How Does the Value of Geolocation Information Vary Across the Purchase Funnel?
37 Pages Posted: 28 Jan 2019 Last revised: 19 Jun 2019
Date Written: May 2019
This research examines how the value of geolocation information varies at different stages of the purchase decision process. The analysis is based on a large sample of users from a mobile platform that enables firms to send geolocated promotions using two types of technology: beacons or GPS/Wi-Fi. Using push non-geolocated messages as a reference and fully controlling for customer heterogeneity by using customer fixed effects, the overall metrics indicate that beacon geolocated messages are 14% more likely to be redeemed, whereas non-beacon geolocated messages are 10% more likely to be redeemed. The decomposition of the effects reveals that although later stages of the purchase funnel account for an important fraction of the improvements obtained with geolocation, early stages of the purchase process also explain a significant part of the effect. Our results show that geolocation adds value, not only because the promotional content becomes more relevant for consumers when they are closer to stores, but also because it allows to reach consumers who are more willing to receive promotions in the first place. We analyze the role of location types and response times, providing complementary evidence to characterize the effectiveness of geolocated messages. Overall, our analysis contributes to a better understanding of the drivers of the value of geolocation information in mobile advertising, in comparison to traditional push and pull promotions. We discuss the implications of our insights for the design and management of mobile promotions.
Keywords: mobile technology, geolocation, conversion funnel, retailing
JEL Classification: M15, M31
Suggested Citation: Suggested Citation