04
Mar
2016

Conversion Zones & Total Visit Rate take Geo-Fencing to the next level

03/04/2016

Measuring the success of an advertising campaign has always been a challenge for business owners. For a hundred years, they used traditional media and hoped their customers would let them know that they saw their commercial or their newspaper ad. But honestly, it was hard to track the success of advertising until the internet came along.

Paid search made it possible to measure the click, which was a pretty good indicator that the advertising was working. CTR was born and embraced.

Display ads weren’t as easy to track, though. Because we know that most people don’t click on display ads, proving their value using the click isn’t ideal.

Introducing conversion zones and total visit rate

Conversion zones and total visit rate identify the number of users who actually visit a business’s location after being served a display ad.

TVRBubbles2

In order to explain how conversion zones work, let’s set the stage by talking about “The Internet Of Things”.

If you haven’t heard of “The Internet Of Things” yet, Forbes explains it well in this video. Simply put, it’s the idea that everyday objects can now be connected to the internet, allowing them to send and receive data so that people can interact with them on the web. An example would be the Nest thermostat. It connects to your home Wi-Fi and can adjust the temperature of your home based on your personal usage, even knowing when you are and aren’t home.

Home security systems, smart lights and even your DVR are some of the everyday objects that are now a part of “The Internet of Things”. Connected to your home Wi-Fi, these items can be controlled through an app on your smartphone, allowing you to be connected anywhere in the world.

With the majority of us now using smartphones, people are the latest addition to “The Internet of Things”.

Because we always have our smartphones with us, and many of us are now wearing technology that is connected to the internet, people are essentially connected to the internet at all times. The majority of apps on our smartphones use some kind of location service, so our phones are almost always transmitting our location.

That means that the internet knows where we are and where we’ve been. Of course, when I refer to the internet in this manner, I’m actually talking about the companies that built those free apps we all know and love.

For example, if you have The Weather Channel app on your phone, chances are that it runs constantly in the background. This allows you to check the weather based on your location any time you like without having to input your zip code.

It also means that The Weather Channel app can track your location when the app is running. Of course, they don’t know that “David McBee is at Joe’s Kansas City Barbecue” exactly. Rather they know that iPhone “IDFA 2319-C3PO” is at Joe’s.

Let’s take a minute here to talk about why your location data is valuable to The Weather Channel app folks. You probably didn’t pay for that app, right? You understand that they monetize the app with ads. That’s how you “pay” for the app. If they can use the location data to sell better advertising, that improves the user experience and makes the app more valuable and profitable.

With lots of apps collecting location data, all of the people who are now connected to “The Internet Of Things” are being tracked nearly all the time.

With access to all of this data, advertisers are now able to place their ads in front of users based on their location. This is incredibly valuable for targeting the places where their potential customers are. A college can target local high schools. A real estate agent can target the Parade of Homes. A sporting goods store can target the local soccer and baseball fields. A painter can even target a neighborhood where the homes are beginning to show their age.

Car dealers, furniture stores, restaurants or just about any business on the planet can target their competitor’s locations.

This article goes into more detail on how advertisers can take advantage of geo-fencing technology to provide relevant ads to their potential customers.

Exciting right? It gets better with total visit rate.

Like it’s online counterpart, click through rate, total visit rate aims to measure the impact of an advertiser’s campaign.

CTR is the number of clicks an ad receives divided by the number of times the ad is served (impressions), expressed as a percentage.

TVR is the number of people who were served an ad who visit the advertiser’s location divided by the number of times the ad is served, expressed as a percentage.

Let’s take a look at TVR in action.

When a geo-fencing campaign is built, the advertiser sets up multiple geo-fences as targeting zones and a single geo-fence as a conversion zone. This allows the advertiser to place an ad in front of users who enter the targeting zones and then track those users when they visit the conversion zone, aka the advertiser’s location.

For an example, let’s go back to Kansas City where there are more barbecue restaurants per capita than any other city in the nation. If I owned one of those barbecue restaurants, I’d be very interested in targeting the people who eat at all of my competitors’ restaurants. I could create a “KC barbecue geo-fencing campaign” where I would build geo-fences and show ads to users who visit all of the other barbecue restaurants in KC. These are my targeting zones.

BBQCity

That alone is awesome because barbecue lovers are always looking for the next great ribs, pulled pork and brisket. Can you think of a better place to find my potential customers?

Next, I’ll set up a geofence around my own restaurant as the conversion zone.

With these different zones in place, it’s easy to cross reference the data to see the number of people who are served one of my ads while they were at a competitor (in the targeting zone) and then find their way to my restaurant (the conversion zone).

My report might show that I served 250,000 ads last month and that 250 people who saw my ad walked through my front door. That would be a total visit rate of .1%. TVR is measurable evidence that the advertising campaign is having an impact on growing my business.

What’s a reasonable TVR? Because geo-fencing conversion zones are still in their infancy, it’s really too soon to say. Different kinds of businesses will have different TVRs. Restaurants are likely to have a higher TVR than car dealerships, simply because we visit restaurants much more often. In the case of KC BBQ restaurants, we go again and again.

Like CTR, TVR is a great metric but should not be held as the ultimate measurement of success. There will be some level of leakage. Leakage occurs when users who are served an ad aren’t tracked. For example, increased web traffic and phone calls are positive results that also come from a geo-fencing campaign, neither of which can be measured with TVR.

Also, because the technology depends on users’ app usage and what apps they are running when they enter the geo-fences, tracking isn’t 100% accurate 24/7. There will be some cases where a person who was served an ad visits the business’s location and isn’t captured as part of TVR. It’s just the nature of technology.

And then there will be the business owner who claims that they would have gotten some of those 250 visits even without the display advertising. They may claim that their television ad or word-of-mouth brought the customers through their front door and that the display ad shouldn’t get all the credit. If they’re running other advertising and have a great reputation, they may be right.

So let’s not make the mistake we made when display first came out – staking everything on the click. Total visit rate is a great metric, and as we start to measure users as they move around the physical world, it’s just one of the many things we’ll start to track.

That being said, TVR truly is exciting! Being able to track actual visitors who walk through your advertisers’ doors based on an ad campaign?! Well, that’s simply awesome.

Thanks for reading.
David McBee, Director of Training, Simpli.fi