A day after Esri snapped up location-technology firm Geoloqi, Telenav has agreed to dish out $22.5 million to acquire ThinkNear, a hyperlocal advertising startup based in Los Angeles. The TechStars alum will join Telenav’s two year-old mobile advertising group, and form a new platform called Scout Advertising that will serve both the company’s consumer-facing mobile application, Scout, as well as other partners.
Telenav, which got its start developing mapping applications for mobile devices, has been busily expanding its mobile footprint over the past few years, acquiring local search play Goby in 2011 to power Scout, partnering with Ford via its AppLink service, and developing a Drive-To Advertising product, which tacks browser-based turn-by-turn navigation onto a mobile ad-unit, late last year. The company is pitching the acquisition of ThinkNear as a growth engine for its mobile advertising unit, and a way to quickly achieve scale — in terms of impressions — for the newly developed set of tools.
“Our positioning has always been around driving new customers,” Dariusz Paczuski, VP of marketing, product, and monetization at Telenav, told Street Fight about the strategic fit with ThinkNear. “Now we can move up the funnel by allowing advertisers to not only drive customers to the store, but help them reach and discover new customers as well.”
The company’s move into mobile advertising is built on a model which has powered the revenue growth for companies like Google over the past few years. By essentially white labeling the technology that supports its consumer property — for Telenav, that’s a browser-based turn-by-turn navigation system — the company can magnify the revenue the technology generates without the cost of entering new markets. With the Drive-To conversion tool (think click-to-drive instead of click-to-call), the company appropriated an existing investment into a new vertical, giving Telenav a unique, and fundamentally locally-geared, point of differentiation within the crowded mobile sector.
“What we’re essentially doing [with the acquisition] is combining what we do — the fine, precise targeting — with what Telenav does, which is the turn-by-turn navigation software,” Eli Portnoy, ThinkNear’s founder and CEO told Street Fight. “Now advertisers can come to us, target ads to the right person at the right time, and also drive that person to their business.”
Although Portnoy says he didn’t expect to sell the business this early, it’s a validation of the company’s decision to pivot from its original model — a yield management platform for small businesses — late last year. The idea was to use mobile advertising to deliver businesses nearby customers during downtimes by analyzing spending trends as well as contextual indicators like weather. The problem was not with the SMB market, it was the mobile ecosystem. The company could not scale enough impressions through partnerships with detailed enough location data (down to 100 meters in granularity) needed to achieve the thickness necessary to serve businesses.
“It was nice, in theory,” Portnoy said about the original model. “We had really nice uptick in SMBs. But the fundamental gap was buying mobile ads was really tricky. We thought, this is 2011, and all of these mobile ad nets have talked about doing hyperlocal, they’ve figured it out. But no one had solved it.”
As Portnoy points out, part of the problem is that many of the players involved in building the mobile advertising ecosystem come from online advertising, where location is irrelevant. The plumbing, so to speak, lacks the necessary specs for clean and efficient sharing of location data.
The key here is that location data is complicated. Turning real-time location from a data point into a place with meaning — whether that’s for advertisers or others — is as much about contextual indicators than the lat-long itself. The exits of Geoloqi and ThinkNear demonstrate its value, but for location advertising (and mobile advertising as a whole) to grow, the mobile ecosystem needs to begin to understand location, together.
Steven Jacobs is deputy editor of Street Fight.