Momentum Builds for Third-Party Location Data; Brands See Correlation with Marketing Effectiveness

Third-party customer location data isn’t used widely by multi-location brands, but those that use it appear to have better success with local digital marketing. That’s what we found by digging into Street Fight’s recent survey of enterprise local marketers.

Real-time location data is one of the top local technologies both brands and smaller local merchants are interested in exploring in the near term. The figure below illustrates that a third of each group listed it as among their top three technologies. Both groups seem to be thinking about applying location data to mobile targeting, and the brands may also be considering addressable TV advertising. Similarly, when we surveyed suppliers of local marketing technologies and services, location data and analytics were a top R&D priority, both now and for longer-term payoff. So there is plenty of momentum and investment.

Currently, fewer than one-fifth (17%) of brands surveyed said they were regularly collecting and analyzing customer and audience location data from companies like Factual, FourSquare, GroundTruth (then xAd), and PlaceIQ. So we looked more closely at the marketing strategies and operations of those location data collectors, as well as the group that was interested in location data, and compared them to the overall base of respondents.

We also asked all the local decision-makers we surveyed how effective their company’s digital marketing was in achieving typical marketing objectives.

The figure below presents the results of that comparison by showing which portion of each group rated its efforts “very effective.” There appears to be a correlation between local digital marketing effectiveness and using third-party location data and/or being interested in it. (The two groups did not completely overlap, although most of the collectors were also interested.)

I profiled those early adopters — the companies that regularly collected location data — in a previous post. They weren’t the biggest companies we surveyed, and many were in the tech/telecommunications and retail industries. They showed sophistication in their use of marketing attribution and audience analysis techniques, but they confessed that working with multiple sources of data was a challenge.

Here are some characteristics of the bigger group of multi-location brands, the ones that expressed interest in real-time location data technology:

• They varied in size and did not have the largest yearly revenues of the companies we surveyed. Many were in retail, healthcare, or tech/telecommunications.
• Like the collectors, they rated digital display advertising, paid social media, and television as their most effective tactics. Both groups were different from the average in that they did not list email as their top tactic. The collectors were even more TV-centric, and they also were twice as likely as the overall respondents to cite re-targeting as one of their top 5 most effective tactics.
• Similar to the average, most spent less than a third of their digital budgets on local. But a higher than average over 50% said they expected that local mix to increase. None said they were cutting back on any of the digital tactics we asked about. The tactics the largest portion of the group said they were increasing spending on were social (57%), local sites (53%), paid search marketing (53%), and mobile (50%). 
• They were a little more likely than the average brand to use point-of-sale data and multi-touch attribution to measure effectiveness, but they were less sophisticated than the collectors. Many did use third-party dashboards or data management platforms. Nearly a third said they regularly collected customer location data, with their marketing departments or customer service being the main data influencers. Managing and understanding multiple data sources was also their most difficult local digital challenge.

As noted, while there is high interest among enterprise local marketers in location data, there’s not a lot of active adoption or deployment yet. Only 10% of the brands we surveyed had it among the top three types of customer information deployed across the most campaigns. So in addition to marketing use cases, data suppliers are actively mining other departments at brands and other revenue streams for their offerings. For example, Factual says a little over half its revenue comes from marketing, as it aggressively licenses to application developers and to companies doing other types of analysis.

Another company in the general location information category, Carto, commissioned a survey of brands from Hanover Research late last year that showed a similar rate of third-party sourcing as did our survey. That survey also showed brands using a variety of location data (first-party, GIS, listings, etc.) by applying it to functions like logistics and competitive analysis. Nearly a third used it to analyze market penetration or for supply chain optimization. About a quarter used it for new product development or sales management. Those applications should be ripe opportunities for suppliers, but I expect the primary use of location data in the next 12-18 months to be for customer segmentation and marketing attribution.

David Card is Street Fight’s director of research.

Click here for more on the The Local Merchant Report 2017, and here for Enterprise Local Marketers 2017.