An Unsexy Truth: Emerging Tech Hinges on Local Data
I spend a lot of time talking to people in the augmented reality (AR) sector, and one factor continues to be overlooked: local data. In other words, the shiny vision of graphical overlays that augment our perception ain’t gonna happen without hordes of geo-relevant data.
Take for example Google’s new self-trumpeted visual positioning service (VPS). Walking around Home Depot and being guided to the exact screwdriver you’re looking for requires an accurate database of products, blueprints and 3d scans of hundreds of store locations.
Google Lens is perhaps a more local example. Holding a phone up to a storefront to get real-time details, reviews and operating hours is accomplished through object recognition using Street View imagery, as well as lots of local business data from GMB.
This is all to say that the visual search future in which “the camera is the new search box,” will have a massive reliance on local data. Therefore value and demand are boosted within that world for companies that have unique local data sets — everything from NAP to snaps.
Speaking of Snap, it has validated this very principle through two recent acquisitions that support a location data play: Placed and Zenly. These moves follow geo-filters in Snapchat’s march towards more local relevance for shared snaps and AR content like World Lenses.
Another local example (though non-AR) is Uber’s move to capture and monetize your in-car attention. As we wrote recently, that unlocks lots of additive media time. Serving behavioral and route-informed suggestions for local fare comes next; and data partners like Foursquare will enable it.
But moving past ad targeting — an arguably tired conversation — local data can unlock operational efficiencies and intelligence for businesses. That includes everything from supply chain management to staffing and CRM. This strays from the AR topic but has local data-reliance in common.
The most recent example is xAd’s rebranding as GroundTruth to convey location data’s value beyond ad targeting. It’s about capturing operational insights. Foursquare has been beating this drum for years, using location-based consumer patterns to predict brand revenues.
This all builds up to the evolution of the “local space.” Focused for decades on data-informed advertising and marketing, smart companies will start to treat data as a primary product. And they’ll package it in the low-friction style of SAAS. I’m calling it Local Data as a Service (DAAS).
The key is that DAAS broadens the local opportunity beyond the $150 billion local ad market that’s been pursued tirelessly in my last 12 years covering it, and before. It becomes a much larger addressable market that taps into everything from payroll to payment processing.
And the kicker is that DAAS carries the virtues of SAAS (i.e. recurring revenue) in investors’ eyes. That could finally bust the local space out of valuation jail where it’s sat for years, due to factors like SMBs’ fickle ad-buying patterns and high churn. Yext’s IPO is Exhibit A.
Speaking of valuation, all of the above follows Salesforce’s playbook. You can bet that it will eventually pounce on the long-tail SMB space. And the thing about Salesforce is that it penetrates new segments by acquisition, so there will be some big exits for SMB-focused DAAS players.
Supporting this, the Economist recently wrote that data is the new oil. That works on metaphoric levels regarding economic impact. But it also applies literally: companies built on data — Google, Amazon, Facebook — have valuations approaching the ExxonMobils of the world.
Back to AR, the sector has some big technical challenges so it can be forgiven for not thinking about local data just yet. But it will eventually realize that differentiation stems from a fundamental ability to locate objects — not bells and whistles — which in turn stems from local data.
Of course data isn’t as sexy as the AR-rendered dragon that flies across your living room (or more aptly, the “barmaid” from Silicon Valley). But it’ll be a primary source of differentiation and thus value in immersive tech. And the dollars it creates could arguably have some sex appeal.