GFM News: How much does the trade cost LBM campaigns?

It is now clear to many retailers that location-based marketing enables customers to be addressed directly and with high relevance. A survey now wanted to find out how much the retailers are willing to spend on it.

Thanks to mobile devices, customers can be reached almost anywhere. At the same time, the current location of the user can be determined via the devices – which offers marketing new opportunities for communication. According to studies, location-based advertising has a higher relevance compared to messages that are not related to the consumer’s location. For retailers, this channel is therefore of great interest. Dr. Hans-Christian Riekhof, Professor of International Marketing at the PFH Private University of Göttingen, now asked the question of how much the retailers are willing to pay for it.

The short survey shows that there is a high willingness to pay in the trade for push notifications on the customer’s smartphone. The retail decision-makers are therefore willing to accept an average thousand-contact price (TKP) of over 300 euros. According to the study, 44 percent of those surveyed are generally willing to pay a price of 0.11 to 0.50 cents per message.

If the recipients are preselected according to location-related criteria, this willingness increases. Then 56 percent can imagine paying between 0.11 and 0.50 euros per contact.

A TKP of up to 1,600 euros

If the providers of the push messages can prove that receiving a message leads to a visit to a store, the willingness to pay increases further. Almost one in three respondents would now even pay between 0.51 and 3.00 euros for a contact. This increases the average TKP to up to 510 euros. If a purchase can even be proven, the TKP increases to an average of 1,300 euros. The retailers would spend even more money if the message is played out in front of a competitor’s store and then leads to a purchase in their own store. According to the survey, the TKP here is 1,600 euros.

In addition, the trade shows itself willing to spend a certain proportion of the same for the campaigns for demonstrable effects on sales. On average, the respondents would invest 4 percent of their sales in LBM campaigns – if this demonstrably increases sales.

Conclusion

The study therefore shows that retailers are aware of the potential of location-based marketing campaigns. They underline this with their clear willingness to pay for corresponding campaigns.

The online survey was conducted from 15.06.2017 to 30.06.2017 among managers, managing directors and retail experts. The study authors emphasize that although the survey is not representative, it can be assumed that the results provide meaningful indications of the retailers’ willingness to pay due to the “high-caliber group of participants”.

Further studies by Prof. Riekhof on the subject of location-based marketing can be found at:
www.unicconsult.com/kompetenzen/location-based-marketing/