Retailers Go IP Geotargeting - Turning Internet Clients into Foot Traffic and More

By Joe Francica

It's not enough anymore to just have a good supporting website to capture additional retail sales. The Web experience for individuals not only needs to be customized for the retailer's "frequent buyers" with regard to their buying preferences, but can now be specifically targeted based on their location, as well. Ace Hardware is using Internet Protocol (IP) geotargeting technology to immediately recognize its Web traffic to create a nearly hyperlocal experience for its Web visitors. The experience not only increases sales but also draws customers into the physical retail store by automatically showing them the closest store…without the need to type in an address. Editor-in-chief Joe Francica explores the technology with executives from Digital Element and GSI Commerce.

(IP geolocation is the method by which Internet addresses are identified by a geographic location. Each computer using the Internet has an assigned, though not necessarily unique, IP address such as 192.218.62.0 and this address can be associated geographically. A registry exists that assigns IP addresses to countries, regions, city, etc. and databases can be purchased in which to perform the geographic "look-up" of addresses that are associated with specific locations.)

Joe Francica (JF): Digital Element uses IP address recognition to determine geographic locale. Explain, in detail if you would, the technology you employ and the geographic accuracy obtained through IP recognition.

Rob Friedman, Digital Element co-founder and executive vice president (RF):
Digital Element's parent company, Digital Envoy, introduced geotargeting technology to the market in 1999. The company utilizes a number of patented and proprietary technological methods to map IP addresses to location. The company provides coverage for 99.9 percent of the globe, covering the entire routable IP address space. Through Digital Element's industry vision and leadership, the company's technology evolved into much more than just geographic information, to include other intelligence factors such as connection speed, domain name, ISP and language - hence the term "IP Intelligence." Digital Element's technology is recognized as the "gold standard" in the industry, and is leveraged by some of the most recognizable names on the Internet including Microsoft, Fox Interactive, MySpace, eBay, Facebook, DoubleClick, CNN, and CNET, to name a few.

JF: You are working with GSI Interactive, an online marketing firm to support geotargeted advertising. Once you have obtained a geographic location, how does GSI take this information and segment the audience for the client? Does it employ a geodemographic solution to support IP geolocation recognition? Is GSI using this information to serve very specific, highly localized advertising and to what level of geography is it possible, at this stage, to serve geotargeted ads?

John Raisch, GSI Commerce, director of User Experience for GSI Interactive (JR):
GSI Interactive's current use of IP-based geolocation is meant to raise the quality of experience a visitor has when interacting with one of their client's sites. GSI Interactive's User Experience and Design group identified IP geolocation as a value-added feature in their development of the second generation store locator solution for Ace Hardware. On AceHardware.com, geolocation technology is used to "personalize" homepage greetings, identifying to the visitor the number of retail stores within the visitor's geographic area. The geo-coordinates provided by the geolocation software are used to search against store level geo-coordinates and identify the mathematically closest stores. Most first generation store locators simply use address parameters such as ZIP Code or city names to match stores to a search query. The use of geo-coordinates provides more accurate results. As an added user experience benefit, the interactive mapping application also auto-renders a map of the visitor's location when visiting the store locator application, allowing a visitor to see the stores in the area without having to key in an address.

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In addition to integration with store locator applications, GSI Interactive uses IP-based geolocation to personalize messages and landing pages based on a visitor's international location, as well as provide convenience and utility functionality to streamline the shopping process for U.S. visitors. International visitors to a GSI Commerce-hosted site may be presented with an international landing page featuring a translated greeting. In another application, shopping and shipping information is personalized based on a visitor originating outside the United States. And in the classic "Select Your Country" instance, visitors from outside the U.S. are sent either to a localized site or an international site, while U.S. visitors land on the homepage, streamlining the initial shopping experience and reducing abandonment from the "Select Your Country" page.

JF: Retailers are now actively looking for a better way to increase sales through better online geotargeting. Can you estimate the sales increase you can drive by supporting this effort for better online sales or retail sales at the physical property? Said another way, are you seeing an increase in Web traffic and in sales generated from a better method of online geotargeting and location-based advertising?

