Why Snap Acquired Online-To-Offline Attribution Provider Placed
As Snap is under pressure to prove its geofilters can drive store visits and sales, it is turning to Placed, which has pioneered the idea of location-based attribution.
Snap is not just a “camera company” anymore: It’s now in the location-based advertising measurement business thanks to its purchase of six-year-old attribution pioneer Placed.
The purchase is estimated at roughly $125 million, Bloomberg News reported, noting that after a series of deals, this is Snap’s “most significant purchase since its March initial public offering, in which it raised $3.4 billion.” (Geekwire cited a “reliable source” that the deal could be worth as much as $200 million,)
The news was confirmed in a short blog post on Placed’s site by CEO/founder David Shim, who noted that the Seattle-based location services brand plans to remain independent.
“Over the past 12 months, Placed has measured more than $500 million in media spend to store visits, across thousands of campaigns and hundreds of partners, cementing Placed as the leader in location-based attribution,” Shim wrote. “By partnering with Snap, we will do even more. Still working independently, Placed’s goal continues to be the adoption of a common yardstick that can measure the offline effectiveness of advertising across multiple platforms and publishers.”
Again, given its use of other location tech providers, there are reasons to wonder why Snap chose to buy Placed, as opposed to simply contract with it as a partner.
One reason is clear: Snap is still generating excitement from marketers and agencies as an important advertising tool. But the company is facing significant competition from Facebook and Instagram when it comes to both maintaining their respective appeal to Millennials while building a broader base of users and advertisers.
To make the case to advertisers and agencies, Snap needs to take the guesswork out of its placements and collaborations on behalf of marketers.
In some ways, owning Placed goes beyond attribution. It goes to the point that location technology offers in supporting a range of advertising and marketing use cases on a daily, real-time, and predictive basis.
How The Deal Will work
Placed, which has roughly 100 staffers in Seattle, Los Angeles, and New York, will continue to report to Shim. It’s not clear if Shim’s title will change, but he will report to Imran Khan, Snap’s Chief Strategy Officer.
A source tells GeoMarketing that Snap plans to establish “strict data-sharing, privacy and security guidelines” to ensure a technical and physical separation of advertiser data between Snapchat and Placed.
Snap acquired Placed to continue to scale its measurement business and improve upon some of its own first-party offerings, like Snap to Store, by allowing advertisers to measure impact across multiple platforms.
As a mobile-only platform, people use apps like Snapchat when they are out in the real world — not just when they are sitting behind a computer screen.
Its 166 million daily active users visit the app more than 18 times per day — that’s over 30 minutes in time spent daily.
Snaps overlaid with Geofilters are viewed over 1 billion times a day, often displaying branding from national or local businesses.
According to research commissioned by Snap from Greenberg Strategy, 80 percent of its members have used Snapchat at a restaurant, 66 percent at a shopping mall, 50 percent at a gym etc.
Snap’s Other Location Data Access Points
While Snap has been using Foursquare’s Place Shapes data since last fall to support branded Snapchat Geofilters, it’s not clear if that relationship will continue (Foursquare also has its own Attribution product along with related location-based insights). Foursquare had been serving as a complement Snapchat’s other location information sources.
In a statement responding to questions about the relationship with Snap, Foursquare told GeoMarketing: “The announcement of Snap’s pending acquisition of Placed is just another indication of what we know is true: The increasing importance of location data and real-world measurement in the advertising industry.
“Snap’s partnership with Foursquare centers around the use of our Places API to power more contextually relevant geofilters. Currently, there is no change to that licensing deal. Placed does not offer developer tools.
Foursquare has its own measurement product, Attribution by Foursquare, which has always been platform agnostic. As the industry consolidates, this difference will remain.”
In mid-August, Snapchat acquired mobile search and local recommendation app Vurb for a reported $110+ million to help promote discovery of local places — something that Foursquare’s flagship app also provides.
While Placed will be able to measure the effectiveness of programs such as Snap to Store, that’s not the only reason its worth owning an attribution provider.
Location Assumes Centrality
A number of things drove Snap and Placed’s deal at this moment.
First and foremost, location technology has gone from a niche skill powering interactive maps to and something that has become a fundamental part of digital marketing.
Location is more than just lat/long; the use of geo-data powers all kinds of online/offline knowledge about consumers based on the places they go. Demographics, the traditional method for understanding how to craft and place an ad, is too vague — household income, gender, and education are very broad categories. Even matching them with cookie-based behavioral targeting is not as valuable, since you’re constantly looking in reverse.
Location is more forward-looking than other forms of targeting and attribution. If one knows where a certain type of consumer tends to go, the location patterns they create offer advertisers, agencies, publishers/developers, and platform companies much more depth and insight.
