Geo-Targeted Online Advertising: Great in Theory, Messy in Practice

Geo-targeting has recently become an important part of our lead generation efforts because we service car dealers in particular geographies. The technology is not perfect, but it has allowed us to spend our ad dollars more efficiently as our revenue-per-lead is largely dependent on geographic location.

Our goal is to acquire the right traffic for our car dealers. We’ve approached a variety of ad networks, and no company has been willing to work with our ever-changing coverage maps and serve geo-targeted ad placements. Our only viable option has been the geo-targeting features offered by search engines. When we sign a car dealer as a lead buyer, we immediately launch geo-targeted SEM campaigns to mirror their coverage and target local consumers shopping for their products.

Although we’ve been successful at increasing revenue-per-lead through SEM geo-targeting, we’ve exposed flaws in IP location detection and a search engine’s ability to accurately serve ads in specific markets. At a high level, it’s difficult to drive significant volume through geo-targeted campaigns, and our geo-targeted cost-per-lead is considerably more expensive than our cost-per-lead across nationwide SEM campaigns.

For a case study, we chose a variety of zipcode and radius combinations and tried to generate Volvo leads in those areas through SEM geo-targeting (the same zipcode and radius combinations in which our Volvo dealers have agreed to purchase leads). The results weren’t what we expected.

To simplify our findings, we generated leads in our target markets. But only 50% of the total lead pool fell under our specified geography filters, suggesting a large percentage of our traffic came from unwanted areas. There are only two possible explanations:

  1. People are interested in purchasing vehicles in areas far away from their location at the time of completing our forms (highly unlikely)
  2. Search engines don’t always know exactly where each person is located, or they make false assumptions at times. Internet service providers such as Comcast and AT&T know where each IP address is located, but due to privacy concerns they cannot share everything with the search engines, placing limitations on geo-targeting (a topic for another post).

Regardless of which option we’re battling, the inability to accurately target specific locations significantly reduces our revenue-per-lead and invites wasteful spend. Advertisers need a better solution.

Serving businesses throughout the country, if we acquire visitors outside of our target geographies we can monetize the traffic and justify the expense. We’ve seen margin gains from our geo-targeting efforts, but not nearly the types of gains our financial modeling suggested under the assumption that IP location detection is 75% accurate.

Many local advertisers want to buy geo-targeted traffic, but the end result of a geo-targeted SEM campaign isn’t necessarily what they’ve signed up for. These types of inefficiencies make running profitable, geo-targeted SEM campaigns very difficult.

This begs the question—what options exist that will allow an advertiser to avoid inefficiencies in IP location technology and acquire traffic ONLY in the areas of their choice?


5 thoughts on “Geo-Targeted Online Advertising: Great in Theory, Messy in Practice

  1. This is an interesting assessment, similar to what I have found while building a community oriented CMS system with Geo Located content and ads.

    As the lead developer I have chosen to stay way from IP 2 Lat/long because my IP always shows up in So. California as opposed to Colorado.

    The alternative is by latitude/longitude. Thankfully I won’t be restricted to other search engines requirements or limitations regarding advertising.

    But to answer your question, what options exist? TownShouts would be able to solve your problem with two approaches to geo targeting advertising, but we aren’t there yet. We’re close but still in start up mode.

  2. Targeted Advertising is a great to sell your product to right audience. Know a days every one is looking for targeted SEO results. It requires lot of effort, time and especially money. Internet know a days is the most powerful tool for targeted advertising.

  3. HERE IS YOUR ANSWER – Geo Targted Email Advertising within a 5 – 10 – 15 mile radius of any zipcode.

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