Finding the Customer: Location Data Technology Takes Center Stage in Advertising Budgets

Consumers are walking around with GPS-enabled supercomputers in their pockets – their mobile phones – and new data sets are being created which leverage previous behavior. Where you are says a lot about who you are.

US location-targeted mobile ad spend is predicted to be worth $11.3 billion in 2016 and is forecast to reach $26.7 billion by 2020. Awareness of the benefits of location-based marketing is on the rise. A recent survey by Interpublic Group has reported that 56% of US digital agencies viewed location as the most important targeting metric in digital marketing. Given the advent of stronger privacy regulations, the majority of Internet users are now more comfortable with sharing their location data with marketers as it provides additional context, relevancy and value to their browsing and purchasing behaviour.

Location-data has historically been carried through bid requests which connect a user’s lat/long coordinates from his device to specific locations. Advances in technology have now allowed the most innovative companies in this space to not only use GPS originated lat/longs but also IP addresses and to apply algorithms to detect and store relationships between IP addresses and locations.

Last month, we announced the closing of a $25m growth capital financing for Blis which will help fund the company’s continued expansion into new geographic markets, notably the USA. The funds raised will also be used to enhance Blis’ core data engineering capabilities, as well as focus on the development of new product features including video location-based targeting and data licensing.

How will a location data company differentiate itself in what is an increasingly competitive market? The key ingredients will be technology that is highly scalable and underpinned by a sophisticated data management platform, deep and varied client reach across multiple industries, and the delivery of tangible results with a highly measurable impact on improving online to offline sales.

There are multiple players in the location data market including the US market leader, xAd, which is growing more than 100% year-on-year and has filed over 20 patents, along with a range of other specialist location data providers such as Ninth Decimal, Near, PlaceIQ, and several others. The market is increasingly ripe for consolidation. So which of these players will make the first move to scale up by acquiring or merging with a complementary player? Perhaps the consolidator will be WPP/Xaxis which have highlighted location data as one of their key strategic focus areas. At this time however, location marketing budgets keep growing so concern over competition is not as big an issue as with other areas of the ad-tech ecosystem. In fact, we expect the location data specialists to continue to attract capital as investors see evidence of the demonstrable return on investment for branded advertisers and the sector’s strong growth potential.

Seth Kundrot

Seth Kundrot

Seth is an Executive Director of Mooreland Partners in the London office. Seth focuses on the digital media and broader Internet sectors.