The advertising logic since ages has been about reaching a large audience in the hope that the relevant customers would spot the ad and buy the product.
This explains the ubiquitous presence of ads everywhere--on banners, TV, radio etc. Advertising costs a fortune and companies spend heavily on it to promote the all-important sales. Yet most of the times they are not even sure if all those costly jingles are actually driving the sales in any way.
For smaller entrepreneurs, something that costs them an arm and a leg and yet has no guarantee to bring in results is a luxury best avoided.
But digital technology came as a boon and like almost everything else, advertising went digital. Digital ads cut costs no doubt, but the return on investment (ROI) was still was not traceable, especially in case of local offline stores.
So the wizards of the business went a step further and came up with the newest avatar of advertising—hyperlocal ads. It’s hyperlocal, not just a cousin of digital ads.
How does a hyperlocal ad look like?
Well, just like digital ads, hyperlocal ads do not stare down from billboards or beam from TV sets or scream out of radios. They pop up on your smartphone or tablet screens. Sounds like digital ads? The similarity only ends there.
While digital ads were just about changing the medium to smartphone and desktops, hyperlocal ads go a step ahead. These ads are specifically curated for an individual’s need at a specific time.
Hyperlocal ads use a person's GPS location and pops up ads about the nearest store or retail outlet where a product or service is available on his laptop, smartphone or tablet. Though SME’s will surely benefit the most from this type of ads, large brands that want to publicise their local franchises are also investing in these ads.
When a person enters a mall, and opens an app that provides information of restaurants, he is sent an ad about restaurants inside the mall using his location and his data. The timing and the location of receiving the ads, increase the possibility of the person going to that particular restaurant.
The ROI of digital advertisement is 3 percent, while of hyperlocal digital ads is up to 50-60 percent.
Nifty Window CEO Rakesh Raghuvansh explains more with another example. In India there are almost 2 crore searches for sarees in a month. “These include banarsi, paithani, brocade sarees etc. We call these transactional enquiries as people have already decided to buy and are looking for it. Even if 10% of these consumers go to offline stores to buy a saree because of a hyperlocal ad, it makes a great difference. If the minimum price of a saree is Rs 400, then do the math, it comes to a transaction of Rs 8 crore, which is huge,” Raghuvanshi explains.
SMEs that had traditionally kept away from advertising are now turning towards it as hyperlocal digital ads are not a burden on the pocket.
Explains Rakesh Raghuvanshi, CEO of Bangalore-based adtech company Nifty Window, "It is difficult to give specifics as there are number of logistic issues involved . But hyperlocal ads scale down the target audience significantly. This cuts down the resources, manpower, time and hence costs involved to get to this targeted group rather than to a large group."
Going beyond mere digital
Digital advertising includes search, social display, video advertising and classifieds. With better GPS availability in the 4G World and with increasing number of smartphone users, adtech companies are using the data to get the best experience on returns.
While making hyperlocal ads with information of relevant stores around you is the adtech trend, some startups are taking the efficiency beyond that.
Marrying not just the right ads to the right consumer, but also ads to the right applications is Mumbai based eMart Solutions with their product Firsthive. According to the founder Aditya Bhamidipaty it is not just targeting the consumer on his/her mobile, it is also targeting the person on the application he spends the most time.
“What we do is also using data see where and when are the higher chances of the person to click on the advertisement. With when, we mean- what time of the day, and with where we mean a particular application. Everyone is different and the amount they spend time on all applications is different. So, if a person spends more time on Facebook and is likely to go to a link from there, why send him ads on email?” said Bhamidipaty.
For Rakesh Raghuvanshi, an advertisement can work for the consumer only when he/she is in a state of mind for that and that can be determined through search engines. His product focuses on what people are searching on google and give targeted ads accordingly.
“Why hyperlocal actually works here is because if a person wants to for example–see Puma Sunglasses, and the ad shows him/her the shop nearby, he is likely to go to the shop nearby and look at the product and buy, than actually buying online. For the stores, who keep multiple products of multiple brands, a hyperlocal ad is what works best for them. And with GST regulation, they are also keeping the inventory updated,” said Raghuvanshi. Nifty Window is backed by Microsoft Accelerator.
But if you thought hyperlocal ads are limited to your phones and tabs, you are gloriously misled! Hyderabad-based adtech startup Adonmo have mounted LED screens on Uber cars that begin to beam advertisements of shops when the cars are within a 500-metre radius.
Sandeep Bommireddi, Co-founder Adonmo said, “We focus on micro targeting based on time and location. For that we just need to know where our LED screen is. So for example–if it’s lunch time, and the cab comes near a McDonald’s eatery, our LEDs will start showing ads of Burger King that will be just some 100 meters away. We started in February this year and are already making profits.”
These startups are not just providing solutions in the hyperlocal space with more ROI, but advertising only to the targeted consumer in all the three models reducing the cost for the advertiser. By, keeping a lower budget, the local advertisers are reaching out to more people with locally targeted consumers.
The adtech boom in India
According to Zenith, India is now placed 4th in the top 10 contributors to global ad spend growth between 2017-20, where it follows the US, China and Indonesia in that order.
Speaking about the growth of adtech in India, Vasuta Agarwal, VP and GM, India and South Asia, InMobi believes India is surging ahead in the adtech space not just because more people in India have smartphones, but also because it skipped the desktop revolution.
“People want the information of hyperlocal services and discounts. With 4G data accuracy, and demonetization that brought digital payments to so many people, it has pushed the mobile content consumption and changed the pattern. Digital ads is growing 30 percent a year which is a very good sign.”
She believes that the way ahead is not just limited to this, but with AI and IOT developing, adtech technology will touch new heights.
“Every device that we use is connected to cars, home lighting our television etc. So this blurs the line between online and offline and marrying the both with hyperlocal targeting will be the way ahead. There is also AI-ML developing and adtech will see the use of that too to give personalised ads,” she added.
InMobi, one of the first adtech companies of India was founded in 2007. Now a unicorn, InMobi reaches 1.5 billion devices worldwide. It is backed by investors like Softbank Capital, Sherpalo Ventures and Kleiner Perkins Caufield & Byers.
While the digital ad revolution focusing on hyperlocal has changed the way even a giant like Google is looks at ads, the users’ personal data runs the risk of being misused.
To prevent that most adtechs have started to go by the General Data Protection Regulation (GDPR) recently formulated by European Parliament and Council. The framework is very clear and the players know that soon it will be applicable to the whole world and are planning considering that as a base.
“GDPR clearly mentions what is first, second and third party and who can share data among themselves. If companies are using the location of that person without informing him, to provide ads through another party, then that is completely illegal and also unethical,” said Raghuvanshi.
With private and public lines blurring, it does not mean that a person’s private life can reflect in the public advertisements. Agarwal said, “The regulators are keeping this in mind to not let (advertisers) intrude into a person’s private life, while GDPR is the base where most of us are working along that, also, India’s telecom regulator TRAI has also come up with a guideline for the same, which is very positive.”
In advertisements on digital platforms, while going hyperlocal is the way ahead, it is also bringing in transparency on data sources that will take the industry forward.
Correction--The earlier version of the story had erroneously mentioned Tennenbaum Capital Partners as one of the investors of InMobi. Tennenbaum Capital Partners were a lender to the adtech firm. The changes have since been made.