RF:
Absolutely. Our clients, both direct and those serving retailers online, see an increase in conversions based on our technology - some as much as 100%. Also, our advertising clients are able to upsell geotargeted inventory for a large premium versus run-of-network ads because of the higher click throughs generated through more relevant online advertising. Another benefit is the ability for retailers to create a relationship with a first-time site visitor. By delivering content that is relevant to a site visitor, retailers are able to decrease website and transaction abandonment by creating a more relevant experience for their online customers.

JR: Unlike geotargeting in an advertising sense, on-site geolocation-based tactics are meant to raise the bar on the quality of user experience a retailer or brand creates for its customers. In addition to transactionally-oriented metrics, GSI Interactive and Ace Hardware measure the customer experience by the level of website usability, customer satisfaction and visitor retention rates, as these metrics provide the building blocks for acquiring new customers, increasing conversion or driving sales, be it online or off.

In Ace Hardware's case, there is clear customer-exhibited behavior and support for a cross-channel shopping experience that is easy to use, satisfying and innovative. In addition to the integration of Ace Rewards on AceHardware.com, the site has supported a "Ship to store" feature since 2004. The program is very well received by customers and drives significant foot traffic to retail stores. The development of the second generation store locator, with IP-based geolocation technology behind the scenes, aligned with Ace's multi-channel strategy and was conceived as a simple way of giving customers an even better, differentiated cross-channel experience.

In addition to geolocation, the site offers customers the ability to save their preferred retail location, and upon subsequent visits to the site, the customer is greeted with messaging specific to the retail store saved within their profile. We are seeing a number of customers adopt this feature, which is then used onsite and via e-mail to personalize messages, marketing and merchandising.

JF: Are retailers taking advantage of location-based advertising to the degree which is now possible? What do you see as the potential split between online media and mobile media delivery of geotargeted ads?

RF:
Many retailers are taking advantage of location-based advertising, but no so much on their sites, rather through ad networks, where they work to drive regionalized, etc. traffic to their websites. It's too early to tell the split between online and mobile media, but the more general way to think about it is any channel where you can reach out to consumers and make their experience more relevant will be important, be it online, via mobile, etc. Taking a cross-channel approach is what is key - more so than how it's done.

JF: How do you determine a default buffer zone or "geographic fence" to serve the locations of the stores? In areas where retailers have a denser network of stores, how do you set the default for the "fence?"

RF:
It's up to each retailer to define "boundaries." Regardless, the goal is to help offline retail counterparts benefit from the online traffic generated on a retailer's website.

JR: The site returns store results based on a fixed 30 mile radius regardless of the density of stores within a specific area. Through a number of tests, we've found this to be the best solution that balanced customer messaging quality, retailer needs and technology constraints.

JF: You mention that you are able to include dynamically targeted messages to international site visitors, redirecting them to local sites to save them the extra step of having to "choose your location." So, if I understand this correctly, an international visitor to a domestic website will receive advertising in a local language. Please explain your vision for how this might evolve to support a retailer's ability to "go global."

RF:
It's not really about advertising - it's about dynamic and relevant content. If a retailer can automatically greet international site visitors in their local language, and show merchandise in local currency, they are one step closer to "going global" - or more accurately, to "making global local."

JR: Upon visiting a site that resides on the GSI Commerce platform, international visitors can be presented with content specific to them or be redirected to any site, as defined by the business rules configured in the GSI system. This tactic was designed as a means of increasing the quality of the on-site user experience, and should not be considered "advertising" in the classic sense.

JF: What do you see as other possibilities and future applications for geotargeting and interactive marketing for location-based advertising? Will mobile marketing be the next major push?

RF:
There are recent applications for geotargeting that are starting to gain momentum in the marketplace such as content localization, geographic rights management, online video, etc. However, we realistically see future applications for fighting e-payments fraud and enabling mobile marketing.


Published Tuesday, July 8th, 2008

Written by Joe Francica



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