For example, people who go to fast food restaurants in the late afternoon or people who tend to shop at Walmart or Target on Tuesdays and Thursdays give you a sense of where people are in their lives in a way that household income and gender don’t.
Most importantly, location is increasingly powering other technologies like voice-activated search via digital assistants like Alexa and Siri. Instead of a list of hyperlinked search results on an infinite number of pages, location data is being used to provide specific answers based on where the consumer is.
Placed has long been positing itself as the go-to provider of cross-platform attribution, the currency of online-to-offline ad sales and targeting: that is, they promise to answer whether someone saw a mobile ad— even an out-of-home or addressable TV ad thanks to alliances they’ve struck with agencies and demand-side platforms— and then went to a brick-and-mortar store and bought something as a result.
Over the past three years, Placed has aggressively sought to sign up every major agency and ad exchange platform. Media buyers control the planning and placement of spending, and ad exchanges command the attention of publishers and agency trading desks as well.
Snap’s star quality as the “thing” to reach Millennials and Gen-Z is one thing. But with out performance metrics, agencies and their brand clients won’t spend consistently. Placed can easily connect Snap to spending from its partners, who describe their respective relationships with the company as its “preferred, non-exclusive” attribution provider for roughly 100 publishers, networks, and demand side platforms, including IPG Mediabrands, DigitasLBi, Horizon Media, Tapad, DataXu, Drawbridge, RUN, Adelphic, The Trade Desk, and DataXu, among others.
Attribution Wars Continue
Attribution is intensely valued and intensely competitive. And, although Placed has had a big head start on its rivals, like Google, Foursquare, Facebook, and other tech vendors, those contenders have built attribution into their systems as well. As a capability, attribution is increasingly viewed as a commodity or a feature. As a result it has become harder to differentiate among competing providers. This is why Placed felt that now was a good time to sell.
But Placed has a lot of tricks up its sleeve — by positioning itself as the “standard” for attribution among agencies, it has struck important deals that gave it a leg up.
For example, in March, discount shopping app Retale rolled out its “Store Traffic Guarantee” for ad campaigns on its platform a week after location marketplace xAd released its Cost-Per-Visit ad format with Applebee’s and The Home Depot. Both Retale’s and xAd’s pay-for-performance guarantees are being validated by Placed. The company’s primary product, Placed Attribution, is based on a panel model that includes 2.5 million active, double opted-in mobile app users — a number that the company has noted represents 1 in 100 adults in the U.S.
Therefore, with attribution’s value so clear, the bottom line for “owning vs. partnering” in terms of Snap acquiring Placed — and an idea that will power future consolidation in the location space — is this: the fact that on-demand, local digital services are heavily reliant on other parties’ maps and geo-data puts a publisher/developer like Snap at the mercy of those providers.
The choosing which provider to eats up time, costs, and the integration of multiple platforms and/or swapping out one company’s system for another creates gaps and uncertainty in a company like Snap’s marketing programs.
As a public company with incessant demands from shareholders as well as marketers, Snap can’t afford such distractions and interruptions. That’s why you see Facebook and Uber ramping up their own in-house location programs.
Placed’s Roadmap: Location-Based Optimization
And that ability made it important for Snap, which has made built its Snap to Store attribution ad program on top of its geofilters The pressure is coming from marketers to prove they can actually deliver customers to a place.
Placed’s mastery of location data will provide Snap with the ability to demonstrate that Snapchat activity results in physical sales. In an arena where roughly 90 percent of purchases happen in-store, that’s an asset the company had to obtain.
Shim had a sense of where the role of location technology would be heading two years ago.
In 2015, Placed expanded beyond measuring mobile advertising to include desktop ads with the launch of the Cross Device Marketplace.
The Cross Device Marketplace enabled advertisers and publishers to select a cross device provider (e.g., BlueCava, Crosswise, Drawbridge, Tapad) to be applied across a campaign, enabling Placed to connect desktop ad exposures to store visitation.
This expansion of Placed Attribution was something the market demanded, and quickly adopted once available. In 2015, Placed also announced the launch of Placed Revenue, where in addition to store visits, reports included purchase rate, revenue, and return on ad spend metrics.
Going into 2016, Location Based Optimization (LBO) is a term that Placed coined to highlight the shift in 2016 from measurement to optimization and actionablity as it relates to location.
“Location-Based Optimization is set to be the next SEO, SEM,” Shim told us last year. “With 90 percent of retail transactions occurring offline in the physical world, it is a channel where optimization is green field. LBO has the opportunity to be a larger market than SEO and SEM as it is addressing a market that is 9x the size of digital.”
That opportunity is now in Snap’s court.