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(0)24 361 2342; Fax: +(31) (0)24 361 2372. Effects of location-based advertising 2 AbstractAdvertising professionals have great expectations of Location-Based Advertising (LBA). The present study therefore set out to investigate whether ads that are tailored to consumers' location are indeed more effective than ads that are not. In addition it was investigated whether LBA is particularly likely to be effective when the ad is not only location-congruent, but also relevant to consumers' goals. Therefore, a 2 (location congruence) X 2 (goal relevance) experimental design was employed. These expectations were borne out: the location-congruent ad resulted in more purchases than the location-incongruent ad, but only when the ad was high in goal relevance.These results suggest that it is only profitable for advertisers to send 'local' messages when these messages are relevant.

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Marketers increasingly use behavioral targeting in location-based mobile marketing (LBMM). However, highly personalized marketing messages like this may backfire by eliciting consumer reactance. We suggest that LBMM efficacy depends on its potential to minimize consumer reactance, which can be achieved by effectively combining location targeting (in-store vs. out-store), behavioral targeting (based on consumers’ product category involvement [PCI]), and the type of promotion offered (price vs. non-price promotion). Results of a field study, a virtual reality experiment, and two online experiments show that although in-store mobile ads are generally more effective in increasing sales than out-store mobile ads, this is only the case if consumers have low PCI with the advertised product category, because this decreases their reactance. To attract consumers to stores by out-store LBMM, we show that firms should offer price promotions to consumers with low PCI and non-price promotions to consumers with high PCI, because these combinations of location targeting, behavioral targeting, and type of promotion elicit the least reactance and therefore result in a higher probability to buy.

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