• by Laurie Sullivan  @lauriesullivan, November 19, 2014

Consumer packaged goods companies continue to shift budgets to mobile to increase retail store traffic and influence consumers as they traverse from search to Web sites. A report scheduled for release this week estimates a 219% increase in CPG-related mobile spending from 2012 to the middle of 2014, supported by location-based advertising, which has become an important tool.

By targeting custom audiences based on location, traffic patterns and habits, along with demographic and transactional information from matching mobile devices to household-level data, CPG ads generated a 74% increase in foot traffic and 56% lift in visit frequency via location-powered media for retailers. The study from Verve analyzed more than 200 campaigns from a variety of CPG categories including household products, food and beverage, personal grooming and pet food.

Location-based marketing has traditionally been about retailers andauto dealers driving traffic to stores and lots, said Tom MacIsaac, CEO at Verve. "We see CPG advertisers have great success transitioning time-tested shopper marketing strategies to mobile through location-based audience data and proximity targeting," he said.

A desire to increase foot traffic in retail stores provides the fodder to make investments in location-based advertising. The CPG category uses location advertising tactics more than most other advertising categories. Retail, auto and CPG are the top market verticals in leveraging location data for mobile advertising, with CPG being the fastest-growing of the three.

Verve cites recent CPG campaigns for battery and beauty items that aim to drive foot traffic to a specific retail partner. Location-based awareness campaigns drove a 154% increase in foot traffic and 182% visit frequency to the same retailer, compared with non-location-aware creative ads. The campaign showed its strongest engagement from ads on weekends -- specifically Sundays, where click-through rates (CTRs) reached levels of 0.53% to 0.58%. This means consumers are more likely to engage with the creative while shopping and running errands, per the study.

Location-based advertising aims to analyze and measure foot traffic into purchase locations, and leverage that data toward understanding how to target the best prospective customers. Companies have also begun to measure advertising return on investment based on foot traffic lift, frequency of shopper visits, and increase in product sales.

In North America, revenue is forecast to grow from about $1.8 billion in 2013 to nearly $3.8 billion by 2018, per a study on mobile location-based services from Berg Insight. The majority of the growth will come from increasing ad revenue in social networking and local search, per the research firm.

Since real-time location targeting uses location information gathered when an ad is delivered to a mobile user, the ads generate higher returns compared with other mobile advertising. The associated eCPM and click-through rates (CTRs) are several times higher. Berg Insight estimates that the total value of the real-time mobile location-based advertising market worldwide reached $1.51 billion (€1.2 billion) in 2013, representing 14.5% of the total mobile ad spend.

The data firm estimates the location-based advertising market is growing at a compound annual growth rate of 54.0%, forecast to reach $13.42 billion (€10.7 billion) in 2018, representing 38.6% of all mobile advertising and marketing. This means location-based advertising and marketing will represent around 7% of digital advertising, or 2% of the total global ad spend for all media, per Berg Insight.