For the Best Location Data, Just Ask
The heightened level of awareness and regulation -- like GDPR -- is already having an impact on companies that collect, sell or use consumer location data. Swirl Networks' Hilmi Ozguc has some thoughts on next steps for marketers.
Location-targeted mobile ad spending is forecast to reach nearly $40 billion by 2022 (according to BIA Advisory Services), a more than 100 percent increase from last year’s $17 billion spend. Driven by marketers and advertisers jumping in to take advantage of the new opportunities enabled by mobile location, the data that sits at the center of this burgeoning ecosystem is poised to play a pivotal role.
Mobile location data provides rich insight into individual consumer behaviors in the physical world, where more than 90 percent of retail transactions occur. And this data is enabling a host of next-generation marketing capabilities, from enhanced ad targeting and online to offline attribution, to omnichannel personalization and new in-store shopping experiences. But surrounding this data explosion is an increasing need for consumer protection.
The Growing Call for Consumer Privacy
Consumer privacy has been getting a lot of media coverage lately. That’s because in addition to a number of recent high profile consumer data blunders and missteps (e.g. Facebook, Uber, Equifax, MoviePass), Europe’s General Data Protection Regulation (GDPR) recently went into effect. This new consumer protection law imposes strict rules regarding how companies collect, manage and use personal data (including a user’s location). The regulation requires companies to clearly communicate to (and obtain permission from) consumers regarding how their personal data will be used, including informing them if there is any possibility that personal data could be shared or sold to another party.
The heightened level of awareness and regulation is already having an impact on companies that collect, sell or use consumer location data. App publishers and vendors that have been selling mobile location data and location-targeted mobile ads built on questionable data practices are facing significant challenges to their business models. According to several published reports, Apple has begun removing apps from the App Store that violate the company’s requirement that publishers obtain explicit consumer consent before sharing any location data with third parties. And as the industry migrates from a call for general consumer consent to strict requirements for full transparency and disclosure of all uses of consumer data, many data brokers, ad networks and app publishers that rely on hidden SDKs to capture and monetize consumer location data will find themselves with unsustainable businesses and the prospect of significant financial penalties.
So, What’s a Marketer to Do?
Marketers who are developing strategies, building capabilities or running programs based on mobile location need to be keenly aware of how and where their data is being sourced. Here are some key considerations:
- First party data, collected directly from a company’s own customer base is the highest quality data that a marketer can use. For retail marketers in particular, indoor location signals paired with retailer-owned mobile apps can be used to generate a unique set of behavioral data. And because this data can be used to add real value to the in-store shopping experience, consumers are more than willing to consent to sharing their location. Every marketer should start here and then consider alternative sources if additional audience reach is desired.
- Second party data, which is simply another company’s first party data, can be obtained (or co-created) through direct relationships with the companies that own those customers/users. These close partnerships ensure that marketers receive data quality, transparency and explicit consumer permission, as well as significantly expanded audience reach. Retailers who connect their indoor location signals with large and trusted mobile audience owners are able to generate precise, verifiable second party location data from a large portion of their store visitors, while enabling entirely new consumer experiences in the store. Marketers would be wise to explore this option before jumping into the quagmire of third party location data.
- Third party data, sold by a wide variety of aggregators, networks and vendors, offers the promise of large scale, low cost audience reach, but unfortunately is all too often riddled with quality, accuracy and transparency issues. With data that could be generated from a broad set of algorithms, scientific approaches and “black box” processes, and aggregated from a variety of known and unknown sources (many of which rely on questionable consumer permissions and privacy practices), marketers need to proceed with extreme caution when considering this category. At the very least, buyers should demand clear and verifiable answers to questions regarding data sources (What are the names of the individual mobile apps/audiences that were used to generate the data?), data generation processes (How was the location data generated – GPS? Beacons? Unknown?), and consumer privacy safeguards (How was consumer permission obtained and what specific permissions were granted?).
The precision and volume of mobile location data that is now available to marketers is truly astounding, but with it comes a set of consumer privacy and protection concerns that every marketer needs to understand. Widely available tools and capabilities enable virtually any company to generate rich sets of privacy compliant first party customer data, while second and third party sources offer significant opportunities to extend audience reach. No matter what data source they choose, smart marketers know that they need to put the consumer at the center of everything they do. The key to success will be making sure that their vendors and partners do as well.
*Hilmi Ozguc, founder and CEO of Swirl Networks, launched Swirl with the goal of transforming brick and mortar retail through the power of mobile technology. Hilmi’s career has focused on building companies that lie at the intersection of digital media, marketing and technology.