"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Steven Rosenblatt, president at Foursquare.
Consolidation: It’s something that no industry is immune to but that many benefit from.
For marketers and advertisers still learning how to leverage location intelligence, it might feel like a fresh new industry, but this space has been developing since the widespread adoption of the smartphone and the scaling of app stores. Location intelligence has become a massive space that not only informs consumer apps but also helps businesses make decisions, sharpen ad targeting and measurement and make sense of ever-changing consumer trends.
Consolidation for the industry is just around the corner. Demand for actionable location data might be on the rise, but there are just too many players in the space to keep afloat amid the many challenges they face.
Consider the technology required. While developing technology to meet a specific demand is challenging regardless of the industry, location has unique challenges. Location technology must accurately detect where consumers travel, stop and spent their time, whether they are at a cocktail bar on the ground floor of a building or at the gym two flights up. It must also gather accurate location signals from mobile devices without taxing phone batteries.
Strong technology is only one piece of the puzzle. Data can come from a number of tricky sources with their own issues.
Bidstream data, which provides external location signals to location intelligence providers with programmatic platforms, is often inaccurate. SDK data from partner apps can provide a strong signal, but only if it’s embedded in apps with inherent location benefits for consumers. Otherwise these signals can be poor and misunderstood. And even when the quality of the data is good, some companies struggle to provide the quantity, which is required to scale. Beacons, for example, generate data that is extraordinarily accurate, but they lack scale.
With all of these challenges in place, the number of businesses currently fighting for a piece of the location intelligence pie is not sustainable and there will have to be consolidation over the next year. For a glimpse of the future, just look around at others across the advertising landscape that have gone through similar growth spurts and subsequent consolidation.
In the viewability space, for example, two dominant players to emerge are Moat and Integral Ad Science. For demand-side platforms, it’s AppNexus and The Trade Desk. In search, the remaining big players are Google and Bing. And in the data management platform space, there remains BlueKai (acquired by Oracle), Krux (acquired by Salesforce) and eXelate (acquired by Nielsen).
Location intelligence is at a similar crossroads that these other industries faced in the past. Some of the market conditions pushing toward this include the industry reaching a natural ceiling on funding, natural attrition as the industry evolves, too much competition leading to lower prices and a limited field of potential clients and budget dollars to be won. Another restricting factor is that clients increasingly want holistic solutions and are leaning towards vendors that can provide more than one point solution at a time.
Expansion and consolidation for an industry typically occurs over a 10-year cycle. Location intelligence is now deep into that cycle. The good news? Consolidation isn’t a doomsday diagnosis. Ultimately, it’s great news for clients because marketers and advertisers will no longer have to sift through dozens of potential solutions and will be left with a handful of competitive options to choose from.