In the golden era of advertising, finding an audience was as easy as publishing an ad in a widely circulated newspaper, running a radio or TV spot, or putting up billboards in relevant areas. With the advent of the Internet and the proliferation of new media types, however, casting such a broad net is the least efficient way of attracting customers. As attention spans are lowered in proportion to the number of competing ads in our periphery, advertisers must focus their messaging on specific audiences more than ever before.

For small businesses, targeting is especially crucial. Ads must be sharpened on several levels by demographic, geographic location, channels used and more. The goal is not just to get foot traffic into their store, but for it to be the right kind of traffic. To serve these businesses, location-based advertising (LBA) has emerged. Location-based advertising helps local brick and mortar shops by combining mobile advertising with geo-targeting technology. The success of this new brand of advertising justifies the rate at which the LBA industry is growing. Almost $30 billion is expected to pour into the industry by 2020, a 24.6% annual growth rate from 2015’s $9.8 billion according to BIA Kelsey.

However, despite the efficacy of this marketing niche, it still faces many challenges. People have admitted their privacy concerns with GPS-based ad targeting and demonstrate that they are hesitant to opt in. Additionally, some of the promotional services that have entrenched themselves in the LBA sector make bringing in customers from online a frustratingly inefficient process. Blockchain is already disrupting this status quo, however, and threatens to tear down the barriers that are already in place in this young industry.

Going Granular With Advertising

Merchants and retailers in a specific location must take advantage of granular targeting tools. This will prevent them from wasting precious ad dollars on those with no chance of becoming a customer. More important than reach, however, is how adeptly a local business can create an online community to support its offline operations.

Determining the target audience’s demography and adjusting the content of their messaging is important for this endeavor. So also is creating enticing promotions that incentivize customers to walk through the front door. For this, most businesses choose a location-based promotional platform like Groupon.

Hitting specific targets

The interactions that platforms like Groupon encourage between businesses and customers are shallow and unproductive. Locals will be targeted for the coupon deals in their area, and can buy them instantly. This system reveals two key problems: customers don’t need to provide any additional value other than their money, and they’re only encouraged to go to the restaurant or store if they can get a discount. The coupons themselves are restricted to certain times of day and to specific products or menu items as well. For businesses, arduous work must be done to optimize these discounts so that money isn’t lost when customers redeem them.

Other companies such as FourSquare provide companies and consumers with a distorted view of the market. Companies must pay for user data that is curated by marketers, and don’t have real data on how effectively their dollars were spent. Users, on the other hand, must wade through hundreds of posts attempting to discern if what they are being shown locally is a real user opinion, or a sponsored post that was boosted higher artificially. This way, there is no real incentive to trust the system, or actively participate in it.

Where the status quo fails at creating motivation to be loyal, long-term customers, Blockchain steps in. New LBA platforms built on the technology offer local businesses a way to nurture online communities where value continually cycles between themselves and their most loyal online advocates.

How Blockchain Can Help

A decentralized ledger technology, Blockchain is like a software platform that runs on a network of its own participants instead of a central server. Its unique infrastructure naturally addresses the security drawbacks in centralized content hosting and makes storing information and value on the network safer than ever. Blockchains usually use cryptocurrency as a medium of exchange for whatever is being transferred between the network’s users, like space on a cloud storage platform, bandwidth on a decentralized VPN service, or digitized money in solutions like Bitcoin or Ethereum. Middlemen have no place on Blockchain as there are no gates between users and content providers where fees or tolls can be installed.

Cryptocurrency acts as a type of monetary reward, but can be customized to incentivize stakeholders only for the activities that benefit others in the ecosystem. Location-based advertising is a pertinent application for this technology because it can better align the interests of those being targeted and those doing the targeting, nurturing a mutually beneficial connection between them. Innovative companies are pursuing this concept with enthusiasm.

Enabling rewards through tokenization

By tokenizing their services, businesses reward people in their local area who complete tasks that inherently create value, like posting on social media, writing a brief review and so forth. LBA platform tokens can be spent at these retailers like cash, with more freedom than a mere coupon. Those consumers who work hard to contribute, participate and spend their tokens frequently are tracked by the immutable ledger and given a score which allows them to borrow more tokens to use in their favorite stores.

Such a self-sustaining system recycles value in an airtight manner, meaning merchants don’t have to breakeven to win loyal business, and can get tangible advertising results in exchange for a small discount.

Most vitally, however, Blockchain can offer merchants access to irrefutable data that can optimize their efforts. Because of the way the technology is built - with transactions being recorded in an immutable and open ledger - user data remains protected. It also offers businesses the ability to fully trust their results as there is no middleman or filter distorting the view. This gives merchants the ability to better fine tune their promotions, and offer more relevant deals to customers based on transparent data.

Adoption is inevitable

Tokenizing services helps to drive transparency in location-based advertising, providing better reach for local businesses and offering customers a better deal in exchange. Mobile devices have the capability to be a portal to the best local experiences, but not when middlemen set up toll booths on either side. Thankfully, Blockchain is helping to build an express lane where local customers can quickly find the local establishments most enthusiastically chasing after their business.