Location-based marketing (LMS) is a direct marketing strategy that uses a mobile device's location to alert the device's owner about an offering from a near-by business.
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Typically, location-based alerts are delivered to smartphones through SMS text messages. An alert may include information about a local business' deal of the day or include a purchasing incentive, such as a discount coupon code.
Location-based marketing requires the end user to opt-in. The opt-in process usually takes place when the end user downloads a mobile app and responds "ok" to the app's request to use the device's current location. The technology behind LMS takes advantage of geofencing, a software feature that uses triggers to send alerts when a device crosses a pre-defined geographic boundary. The goal of LMS, as with any mobile marketing initiative, is to capture the end user's attention and turn him into a customer.
Proponents applaud location-based advertising as a way to bridge the gap between online and physical customer experiences and promote impulse purchases. Skeptics question whether LBM will cause consumer burn-out and violate consumer privacy if the data that's gathered through LBM is not used, shared, protected and stored properly. Companies engaging in LBM should take measures to ensure customer privacy through stringent opt-in policies and security safeguards.