Trajectory-based Mobile Advertising

Rapid improvements in the precision of mobile technologies make it possible for advertisers to go beyond using the real-time static location and contextual information about consumers. In this study, we propose a new mobile advertising strategy that leverages full information on consumers’ offline movement trajectories from different mobility dimensions. To analyze the effectiveness of this new trajectory-based mobile advertising strategy, we design a large-scale randomized field experiment in a large shopping mall that examines the redemption rates of mobile coupons. Our experiment results are validated based on 83,370 unique user responses for a 14-day period in June 2014. We find that trajectory-based mobile advertising can lead to higher redemption probability, faster redemption behavior, and higher transaction amount from customers compared to other kinds of advertising, all of which facilitate higher revenues for the focal store as well as the overall shopping mall. Interestingly, however trajectory-based mobile advertising becomes significantly less effective in boosting the revenues of the shopping mall during the weekend. This finding suggests that customers are likely to be in an “exploratory” shopping mode during the weekend and are likely to engage in “impulsive purchases.” However, closely targeted mobile advertising can have the inadvertent impact of reducing impulse purchase behavior suggesting that marketers need to be careful when implementing mobile advertising strategies. Finally, trajectory-based mobile advertising is especially effective in attracting high-income consumers, suggesting the potential of mobile advertising in approaching high-end customers to achieve better customer lifetime value. On a broader note, our work can be viewed as a first step to study the digitization of individual offline behavior and how it can be linked to a better understanding individual preferences and decision-making. 1 Author names are in alphabetic order.