Geo-targeted campaigns have transformed how marketers allocate budgets. By focusing messaging on specific regions, marketers can improve relevance, reduce wasted impressions, and even increase return on investment. Location-based targeting allows brands to deliver messages that reflect local context, culture, and timing—which can improve engagement and conversion rates. 

So geo-targeting is the smart choice, right?

Not always.

Before marketers decide to geo-target, there are some important trade-offs to consider. To help you make the most informed decisions about geo-targeting, we’ll debunk the top five geo-targeting myths.

Myth #1: Geotargeting Is the Most Affordable Way to Measure Lift in a Market

Geo-targeting can be used to perform incremental lift analyses. “This requires defining two sets of geo groupings that are as similar as possible,” Jenn Benowitz, Senior Account Manager, Client Services, explains. “One group is exposed to the ads, the other is not. The difference in performance–or, the incremental lift–is the result of the ads.”

However, Jenn cautions that this methodology can present problems because it’s nearly impossible to find like-for-like markets that have no other marketing biases between them. “Additionally, buying the media at the geo level is often more expensive than buying nationally, so it can be an expensive way to try to test incrementality,” she says.

Advertisers will need to spend up to buy geos to perform this type of test, says Jenn, “costing you more than it would to let your media run and measure incrementality another way.”

Myth #2: Geo-targeting Is the Only Way to Measure the Effectiveness of Audio

“A lot of clients come in thinking the only way to measure the efficacy of audio is to see market lift,” says Media Director Heather Hansen. “And we have to say no, that’s not correct. Unless there’s something specific to those markets that’s crucial for your campaign, like retail stores, you don’t have to geo-target to measure performance.”

At SMI, we utilize a layered attribution approach, which combines:

• Direct Attribution: Vanity URLs, text CTAs, and promo codes

• Indirect Attribution: Pixel tracking, “How Did You Hear About Us” (HDYHAU) surveys, and
• Advanced Measurement: Media mix modeling (MMM), multi-touch attribution (MTA), and incrementality testing

“We have measurement tools that will help clients read performance, besides just lift in the market,” says SMI’s Senior Media Strategist Pam Wolfgram. “So they can expand their reach more affordably and still see the measurement that they’re looking for.”

Myth #3: Advertisers with Budget Limitations Should Geo-target

“Oftentimes clients will come to us and let’s say they have budget limitations,” says Pam. “They think because they only have $50,000 to spend, they want to put it all in one geographic area in order to condense the reach, and they don’t realize that they’re actually putting themselves at a disadvantage cost-wise in doing so.” 

In reality, advertising rates for geo-targeting can be up to two to five times higher than national campaigns. “Additionally, if you concentrate on a higher-demand market, there is a chance that your spots will not run,” says Heather. “And when we’re doing market-specific buys, if something like a natural disaster or political unrest is affecting the market—like what we saw in Minneapolis earlier this year—we would have lost any listenership awareness. If you’re being market-specific, you’re really putting yourself at the will of current events and nature.”

Myth #4: Targeting Top Markets Is the Best Way to Identify Markets for a Geo-targeted Plan

“There’s also a common assumption that brands already know their top-performing markets,” says Vanessa Verrillo, Senior Account Manager, Client Services. “However, when we test preferred markets against broader placements, we often see stronger performance emerge from geos that weren’t previously considered priorities.”

When brands limit their audience to markets that have performed well historically, they hinder their ability to scale. In addition, there may be missed opportunities based on the methods they used to calculate their top-performing markets. 

Brooke Murray, Vice President of Strategy, adds, “Most brands don’t evaluate how penetrated they are in a market by comparing their sales volume against population. When we create market-specific plans for clients, we often find many smaller markets where we can get better rates. Purely looking at volume always brings up the top 10 markets, because of course they are the most densely populated.”

Myth #5: Geo-targeting Programmatic Audio is a No-Brainer Because It Won’t Raise your CPM

Unlike terrestrial radio, where geo-targeting can be more expensive than a national campaign, programmatic rates remain the same, whether you geo-target or not. And that can be a tempting targeting strategy, but there are a few things marketers should consider with this approach.

“Many advertisers think that smaller geos are easier to optimize, making geo-targeting the logical choice,” says Jenn, “but in actuality, smaller scale gives you less data, which actually makes optimizations slower and harder.”

Additionally, geo-targeting local audiences is especially challenging on programmatic audio placements, where audiences are based on IP addresses. “You can inadvertently deliver ads to people who are commuting, traveling, or visiting the geo you’re targeting without actually living there, so you can wind up with a mismatch of the geo you reach vs. where the listener lives,” cautions Jenn. “If I live in San Diego but am on vacation in Hawaii, I might hear an ad for an event in Hawaii in two weeks, but since I’m traveling back to San Diego by then, it’s not relevant to me.”

When Geo-targeting Works

In spite of these myths, there are absolutely instances when geo-targeting is the right choice for advertisers. 

Jenn advises, “In my experience as a marketer, geo-targeting makes sense when:

• The product or service isn’t available nationally and is limited to a handful of markets 
• You want to understand the impact of activating multiple channels simultaneously in a specific market for a big push
• You are running a geo-based incrementality test with sufficient spend to measure lift
• You have reason to believe that prospects in a specific market are more valuable, or require different creative or an offer tailored to them
• A market is oversaturated and needs to be excluded from the broader campaign
• The additional CPM is justified by the incremental reach it delivers, while performance remains within goal

Conclusion

“In many channels, it can be more expensive to geo-target than to advertise nationally so it’s almost like you have to have a good reason to narrow the audience.” says Jenn.

And a broader marketing strategy has real advantages.

“In my experience, many advertisers believe that narrowing to ‘best-fit’ markets will improve efficiency,” says Vanessa. “In reality, it often limits scale and reach—and can even drive up CPMs, as we pay a premium to secure enough inventory to properly evaluate performance. Unless there’s a clear constraint, we typically recommend a broader approach, which allows for more efficient CPMs and a more accurate read on what’s actually working.”

Still wondering if geo-targeting is the right approach for your brand? SMI can help you decide whether geo-targeting, a national approach, or a strategic combination of both will achieve the precision and scale necessary to reach the right audience at the lowest effective cost.