Bii location data report 1 22-13


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Bii location data report 1 22-13

  1. 1. How Location Data IsTransforming The EntireMobile IndustryMarcelo Ballvé | January 22, 2013
  2. 2. How Location Data Is Transforming The Entire Mobile Industry Marcelo Ballvé | January 22 2013 The possibilities for location-based services on mobile go beyond consumer-facing apps like FourSquare and Shopkick. Location data has begun to permeate the entire mobile space, powering advertisements, and many other services — from weather to travel apps. There are 1.2 billion smartphone devices in use worldwide, and 770 million of these are equipped with GPS, according to TomiAhonen Consulting. All that geolocation data adds up to a trove of valuable information both for app publishers and mobile marketers. n this report, well point to the opportunities emerging from this new local-mobile paradigm, and demystify some of the underlying technologies and privacy issues.  Location-enabled mobile ads have generated excitement for their effectiveness and the impressive prices they command. Many mobile ad trading platforms are reporting triple-digit increases in location-enabled impressions. However, it turns out some of this data is unreliable.  Location-based features have turned out to be great for boosting engagement on apps.  Local data can connect hundreds of thousands of small and medium- sized businesses to the mobile economy, via mobile search and other strategies. Click here to download the charts and data for this report in Excel→2 Copyright © 2012, Business Insider, Inc. All rights reserved.
  3. 3. It’s All About The Data: GPS And Its Friends A pure GPS approach and the "lat-long" tags it generates is considered the standard for location data. But there are at least four other methods, sometimes used in combination, for pinpointing location. These other techniques will follow different steps to achieve an estimate of your location.  Cell tower data: When GPS signals cant reach the devices GPS chip, which often happens indoors, the device will often report its location by communicating with the cell tower its connected to and estimating its distance. Its less accurate than pure GPS data.  Wi-Fi connection: Its an accurate method but requires an active Wi-Fi hotspot. Wi-Fi locations are matched with GPS coordinates. It can pinpoint a user to a specific storefront, which is why many retailers are3 Copyright © 2012, Business Insider, Inc. All rights reserved.
  4. 4. rolling out free public Wi-Fi to enable in-store mobile ads.  IP address: Location can be gauged by the IP address associated with the data connection. The accuracy of this approach varies between carriers, and is far less reliable than the above methods.  User-reported: When users sign up for emails or register for mobile apps and services, they often enter their addresses and zip codes. This data can be translated into GPS coordinates to build a geolocation profile of a single user or user base. The ability to collect user location data and track it has raised some concerns over privacy. However, Android and iOS give users the ability to opt out of location tracking altogether via their settings.4 Copyright © 2012, Business Insider, Inc. All rights reserved.
  5. 5. (Please see section below, "Dont Follow Me: Why The Privacy Issue Is Solvable," for more on the privacy issue.) The Lat-Long Mirage Advertisers pay a premium for location-enabled ad impressions. Data from several mobile ad networks and ad exchanges tell the same story: location-enabled ads see a lift in CPMs, or cost per thousand impressions. (See chart, above.) Also, the simple fact of a user being physically close to a business, within two miles or so, gives a significant lift to click-through rates on mobile banner ads, according to a 2012 study of clicks on AT&Ts YP local mobile advertising network.5 Copyright © 2012, Business Insider, Inc. All rights reserved.
  6. 6. (See chart below.) But unbeknownst to many ad buyers, many location ads arent always what they seem. Its an oft-discussed fact in the mobile advertising space that only five to 10 percent of all mobile ad inventory has true GPS-generated latitude- longitude data. Many ad impressions in fact are powered with less precise geographic information: zip codes, metro area, carrier IPs, etc. Also, even ad inventory with latitude-longitude information isnt always what it seems. Thats because some ad platforms will take the rougher location data like a zip code and translate it into a latitude-longitude format. "People are making up lat-long because its one of the few things that can give a lift to impressions on exchanges," says Tom MacIsaac, CEO at Verve, a location-based mobile advertising specialist.6 Copyright © 2012, Business Insider, Inc. All rights reserved.
  7. 7. MacIsaac says Verve is able to offer 30 percent of its inventory with "true lat-longs" because its ad platform rides atop an exclusive network of 3,500 local publishers. For ad platforms that dont have lat-long data, there are ways to create it from less precise location coordinates. For example, ad suppliers can generate a "centroid" — the GPS centerpoint of a zip code, metro area, or user cluster — and use that coordinate to geo-tag their available inventory, or they can randomize to distribute users across the same area. In other words, the resulting location tags dont accurately represent the real-time or past locations of the targeted users. Theres money at stake in being able to distinguish true lat-long data. Nexage, an advertising exchange, reported in December 2012 that an impression with any location data commands a premium of twice the average CPMs for mobile ads, while lat-long impressions will fetch five times the average CPM. Do ad buyers generally understand differences in the quality and accuracy of location data? "I think the answer is no," says Greg Sterling, senior analyst for Opus Research. However, they may not necessarily care. Major advertisers are so concerned about scale, Sterling says, that they often simply want to reach as many mobile devices as possible, and ignore nuances in accuracy.7 Copyright © 2012, Business Insider, Inc. All rights reserved.
