3 Ways Location-based Ads Influence Diners

From online ordering to the rise of food halls to the latest menu trends, the restaurant business is constantly transforming. Competition has become fiercer, so attracting first-time diners and encouraging repeat business is more important than ever. Mobile technology now enables a restaurant to draw in customers by leveraging one of its most basic assets — location.

A 2015 survey found that more than 60 percent of consumers indicated they prefer offers that are targeted to where they are and what they are doing, and that percentage is likely rising as consumers become more comfortable with mobile technologies. Several of these technologies allow restaurants and other dining establishments to deliver ads, coupons and other promotions to the mobile devices of potential diners who are nearby.

The primary location-based technologies are:

  • geolocation, which uses IP addresses and GPS location to determine a diner’s location
  • geofencing, which utilizes a digital parameter that is activated once diners enter a certain area
  • geotargeting, which determines a diner’s location as well as more in-depth information, such as their purchase history and preferences

With so many options for providing location-specific advertising and promotions, restaurants can create more tailored dining experiences for their customers. This type of personalization is especially important in today’s restaurant-business environment because consumers are increasingly interested in not only eating good food but also having a share-worthy experience.

Diners are receptive to this new form of marketing because it makes their lives easier and helps them make better decisions. Location-based promotions influence diners in three distinct ways:

1. Reduces indecision
Deciding where and what to eat are among the routine decisions a person makes each day. When the choice is “let’s eat out,” the decision often requires a commitment — spending a lot to time or energy either searching online for dining options and menus or walking around checking out restaurants wherever you happen to be. Even after coming to a decision, diners often make an additional effort to validate that they’ve made the right choice, resulting in information overload as they sort through reviews, social media comments and photos.

Location-based advertising can alleviate this paradox of choice. Restaurants that use this technology to reach out to diners who live or work nearby — or who are in the area — can alleviate much of this type of decision paralysis, informing people of their options and providing reviews, menus, and specials on a single platform.

2. Suggests other options
Location-based ads can also introduce diners to restaurants they may have otherwise overlooked or rejected. For example, diners may be unaware that a nearby restaurant has updated its menu, is open late or is showing the playoff game on big-screen TVs.

In addition to raising awareness, location-based ads can pull diners away from competitors. This concept, known as geo-conquesting, works by placing geofences near a local competitor and sending timely ads to diners’ phones when they’re nearby, engaging them at a key decision-making point. This kind of powerful targeting can persuade diners to try a new place rather than settling for a familiar standby, even if they have to travel a bit farther. It also generates critical data that provides insights into the types of ads and offers that successfully divert diners away from competitors.

3. Provides discounts and other offers
Fifty percent of consumers use rewards or specials when they shop, and this includes food purchases. Microsoft’s “Consumer Data Value Exchange” survey found that 89 percent of customers are willing to share demographic and personal data in exchange for discounts. Rewards are typically persuasive, not only because of their monetary value but also for the possibilities for personalization. For example, a restaurant can set up alerts to be sent to frequent diners when they’re in the area, reminding them of unused loyalty points. Restaurants can also combine rewards with payment integration, offering discounts for using a particular payment method.

Location-based marketing will become even more critical to success as diners’ expectations continue to change, their lifestyles become increasingly mobile and resistance to location-based promotions erodes. By using location-based advertising today — either through geolocation, geofencing or geotargeting — restaurants can address their mounting foot-traffic challenges and thrive in an increasingly competitive marketplace.