Over-Reliance on the Bidstream Is Failing Retailers Looking to Make the Most of Location-Based Advertising

Today, using location data as part of ad campaigns is the norm for most retailers – and for good reason. Not only does it enable them to build location-informed audiences, but also to target consumers with the right message, at the right location, and the right time, as well as to measure the effectiveness of their advertising at driving consumers in-store. In this piece for RetailTechNews, Mark Slade, CEO, Location Sciences, explains that, despite this, we are acutely aware that not all location data is created equal. And that includes the data sources that retail advertisers currently rely on most heavily.

Location Sciences recently carried out a study in partnership with RetailTechNews, surveying 157 UK retail professionals who currently make use of customer location data. This survey showed that the majority of location data is sourced programmatically, via the bidstream. To be precise, 54% of retailers currently buy location data this way, a number that is set to rise to 74% in the next 12 months.

However, the bidstream is an inherently unreliable source of location data. This is due to a number of important factors, including a reliance on publishers to pass on accurate location data to the bidstream; a lack of accurate GPS data attached to the majority of bid requests; and location data being obtained from the IP address of the phone, or mobile network tower, rather than the phone’s location services.

Programmatic bidstream data is also only available when the consumer has been exposed to an ad within an app. This is intermittent and therefore skewed when compared to SDK-based data, where location can be collected in the background at regular intervals, providing the right consumer consent is achieved.

As a result, the bidstream is simply incapable of delivering the precision that advertisers want from location data. For example, an indication of dwell time at the location – which was identified as an indicator of good quality data by 53% of retailers – is unavailable via the bidstream.

The single biggest factor, though, is accuracy – or lack thereof. When we asked retailers about the factors that impact their ability to understand the effectiveness of their digital advertising, inaccurate location data came out on top. Almost half (45%) say this had a high impact, and a further 41% say it has a moderate impact.

Conversely, 62% of retailers named a high level of accuracy as the indicator of good location data. Specifically, 57% said they want accuracy of five metres or less, which is unrealistic via bidstream and impossible to verify using this data alone.

If retailers want location data that is closer to the level of accuracy they crave in order to improve their attribution, then they need to turn to first-party data sources, such as SDKs, which include GPS location. This is currently used by just 26% of retailers, with 33% set to use it in the coming year.

So, if inaccurate location data is believed to have the biggest effect on understanding the effectiveness of their advertising, and yet bidstream is likely to continue to be the dominant source of that data over the next 12 months, what can retailers do to address this dichotomy? We believe they will increasingly turn to independent verification of that location data, which is only possible with accurate first-party location data from sources such as SDKs.

The report makes it clear that we now are at an inflection point. The majority of retailers are now used to using location data as part of their advertising campaigns. The opportunity has been eagerly embraced.

However, the more sophisticated buyers are starting to ask serious questions about the source, accuracy, and precision of the location data insight they are being provided. With WPP chairman Jeff Devlin stating that he believes “80-90% of mobile ad inventory has incorrect or imprecise location data”, there is a growing need for this verification in the market. Like viewability, fraud, and brand safety before it, location accuracy demands independent verification.

The full report referenced in this piece, ‘Quality vs Quantity: Understanding Retailers’ Use of Location Data’, can be downloaded here.