Summary:

Companies will increasingly use location data to find when a consumer is at a rival’s location, giving the company important insight about consumer habits, the effectiveness of the company’s marketing efforts and options to reach out to a consumer when shopping with a competitor.

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One of the interesting uses of location data is not just to target consumers with that mythical Starbucks coupon as they pass by. Companies will increasingly use location data to find when a consumer is at a rival’s location, giving the company important insight about consumer habits, the effectiveness of the company’s marketing efforts and options to reach out to a consumer when shopping with a competitor.

That’s one of the takeaways I got after talking with Thaddeus Fulford-Jones, the CEO and founder of Locately, a Boston start-up that focuses on harnessing the power of cell phone location data. Locately works with data from consumers who have agreed to share their location information for offers or deals; for example, through research survey panels. The company partners with research firm Harris Interactive, which uses Locately’s technology to power Harris’s “Observe” component of its Research Lifestreaming platform.

By charting the actual movements of people, whose identities have been anonymized, Locately is able to offer companies a very clear picture about how people actual live their lives, what places they shop at and how best to reach them. “We really feel this is the analog of web analytics for the real world,” Fulford-Jones told me, in an interview last week. “It’s essential to understand where people are going.”

Real-time data is more valuable than what companies have often relied on in the past: consumer self-reporting surveys. Surveys are often inaccurate and don’t reflect the true movements of consumers, which can be very telling. For example, companies can use consumer location data to determine if a recent marketing effort is driving traffic to their locations. Companies can also target consumers who hit a certain location, say a Whole Foods or Trader Joe’s, with offers for gym memberships, because studies have shown they are likely to respond to that due to affinities between healthy eating and exercising.

But more importantly, it gives companies the chance to see when consumers choose a competitor. That can be helpful to understand a number of things, said Fulford-Jones. “It’s all about competition,” he said. “Are consumers willing to drive past your location to to a competitor? How long are they spending there? How well is our advertising doing?”

It sounds obvious, but location data can help companies understand what consumers are really doing. And it can bring into focus the affinity that consumers might have for a competitor. When you see the travel patterns of a consumers as they drive past your location to get to a competitor, you can see that convenience may not be the deciding factor in their decision, for example. Understanding where a consumer is going can help companies decide how best to deploy their resources to bring in those consumers.

Ultimately, this information is going to help equip companies to tweak their outreach and eventually respond in real time. And it will help spur on more location-based advertising campaigns, which advertisers are forecast to spend $1.8 billion on in 2015. I talked with Josh Rochlin, CEO of Xtify recently whose company helps corporate customers set up geofences, or specified areas which can trigger an action when an user enters or leaves. Rochlin said the technology can be good not only for offering a consumer a coupon when they pass by but it will be an important tool for companies to target a consumer when they’re in a competing store. If a consumer, for example, enters a Walmart, Target may be able to offer the customer a competing deal in real-time to lure them away.

For some time now, the instant Starbucks coupon for consumers passing by is how we understood the power of location. But in the future, expect that same consumer to get a coupon for Peet’s Coffee as often as they get it when they walk by a Starbucks.

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