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FICO on Location-Based Marketing: GPS Data Supports Omnichannel Analysis

Posted by Sheila Shayon on February 14, 2013 03:15 PM

As retailers increasingly leverage location-based marketing to predict customer behavior and influence purchasing decisions, the result is more sophisticated data about who and when to target — and what offers to make.  

“Collecting GPS data is becoming quite pervasive. Using the knowledge of where a customer goes, which path she travels and how much time she spends at various locations can improve the quality of customer interactions and types of marketing offers and increase the likelihood that she’ll redeem an offer,” writes FICO’s Shafi Rahman and Amit Sowani.

FICO, founded in 1956, introduced analytic solutions including credit scoring, predictive analytics and business rules management and optimization, now used by most of the world's top banks, leading insurers, retailers, pharmaceutical businesses and government agencies, as well as managing the personal credit health of millions of individuals. 

The organization identified some key steps in location-based data collection:

Measuring the duration of travel vs. the duration of inactivity

Identifying the anchor points of each customer

Determining the interaction between the path taken by the customer between anchor points and the places of interest

Measuring the maximum distance that a person travels from the anchor points and how often

Inferring interests and hobbies by the types of POIs (points of interests) frequented.

FICO's solutions work beyond traditional retail environments. The concept of "omnichannel" marketing is key to FICO’s focus with analytics across web, mobile, social, email, mail, and in-store electronics (e.g., kiosks, end caps, POS devices).

“You have to give to get. Give your customers a reason to opt in; it could mean giving them more relevant offers and discounts as a consequence of this opt-in, or providing a service resulting in a richer user experience,” concludes the FICO blog, which followed up on its big data strategy in a subsequent blog post.

According to a 2010 white paper, Bank of America Merrill Lynch projects that by 2015, 66 million subscribers will be enabled for addressability, representing 60 percent of the pay TV marketplace, however Experian Marketing Services has been selling addressable advertising data services as, “sexy and smart” since 2007. “The concept is simple: Deliver TV advertising like one targets direct mail, using household-level analytical profiling and segmentation. Like direct mail, the ad can be tailored to the household, with different ads being delivered to different households simultaneously across the same ad unit.” 

Cablevision recently rolled out addressable television advertising with five different brands sharing a single 30-second unit across its footprint of nearly 3 million households in the New York metropolitan area, while a trial by Comcast Spotlight and Starcom MediaVest (SMG) revealed viewers who saw addressable ads tuned away 38 percent less than homes that received non-addressable ads.

According to Forrester, “We expect the market for big data predictive analytics solutions to be vibrant, highly competitive, and flush with new entrants over the next three years.” Competitive advantage will be held by those who rise to the challenge of Big Data predictive analytics by harnessing them and using modeling tools and algorithms as key differentiators.

Experian predicts that the growth over the next 12 to 14 months to 91 million digital subscribers will open the way for advanced advertising at scale, critical to the adoption of a, “national interactive TV footprint.”  

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