AI is reshaping local advertising.  Location-aware devices and geotargeted ads are combining with artificial intelligence to deliver a new generation of microtargeted marketing. The rise of mobile apps has further refined the approach – users can now be tracked to specific landmarks and “check ins” resulting in contextual ads with hyperlocal click-throughs and conversion.

69% of consumers expect business search results within 5 miles of their location

Joint Google and Nielsen Ratings study

Here are four ways that AI is reshaping local advertising.

1] AI is driving location-aware recommendations

Among consumers, recommended products tend to be more “trustworthy” by virtue of their crowdsourced nature —  more people think it’s good, so it must be good. Location-based recommendations take it to the next step by integrating physical location and machine learning to provide suggestions specifically tailored to the user’s interests.

This has led to “geo-social” apps like Yelp and Foursquare, which combine geo-tracking and crowd recommendations to generate Top 10 lists. A Harvard Business study found every 1-star increase in a Yelp rating brings in 5-9% increase in revenue.

Even Facebook and Google are jumping on the trend, by displaying nearby products, services or events of interest. For instance, Siri might recommend nearby Thai restaurants or art museums, and FB can notify metalheads of an upcoming rock concert in their neighborhood.

And as AI improves, location-aware recommendations, which take into account other data like purchase history, friends, and even the weather, will provide ever more accurate suggestions. Google’s “promoted pins” is an example of this evolution: it shows not just promoted businesses in the Map app, but store promos that may be relevant to the user.

2] AI is powering location-based search

Thanks to mobile data and voice assistants, an increasing number of shoppers are using location-based searches. Instead of looking at maps and directories for nearby Asian restaurants, today’s shoppers can just fire up their map app, go to Yelp, or even have the searching done for them by Siri or Alexa.

What most people don’t realize is that the nearly instantaneous result doesn’t happen by magic. It involves a complex combination of geo-tracking, aggregation and AI. First, the system pinpoints where the user is, then checks the aggregated list of restaurants nearby. Finally, AI enables the system (or even the hardware, itself like the phone) to “learn” the habits of the user, resulting in improved search results and weeding out contextually irrelevant ones. If the user has a particular taste for Thai cuisine, then Thai restaurants are likely to show up at the top before other Asian fare.

And it works: according to Google, one out of three mobile searches are for local, and of those, 88% take an action within 24 hours, such as calling the business or visiting the store.

3] AI is enabling geotargeted ad buying

It used to be that media buying meant talking to a sales rep to purchase air time or ad space. Today, thanks to AI algorithms, it’s as easy as logging online, setting the target audience and campaign spend, and sitting back as automation does the rest.

Programmatic ad buying – the automated purchase of ad space and placement in real time is becoming increasingly local. All the brand owner needs to do is set the audience’s location parameters, and AI manages the bidding against competitors that target the same audience. This makes it faster, more accurate and more efficient than traditional media buying. Programmatic advertising is widely used on Facebook and Google, so that even the smallest mom-and-pop store can push out relevant ads to their surrounding neighborhood, all with just a few clicks.

According to Borrell Associates, 61% of local ad spending will go to programmatic buying this year to the tune of $47 billion, a dramatic rise from just 10% in 2015.

In addition, Facebook’s extensive local targeting options have enabled businesses to reduce new customer acquisition cost by almost 8%, while costing less than $8 per thousand impressions on average, versus over $35 for local TV commercials. Easy-to-use interfaces that automate the process of placing geotargeted ads have also contributed to the growth in local programmatic by making location a tactic accessible to small and medium business owners.

4] AI is improving reputation management

AI is reshaping local advertising through reputation management.  Online reputation can make or break a business, and nowhere is this more critical than for local. Brightlocal’s 2018 survey of local consumers found that 86% of respondents read online reviews before making a purchase, 89% of those read the business’ response (or lack thereof), and that 57% will only patronize the business if it has 4 or more stars.

Businesses with 4 or more negative search results on Google lose up to 70% of potential customers

Moz study

This has led to firms that offer reputation management services that gauge consumer sentiment. In the past, this was done by human experts who relied on SEO and SEM techniques to measure and improve a brand’s online impact. Now, advances in neural networking and machine learning mean that AI can do the same task much faster, more efficiently and for less cost.

A London-based startup called Signal Media recently raised $26 million for its AI-powered reputation management platform. The system crawls through nearly 3 million information sources, from traditional to online media, and takes advantage of machine learning to streamline the process. To digest traditional media like print, TV and radio, it uses a combination of audio/video transcription and optical character recognition to transform those sources into machine-readable text. Reputation is a critical component of local marketing where consumers are less familiar with brands and more open to being persuaded by a positive or negative review.

Conclusion

AI is reshaping local advertising.  Local is a strong growth area for digital advertising and tools powered by AI are improving the impact of hyperlocal marketing campaigns.

Learn more about William Ammerman here.