¹

Location-based ad service providers offer low risk partnerships that, not only allow transit agencies another avenue to access revenue, but also offer additional value by enhancing an agency’s communication tools.

Revenue not biggest advantage

Additional revenue is one advantage to running location-based ads on a transit system and for those agencies that have integrated the service, the revenue is a nice addition, but they note to temper expectations.

Cindy Baker, chief external affairs officer at Kansas City Area Transportation Authority (KCATA), says the agency was an early adopter of location-based ads. She explains that while the revenue received isn’t huge, she notes KCATA’s vendor did not stoke false expectations and, more importantly notes, that any extra revenue is appreciated.

Erin Hockman, marketing and communications manager with Des Moines Area Regional Transit (DART), says the location-based audio advertising revenue isn’t comparable to that generated from traditional print ads. She explains print advertising has been an option for much longer, with audio advertising only being offered as an option for the past year and a half.

“I believe there is room for continued growth given we're very early on and it probably takes some time to generate awareness that it's available. I think there's still a lot of opportunity from a revenue standpoint. With that being said, the way our contract is structured, we don't pay anything, so any revenue that we generate is additional revenue,” said Hockman.

Wendy Williams, director of marketing and planning at OmniTrans, explains revenue generation has been 10 to 18 percent of what was expected, but the agency isn’t willing to give up on the concept of location-based ads. She says a request for proposals will be issued when OmniTrans’ current contract has ended.

While revenue is a single advantage, vendors are delivering services that provide value beyond revenue.

“[The] biggest advantage to OmniTrans are the messages recorded to inform/educate passengers. It’s a great way to reach all customers,” added Williams.

OmniTrans has utilized the professionally produced recordings provided by its vendor to announce upcoming service changes, holiday closures, promotions and rider education spots, such as reminders to keep aisles clear.

Hockman notes that DART was producing its own public service announcements before partnering with its location-based ad vendor, but believes the professional quality of the announcements, along with the added ability to produce announcements in other languages, such as Spanish, gives these announcements a boost.

“We are able to take advantage of the time-based and the location-based functionality, which has been helpful to be really hyper targeted in our messaging to our riders,” said Hockman.

Baker adds that location-based ads have also brought value to small, local advertisers that may have a lot to gain from KCATA riders, but may otherwise be priced out of other advertising avenues.

Hockman agrees that there are additional benefits in the ability to offer more options at more price ranges in order to meet more organization’s needs from an advertising perspective.

“As someone in marketing and [with DART doing] our own advertising, I think we're always looking at how we can be more targeted in who we're trying to reach. I think the audio advertising is a way that people can [accomplish this]. If you're a business that's located along a certain route, it may not make sense for you to buy a full bus route that travels throughout the entire region when you can target people riding a route that's driving by your business. There certainly are benefits in being able to be much more targeted in who you're reaching with your message,” said Hockman.

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1. Shinde, S., Shaikh, T., Vandha, A. and Sheth, H. March 2015. “Location-based Dynamic Advertisements Structure for Public Transit Systems.” International Journal of Engineering & Technology, Vol. 4, Issue 3.