  8. 8. Jumping The Geofence JiWire, another specialist in location-based media, already has a database of over 3 billion location tags, which is growing at the rate of 16 million per day, thanks to JiWires partnerships with operators of public Wi-Fi networks, as well as app publishers. JiWires data shows that even in public Wi-Fi hotspots like cafes and airports, mobile devices are already trumping laptops in usage. By the end of last year, smartphones and tablets together accounted for 58 percent of usage on JiWire Wi-Fi traffic. (See chart, below). In addition to hyper-local campaigns, location-based ads can be used for "geofencing," which refers to the practice of isolating zip codes, metro areas, or city blocks near retail outlets or malls. Then, advertisers will bombard those ring-fenced areas with mobile ads. The downside is that geofencing inevitably captures a great deal of audience who might have no interest in a service, event, or product. So, JiWire and other location-based advertising platforms are reformulating their pitch to brands, big retailers, and national advertisers. Theyll use location data not just to geofence, but to build much broader audience categories. For example, a user who visits airports and hotels with a certain frequency may be classified as a business traveler. That business traveler — along with potentially hundreds of thousands of users with the same profile — will be targeted with relevant ads, no matter where they are.8 Copyright © 2012, Business Insider, Inc. All rights reserved.
  9. 9. "I think using location, not just present location, but present and historical location, is a smart way to define audience," says Phuc Truong, a managing director at mobile media planning agency, Mobext. JiWire refers to this style of location-based marketing as the "location graph," but other companies, including Verve, Everyscreen Media, Factual and XAd are all pitching services that are a variation on this theme. Sterling, of Opus Research, sees this move beyond the geofence as key to mobile advertising for two reasons. One, it translates user location, one of the unique selling points of mobile as a go-everywhere medium, into a language that advertisers can understand: the language of audience profiles. Two, it attacks the scale issue.9 Copyright © 2012, Business Insider, Inc. All rights reserved.
  10. 10. Lets say a luggage brand wants to reach business travelers. If this brand were to simply pound airports with mobile ads, the audience would be restricted to whomever happens to travel during the timeframe of the campaign. Also, the campaign will reach many individuals for whom the ads will be irrelevant: airport workers, travelers relatives, taxi drivers. But lets say the brand identifies devices owned by travelers who visit at least a half-dozen airports in the course of a three month period. The ads target these users regardless of where they are once the mobile campaign begins. The audience expands considerably in size, and it gains accuracy too. "I think location as audience is kind of a near-term key for getting brands involved" in mobile, says Sterling.10 Copyright © 2012, Business Insider, Inc. All rights reserved.
  11. 11. Apps: Pushing Location Something similar may happen with location data in the context of mobile apps and websites. Location-based services will become ubiquitous, but not with a wave of killer apps or social networks that will move them into the consumer mainstream. Instead, location data is being used to power location-sensitive features in the background of more and more apps. Facebook, Google, Yelp, Instagram, Groupon, Twitter and dozens of other popular apps offer location-enabled features. These mobile properties, and many others, have moved beyond the "check-in" concept, which in any case never really caught on with users. They may still offer the ability to "check-in," but are also trying to be more imaginative with location-based notifications and location-aware services. Some apps, like FourSquare, Path, and Google Latitude, offer ambient tracking of a smartphone so that users can share their location with friends in real-time and receive push notifications that guide them to nearby events, deals, or gatherings. Another popular app, Life 360, allows families to track one another. In December, Life 360 introduced a feature called "Places," which allows families to receive automatic geo-tagged notifications. For example, a teenagers mother may receive a note, "Alice Has Arrived At School," every time her daughter makes it back safely at her boarding school. One big problem with ambient tracking and location-enabled push notifications: the battery drain of always-on GPS. One company, Geoloqi, has created a development platform that aims to allow coders to easily build powerful location-sensitive features that are battery friendly.11 Copyright © 2012, Business Insider, Inc. All rights reserved.
  12. 12. In October of last year, Geoloqi was acquired by mapping technology company, Esri. Amber Case, co-founder of Geoloqi, says most of the uses for location data in apps wont be glamorous, but instead will work unobtrusively in the background to make life easier for individuals and organizations. For example, she says, an energy-saver app will remind a user to turn off their lights every time they leave their vacation home. Or, a travel app will push notifications for automatic check-in as a user arrives at an airport. "Youre using location to inform multiple services," she says. "Its really just this nerdy, mundane but incredibly useful stuff." Privacy: Don’t Follow Me12 Copyright © 2012, Business Insider, Inc. All rights reserved.
