How IP Geolocation Fits Into the Evolving Online Advertising Landscape

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It’s more than 20 years since the first banner ad was displayed on hotwired.com and, since then, digital advertising has flourished, with global spend predicted by Statista to exceed $250 billion by 2018.  

This continued growth has gone hand-in-hand with a technological revolution. While the principles of ad targeting have hardly changed during the last two decades, the underlying technology has become increasingly sophisticated. 

While the first online banner experienced impressive click-through rates (CTR) of 10%, today’s average CTR is just 0.06%. It is therefore vital relevant ads are served to consumers to ensure success. The challenge lies in effectively targeting customers using multiple devices across a range of locations – and data is the key to success.

The online advertising market is a complex ecosystem of ad exchanges, data management platforms, and supply and demand side platforms – all of them crunching the data profiles of potential customers and enabling bids to be made and accepted in milliseconds. But the targeting is only as good as the data used and using accurate data is essential.

So, where does IP geolocation fit into the data-driven advertising landscape?  

Location is an important part of the data mix and its incorporation into online campaigns can enable the delivery of more meaningful and impactful messaging to consumers. As a result, smart advertisers and advertising technology companies are using accurate IP data to innovatively drive engagement and make advertising more contextually relevant by:

Combining location with other targeting criteria

Adding location alongside other targeting filters – such as demographic, intent, and interest data – as a criterion for audience profiling enables marketers to add another layer of relevancy and context to their campaigns. Serving highly relevant ads to consumers allows the delivery of the right message to the right consumer and is proven to deliver higher CTR and command a higher premium, boosting both efficiency and ROI.

Targeting and optimising local promotions

Knowing where consumers are located allows advertisers to deliver messaging appropriate to specific regions or cities – ensuring online campaigns are relevant to individual consumers. It also enables brands to target promotions, such as localised discounts or special offers. 

Geographic ad targeting – where highly granular data can locate users down to postcode sector level without becoming personally identifiable – increases the precision of ad campaigns and can increase CTRs by up to 300%, while reducing wasted impressions. This delivers a double bonus for advertisers – reduced costs and increased revenue.

Targeting clusters of similar users 

Advertisers can analyse buying patterns using location to identify areas where campaigns are most likely to be effective. For example, a travel company found that holidays to France were more popular with users in the South of England than the North and was able to target only southern users, significantly reducing the cost-per-mille (CPM) of their campaigns. Equally, public service campaigns such as the government’s 'Healthy Heart' can be targeted to specific geographic areas affected by relevant issues. 

Aligning ads with external events 

IP geolocation can be used to synchronise advertising with real-world events such as weather conditions. A fashion retailer, for instance, can promote warmer clothing in a specific region when a cold front moves into that area. It can also be used to run time-sensitive campaigns that align with offline promotions. For example, an insurance company could cross-promote online ads with offline promotions, using IP geolocation to target relevant regions at the appropriate time.  

Maximising mobile 

Mobile is a crucial channel for advertisers but ad networks are missing opportunities as users increasingly connect via IP-based wifi networks – due to speed, convenience or cost – rather than 3G, 4G or LTE. IP geolocation can determine the location of the wifi hotspot without the need for opt-in – while still respecting the user’s privacy. This enables advertisers to reach consumers anywhere at any time – whether on the train to work or high street shopping. IP intelligence also allows the type of wifi hotspot to be identified, and the most suitable ad format to be served. For example a user with a high-speed connection may be served an immersive video ad, while a user on a slower connection may see a static display ad instead.        

We live in the age of tailored, targeted, programmatic advertising delivering relevant, timely messaging to consumers. The relevance of that messaging is dependent on good data. Advertisers must ensure they use premium IP data that is accurate, refreshed regularly, has global coverage and is supported. Understanding where visitors really connect from and how results in increased relevance, response and revenues.