SMG’s Thompson: ‘Not One Client’ is Not Interested in Hyperlocal

With brands beefing up investment in mobile advertising, the hyperlocal ad tech space is as crowded as ever. For startups, that means fighting to find the ear of decision makers at big agencies, often drown out in the mix by a noisy, and well-funded, startup scene. On the buy-side, it’s a delicate process of trial and error, as agency execs look to innovate and learn without falling off the bleeding edge.

Derek Thompson is global managing director of mobile practice at ad agency Starcom MediaVest’s (SMG), which has more than $30 billion in annual billings. The marketing veteran directs the mobile initiatives for the global marketing network, developing best practices and guiding campaigns for SMGs clients, which include brands like Samsung, Comcast, and Mondelez International (formerly Kraft Foods). Thompson is also the man responsible for vetting vendors in the mobile, and local, ad tech space, to identify the mobile firms with whom SMG, and its brands, work. In April, SMG announced a partnership with PlaceIQ to build out a new KPI for retailers, which measure when users, who saw a mobile ad, show up in-store. 

In a conversation this week, Thompson discussed how location creates an ‘element of sophistication; his clients’ current hyperlocal interests (real-time offers and coupons); the toe-dipping they’re doing now; and the “minimum requirements” for vendors to get on Starcom’s radar.

When your team sits down to plan a campaign, how does location fit into the larger mobile strategy?
We use location in two fundamental ways. The first is to identify where a consumer is at a special time and message them based on that information. But you don’t necessarily need to use location to reach someone at that particular moment. Secondarily, we use [location] to help us better understand audience based on where that device has been seen. It’s from that that you can start to develop these truly unique and custom audience segments. We can try to do it through third-party reporting, likes, and content but that’s often misleading. Location adds an element of sophistication in terms of identifying our clients’ audiences and targeting more intelligently.

Are you separating ‘local’ into its own bucket, or do you approach location-based messaging in the context of other targeting techniques?
Often times, location is one more element to add on in order to understand the audience. In some cases, it could be the only determinate, but often times, the end goal is in understanding and creating these buckets of consumers, or devices rather, based on the information we have. I think it’s a very important signal to use, but I don’t think it’s the only one. That’s where we can start layering on third-party data, and other information that we believe is linked to these devices in order to help us paint a more clear picture of a client’s audience.

Is this making a difference in your clients’ campaigns? How does it fit with their marketing goals and targets? 
When we look at [hyperlocal targeting], we’re often thinking about moving the consumer to that next interaction. If you’re a brick-and-mortar store that next interaction is about driving people into your store. That’s the case whether you’re a big box retailer or speciality firm, or even a quick-serve-restaurant (QSR) for that matter.  It’s about driving people into real locations.

For other clients, we might focus on moving very specific audiences like travelers. The idea is to use location signals to identify a core segment of mobile audiences that are high travelers based on the fact that those devices are seen in airports or different cities. It really puts a high level of focus for those brands to speak to that set of consumers. In both cases, we’ve certainly seen some impressive results so far.

Local has traditionally been a marketing backwater for national brands. How do brands approach hyperlocal marketing today?
Across Starcom MediaVest’s portfolio, I cannot think of one client that is not interested in this space. You have consumer-packaged-goods (CPG) brands that are asking how location can help them best reach their audiences; you have auto manufacturers who want to reach people in real time at a given place; and you have travel companies that want to understand those audiences.

Across the board, brands are curious about location. They know the data is there; they know the signals are there; they know that it’s not an invasion of privacy. But they just don’t understand which technologies are out there, and how they can harness these signals and make sense out of them. And that’s the challenge with big data. There’s lots of data out there; it’s just a matter of cutting through it, validating the [information], and using it effectively.

You spend a lot of time vetting ad tech companies, identifying what works and what does not. What do you look for in a hyperlocal startup?
Overall, the most important thing for startup companies to understand is the point of differentiation they bring to the market. There’s so much activity in the [hyperlocal] space that to be another ad network, or something along those lines, does not add a lot of value. So to understand how they’re different, what’s valuable about their approach; what is the IP they’re bringing to the table. Is there something unique and technical going on behind the curtain?

Having said that, there’s also just a massive complexity in this industry. The space is so fragmented, there are so many different offerings, or alleged offers, for brands, that they need help understanding it, they need reasons to get behind it. And what it should result in is a test and learn opportunity. So that’s often what we try to drive with our brands: test and learn. It’s about doing your due diligence, understanding how a company approaches the market, understanding where they’re differentiated, and then putting it to a test.

So in terms of the market today, which tools and technologies have shown promise, and which are you less bullish on?
Thats tough to answer. With location-based and location-enabled offerings, the question is often whether the timing is right. Our clients and brands would love to do more with real-time offers and couponing. And while there are some ways to deliver against these products today, the timing isn’t necessarily right because there are other challenges as it relates to point-of-sale (POS), validation, or security. There’s a growth curve in this space, and as we move forward there will be more and more offerings, which we will be testing.

The mobile space is filled with hundreds of hyperlocal vendors, pitching a range of solutions. Which features are a must for hyperlocal vendors looking to work with Starcom MediaVest?
The ability to integrate third party ad-serving is a critical component. And the ability to manage and optimize accounts in real time in real time in terms of delivery, execution and results is also extremely important. Those are two things that I think are kind of the minimum requirements to get going.

The other one across this space is to have access to the right inventory. You can have a great solution, but if you cannot get distribution of that great idea because either your first-party publisher partners are not there yet or you’re only working with a certain segments of applications, then you’re going to be limited. The distribution mechanism is critical.

On the consumer-side, Foursquare has ramped up its ad efforts and news surfaced recently that Twitter is developing a geo-targeting product. What impact do you think these platforms can have for brands?
We haven’t tested Twitter from a location perspective, but do I think that people are encouraged by the scale Twitter is bringing? Absolutely. Do I think that people are encouraged about the simultaneous viewing and usage of Twitter? Yes. Based on those characteristics alone, I think people are going to be excited about it. With the other smaller platforms — you brought up Foursquare — it just comes down to that scale. Although they may have built a sizable audience, I don’t think anyone would argue that they have the reach that Twitter does. The likes of Twitter and Facebook are going to continue to have a huge advantage — there’s no question.

Steven Jacobs is Street Fight’s deputy editor.