Flawed viewability metrics are grabbing headlines, and spurring debates among brand marketers, but a new challenge may be on the horizon for the mobile advertising industry. According to a new report released by the location-driven insights firm Placed, accuracy has fallen by the wayside in the rapidly expanding location-based advertising industry, which is estimated to reach nearly $30 billion by 2020.
Placed’s analysis found that just 1% of locations are accurate enough to identify a store visit and 80% of bid requests with location occur when consumers are in-between visits, with a significant portion of visit-based impressions occurring when at home.
“In a perfect world, each location would represent the actual location the user was when the ad was served, in reality, the study found that these locations were on average off by four city blocks,” says David Shim, founder and CEO of Placed.
To uncover these insights, Placed joined its persistently measured Placed audience to a large dataset of ad-exchange-derived locations. After combining the datasets on device identifier, Placed compared the properties of the ad-exchange-derived locations to its own Placed audience data.
Although there’s not a single source to blame for the discrepancies, Shim sees bad players capitalizing on the lack of dialog surrounding location accuracy. Ad publishers have strong incentives to provide location data to advertising exchanges, but not enough incentive to provide accurate location information. Too often, publishers rely on IP addresses from devices, which leads to low quality data.
In Placed’s analysis, exchange-derived locations were used to infer whether device owners were visiting stores at specific times and places, but findings showed that because exchange-derived locations are only present when the device owner is using the phone and browsing the specific app that serves ads, bid stream data over-indexes on location data from lodging, gyms, and fitness centers. These facilities are more likely to have available WiFi than fashion retailers, professional services, and sporting goods stores, which were underrepresented in bid data, according to Placed’s analysis.
“Not all locations are the same, just like an ad impression served on Site A is going to perform differently than on Site B. Advertisers need to question partners that utilize location, and dig beyond the marketing buzzwords to truly understand where does their location come from, and just as important, how do they validate the accuracy?,” explains Shim.
Shim hopes that his company’s new report will generate more discussion around the topic of location accuracy and limitations in the current way of doing business, along with how these deficiencies can be overcome for businesses using exchange location for in-store measurements.
“Rather than a response of frustration or anger, advertisers should channel that energy into education,” he says. “By understanding there is a viewability issue with location, advertisers can ask the right questions of partners, to insure they are transacting on accurate location data.”
Shim also believes that shining a light on biases in ad-exchange-derived location data may help the most respectable firms rise to the top over those that fall back on using device IP addresses or WiFi network names as location identifiers. He’d like to see more DSPs and programmatic platforms integrating with location and visitation measurement partners for third-party validation.
“The increased attention around location accuracy, and specifically the lack thereof, will increase partner scrutiny from marketers, and rightfully so,” Shim says. “Those who aren’t able to prove the accuracy of their location will lose out on budgets, while those who are able to validate their approach to location will see accelerated investment.”
Stephanie Miles is a senior editor at Street Fight.