  13. 13. There is one stumbling block to a location-aware mobile ecosystem: privacy. But we believe privacy fears as they pertain to location are overblown. Firstly, the industry is acutely conscious of consumer and media attention on the privacy issue and is already self-policing. For example, with Apples App Store, if you cant make a good case for why people should share their location with your app, Apple wont let you ask for it. Several of the largest ad networks and exchanges — including location specialists JiWire and XAd — have contracted privacy manager TRUSTe to manage privacy across their mobile ad operations. Besides allowing users to easily opt out of ads, TRUSTe also "discourages permanent device identifiers." Instead, it generates temporary device IDs for location tracking and audience targeting that are not traceable to specific users or their personal information. "What that does is separate that location data from any other data that would push the boundaries of privacy," says David Staas, president of JiWire. If consumers feel they benefit from a location-aware mobile ecosystem, including more relevant advertisements, they will continue to give up their locations, says Jamie Singer, director of client services at Everyscreen Media, which has also signed on to TRUSTes service. Theres some evidence to back up Singers belief. An IAB survey from May 2012 found that 28 percent of consumers said they would accept location information being used to improve ad relevance. Thats a relatively high proportion. By contrast, fewer than 20 percent said they would accept ads targeted to their Facebook or Twitter activity, their TV viewing, or their recent purchases.13 Copyright © 2012, Business Insider, Inc. All rights reserved.
  14. 14. (Note: the survey asked respondents to assume that mobile ads had to exist.) Mobile Search: Location In The Long-Tail Since searches with local intent are such a big part of mobile search traffic, location data has played a role in Googles rise to mobile search dominance. Currently, 96 percent of all mobile searches are undertaken on Googles search engine, and an estimated 33 percent of these have local intent. Google highlights the "local mobile consumer," in its ad sales material, and touts statistics that show a third of mobile searches have local intent, and that 94 percent of smartphone users have searched for local information.14 Copyright © 2012, Business Insider, Inc. All rights reserved.
  15. 15. Smartphone users tend to use their handsets at the beginning of the consumer process, while tablets are used throughout the purchase cycle, according to a Localeze and 15 Miles study of local mobile search. That echoes results of a Google survey of 1,000 smartphone users, which showed that they use search to get basic, first step-type information about a business: address, phone number, etc. In Googles survey, 76 percent of the respondents said they would like businesses location or operating hours, and 61 percent said they would like to be able to "Click to call" the business. Because small and medium-sized businesses tend to have a local footprint and source sales from a limited geographic area, mobile search is an issue they will eventually have to grapple with. Right now, SMBs are lukewarm to mobile, unsure about how it will benefit them. A Borrell Survey released in September 2012 found that only 49 percent of the over 1,300 small and medium-sized businesses polled said it was likely that they would incorporate mobile into their advertising and marketing efforts in 2013. The survey also picked up an underlying discontent with existing mobile efforts. Half the businesses that were in mobile said they would increase that spending if they saw a better return on their investments in the medium.15 Copyright © 2012, Business Insider, Inc. All rights reserved.
  16. 16. THE BOTTOM LINE  Many geo-tagged mobile ad impressions arent what they purport to be. The GPS coordinates are often the result of various workarounds. Ad buyers should try to understand exactly what theyre getting.  The geofence is no longer the dominant paradigm in location- based mobile marketing. Location data has become a powerful tool for understanding mobile audiences and their needs.  Location data will work its way into every major part of the mobile ecosystem. Every mobile marketer, developer, and publisher needs to consider whether location-enabled elements are relevant to their audience. About BI Intelligence BI Intelligence is a new subscription research service from Business Insider that provides in-depth insight, data, and analysis of the mobile industry. We publish notes and in-depth reports about the business of the mobile industry as well as an exhaustive library of charts and data that will help you stay on top of the key trends in the mobile ecosystem. We help our subscribers make smarter strategy decisions. To learn more or to sign up for a free trial of the service, please visit Analysts BI Intelligence has an experienced team of analysts led by Henry Blodget, CEO & Editor-in-Chief of Business Insider. BI Intelligence’s team of dedicated analysts have deep analytical and industry experience, and work with the Business Insider’s 50+ journalists covering specific verticals, such as technology, advertising, and strategy, to produce unique insight and analysis on the mobile ecosystem. Copyright © 2012 Business Insider, Inc. All Rights Reserved. Proprietary and Confidential Property of Business Insider, Inc. Licensed for Use By BI Intelligence Subscribers Only. Access to and use of this proprietary and confidential information is limited by the terms of conditions.16 Copyright © 2012, Business Insider, Inc. All rights reserved.