Location Intelligence, Spatial Data Analysis | Pitney Bowes

Five reasons marketers must embrace contextual marketing

Marketers may be digital-savvy analytic experts, but contextual marketing adds an entirely new dimension.

Contextual marketing is one of the most disruptive forces to explode into the marketing discipline since the mantra of all marketers—price, product, placement and promotion—came into being. In fact, according to the Harvard Business Review, it is set to throw the ‘Four Ps’ approach “into constant flux”. Contextual marketing is a technique that takes user information from a variety of sources (web browsing or online location check-in, for example) and uses it to deliver precise, relevant, tailored content, to the right people, at the right time.

Today’s marketers may well be digital-savvy analytic experts but contextual marketing adds an entirely new dimension to customer engagement. Here’s why it’s more important and relevant for today’s marketers:

1. It fits perfectly with a device-driven market and a shift in customer lifestyles

About 1.3 billion smartphones were shipped in 2014. We spend more time accessing the Internet via smartphones than our PCs. The more time we spend connected to the Internet through our devices, the more information we share. At the same time, society has become less community-focused and is now geared towards individual status and achievements, making mass marketing irrelevant and untargeted. Mass marketing messages, when sent to our personal devices, seems even more intrusive. Conversely, tightly targeted marketing messages, sent to individuals at the right time, in the right place, and retrieved from whatever device they want, can be extraordinarily successful, driving customer retention, creating new sales and adding depth to our omnichannel world.

2. It empowers customers and consumers

Contextual marketing puts customers and consumers firmly in control, since they can set their devices to limit advertising, or opt-in to allow location-based services to access their smartphones. And according to a Pew Research study, 74% of consumers with smartphones choose to use location-based services. Note the word “choose”: consumers are empowered as they can choose to use these services due to their relevancy at that point in time. This also frees consumers from restrictive, expiration-date driven marketing. They’re not sent to a website or made to wait until the weekend for an online sale. Contextual marketing suits the desire for instant gratification: those companies which respond instantly to consumer demand are rewarded, and pushing content to the customer at exactly the right time is a great way to do this. In addition, by sending precise and accurate messages directly to consumers, companies are removing the need for them to sift through the marketing clamor to get to what they really want, freeing them from the noise generated by the Internet.

3. It fits with the economic climate

Post-austerity, consumers love a bargain, more so now than ever. Armies of thrifty consumers refuse to buy anything online until they’ve found a coupon to reduce the cost or used a comparison app to secure the best deal. Contextual marketing fits here perfectly as well, offering hyper-targeted messages with offers appropriate to the customer, sent at exactly the right stage of the buying cycle. It’s cost-effective to deliver and it generates revenue. But don’t worry, this doesn’t quite sound the death-knell for the billboard just yet. While expensive, one-size-fits-all marketing might seem crass and expensive by comparison, clever above-the-line advertising techniques still have their place. Digital marketing teams can integrate above-the-line ads within a contextual marketing campaign, with cameras embedded in smart interactive billboards to record views and send reactive messages accordingly.

4. It uses location intelligence

Contextual marketing uses data drawn from different sources to create a precise buyer profile and analysis of buyer behavior. Location intelligence technology is critical to this, as it enables place and position to be worked into the marketing strategy. There is more location intelligence available to us than ever before, including points of interest, in-building maps, building footprints. Location data adds value to a customer relationship, and more and more marketers are boosting their success rates by incorporating it into their marketing strategies.

No longer about the marketing ‘four Ps’, location-based intelligence has instead facilitated the ‘four Rs’:

  • Relevance
  • Response
  • Revenue
  • Results

Leveraging location intelligence adds a new dimension to marketing. It’s the reason contextual marketing came out of the marketing departments and into reality.

5. It works

While contextual marketing is still in its infancy, businesses sharing their success rates are not hard to come by. Take the Western European mobile phone operator, which generated 64% year-on-year revenue growth and improved customer satisfaction from contextual continuous engagement. Response rates and conversion rates are from five to 20 times higher than the results from conventional online advertising, according to Nathan Hull in The Guide to Internet Marketing.

It’s also cost-effective. You’re not shouting with a megaphone, hoping someone will respond, but instead you’re sending a valid and personal message, generating a one-to-one relationship. And it needn’t be complex; today, companies such as SAP are offering Contextual Marketing platforms, so you can benefit from its dynamic nature and respond in real-time, with accurate content, reaching the consumer at the exact point of need.

It permits businesses to foster a two-way instantaneous dialogue with customers, by using these techniques, combined with devices and technology, in order to more adeptly adjust on a regular basis. This can affect Net Performer Scores and other ways a customer’s experience will be enhanced.

With contextual marketing, the physical and digital worlds fuse to boost results and deliver the ultimate in smart marketing. It’s a game-changer and one that will create impact for your organization.