It’s been a banner year for the mobile advertising, but the industry still faces structural issues that could inhibit growth. To wit: the growing importance of programmatic buying, where marketers buy media via data not content, has suddenly put an price tag on the data quality problem on mobile exchanges.
A new report from Thinknear suggests the problem isn’t getting any better — at least when it comes to location data. The mobile advertising company found that the quality of location data, which publishers attach to inventory passed onto programmatic exchanges, has declined slightly in the previous three quarters, returning to levels seen a year ago.
After a sharp improvement in the third quarter of last year, the average accuracy of location data on mobile exchanges, as measured by the company’s Location Score technology, has returned to comparable levels as the beginning of 2014. In the first quarter of this year, 37% of the inventory with location data was accurate to within 100 meters of the user’s true location — a little larger than a street block in New York City. Meanwhile, over half of the inventory was not accurate to 1,000 meters.
To an extent, the decline in quality can be correlated with the sheer growth of location-enabled inventory. The amount of location-enabled inventory has nearly doubled since the third quarter of 2014 as publishers look to take advantage of a rising demand for impressions with location data. Often, publishers will substitute less accurate (and at times even fraudulent) data such as cached information or ZIP code data from registration forms for real-time data derived from GPS and wi-fi positioning.
The data quality problem poses both an opportunity and a threat to the mobile advertising industry. On the one hand, lesser-quality data will dilute the performance of location-based advertising campaigns and eventually drive the price down on inventory with location data. On the other, the data quality issues create a meaningful problem for specialized location companies to solve, curbing competition from broader mobile or desktop focused advertising technology firms.
Steven Jacobs is Street Fight’s deputy editor.