What’s the Fate of Location Intelligence in 2021?

As we say goodbye to the dumpster fire that was 2020, it’s time to project forward to the coming year. ‘Tis the season for next-year predictions. But rather than rattle off a list of projected 2021 happenings, we’ll zero in on one area that’s central to Street Fight’s coverage: location data.

To contextualize location data’s future requires looking at its recent past. Otherwise known as location intelligence, it tracks mobile user behavior and movement to inform marketing strategies (think: ad targeting) or evaluate marketing effectiveness. The latter involves the art of offline foot-traffic attribution.

Beyond advertising, location data players like Foursquare and PlaceIQ have applied the technology to other endpoints such as helping brands decide where to open their next location. Hedge funds even use location data to gain an intelligence edge, surveying foot traffic to estimate retailer revenues prior to earnings.

Though these and other use cases are valuable and increasingly prominent, the past few years have brought considerable headwinds to the location intelligence sector. As a corollary to the larger privacy backlash in the advertising industry, there’s been a crackdown on location data gathering.

Location data headwinds

That scrutiny includes sections of legislative measures like GDPR and CCPA. But greater challenges could come from private sector measures. For example, iOS and Android alerts prompt users to turn off GPS location tracking in mobile apps — the top way that location intelligence players track movement.

Just last week, Google and Apple announced that they’re also banning X-mode’s location tracking in apps on their respective platforms. Like a lot of action in ad-industry crackdowns of late, this move was partially driven by politics and partially driven by Apple’s repositioning as a data-safe hardware play.

Speaking of which, the biggest privacy-related event of the past year was Apple’s bombshell announcement that it will limit access to mobile IDFA — a standard unit for mobile app-based ad targeting and tracking. Add it all up, and the mobile advertising world is being turned upside down.

Some of this momentum was underway last year… then, a pandemic happened. Covid-19 has not only overshadowed the ongoing privacy backlash, but it’s also delayed its bloodletting. We’ve seen some evidence for example that GDPR and CCPA have slowed down enforcement in these “uncertain times.”

Even if this is true, it will be a temporary reprieve. And again, the real sting will come from private-sector measures. Apple’s IDFA lockdown goes into effect in early 2021, despite sizeable counter-attacks from Facebook and other vested interests throughout the mobile app advertising landscape.

2021 directions

So what does all of this mean for 2021? The biggest thing we predict is location intelligence sector consolidation. This has already gotten started in 2020, considering Foursquare’s merger with Factual, and smaller deals like X-Mode’s acquisition of Location Sciences and Near’s recent Teemo acquisition.

One thing driving this consolidation is the need to pool resources. Data sources are getting constrained, so location-data players have to gain back network effect. That can be accomplished to some degree by combining data sources. This principle was at play when Foursquare acquired Placed and Factual.

Speaking of Foursquare, it’s the other consolidation driver. As it continues to make a power play for location-intelligence scale, it will drive others to follow suit to compete. Though success in location intelligence relies on strong technology, it’s also all about network size and large samples.

So expect to see a location-intelligence shakeout in 2021. That will include some companies that don’t make it, and some that get acquired (possibly at a discount). Foursquare will continue to be the 800-pound gorilla based on its recent M&A activity and good underlying location-intelligence chops.

Outgoing Foursquare CEO David Shim told me there aren’t other acquisitions planned, but we think that could change. Meanwhile, keep an eye on other industry consolidation. Location intelligence will continue to be central to mobile advertising, though the landscape may begin to look a lot different.