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Two Big Deals Show Market Finally Starting to “Get Local”

Geofencing

For years the market has not understood “local” or its true value. The notion of local has been associated almost exclusively with small businesses (SMBs) and thus dismissed by many agencies, pundits and marketers accordingly. While SMBs are very important they’re only half the story.

Investors have also been repeatedly burned by location-based consumer sites that have not paid off. That’s because the consumer side of local is challenging, with unique issues that make scale and scaling harder than building a single experience for a national audience. Yelp or NextDoor’s accomplishments, among a handful of others, are thus all the more impressive.

With the rise of mobile, however, people are starting to see the relevance and importance of location in new ways. New ways of identifying and defining audiences, new forms of targeting those audiences and new ways of measuring the efficacy of that targeting are all developing with mobile-location at the center.

Two recent deals reveal that marketers and investors are taking note and starting to understand location and its profound implications for all of digital marketing.

Last week mobile platform/network xAd received a whopping $50 million investment round from Institutional Venture Partners and existing investors Emergence Capital and Softbank Capital. That brings the company’s funding total to nearly $75 million.

Company CEO Dipanshu “D” Sharma has said that xAd now has a $150 million run rate. That can be expected to grow rapidly as more national advertisers and brands take advantage of the company’s platform and tools. A few years ago xAd shifted its focus from SMBs to national advertisers.

The xAd $50 million investment makes a profound statement that investors no longer see location-based ad networks as niche players in the mobile ad market. Indeed, as discussed, location is one of the primary profiling and targeting methodologies that will be used in the future. In a post on Marketing Land I discuss a case study involving Toyota that showcases one of the primary ways in which location will be used in mobile advertising going forward — in the background.

This means that “location based” mobile advertising has the potential to be much larger than currently projected. In actuality local-mobile ad revenues are still relatively small — only a small minority of marketers use Google AdWords location extensions for example; however it will ramp quickly for these “background” use cases.

Another way in which mobile and location are profoundly affecting digital marketing is through offline tracking and attribution. This is arguably the single largest problem of digital campaigns today, although one could also argue ad creative is a major problem. Companies like Placed and PlaceIQ, among others, enable marketers to track offline lift and store visits from digital ad exposures.

Placed is a “location analytics” company that uses an opt-in panel of smartphone owners who explicitly agree to have their movements tracked in exchange for rewards. The resulting data is used for competitive intelligence but also to report on the success of mobile campaigns in generating offline visits. Each store visit by a panel member is captured and can be correlated with campaign ad exposures. The data can then be extrapolated to the larger campaign. Most of the major mobile ad networks are now using Placed to help track offline ad impact accordingly.

Earlier this summer Placed received a $10 million funding round. And last week it announced a strategic partnership (and another investment) by IPG Mediabrands. IPG will now introduce “marketers from across the IPG network to Placed’s first-in-kind services.” For IPG this is primarily about offline attribution and tracking store visits.

Online-influenced offline buying is at least 10X the size of e-commerce (into the $ trillions) but tracking offline conversions has been extremely challenging-to-impossible until recently. Mobile devices now make it possible to do so for potentially every mobile campaign where goods or services are sold in the physical world.

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