Location, location, location (data)

by Scott Denne

Marketers are experimenting with a variety of applications for consumer location data, which is expanding the supply of potential acquirers for a set of startups that was once relegated to a niche corner of the mobile ad sector. The abundance of early-stage startups in this space will likely keep exit sizes modest for now, benefiting companies that need an early exit. Yet vendors that are able to successfully transition from ad-tech suppliers to core elements of the marketing stack could see large exits in another year or two.

Location data was initially gathered in two ways – through beacon deployments at retail locations and via data shared in advertising exchanges. As we detailed in an earlier report, the methods for gathering and managing this data have since expanded and the applications have moved beyond showing mobile ads based on device proximity. That has led to a growing interest among marketers to employ location data for multiple applications, such as behavioral targeting, ad attribution, loyalty programs and competitive intelligence. In a survey from 451 Research’s Voice of the Connected User Landscape, more than half of respondents said this data was ‘very important’ to gaining insight into customer experience.

While the uses of location data are largely experimental today, more marketers are faced with a mandate to meld their physical and digital operations. Location data helps bridge those two by linking digital identity with physical movements. As location data becomes a pervasive part of customer analytics, marketing measurement and campaigns, businesses that can build relationships with brands that encompass multiple parts of the advertising stack will be well-positioned for a bigger payday.

While the exits have been few, they have come at enviable multiples. The most notable of late are Snap’s acquisition of Placed – a supplier of location-based attribution services – and Ericsson’s purchase of Placecast, a developer of white-label advertising software that provides telcos and others with consumer location data to monetize those signals. We estimate that both sold for north of 5x trailing revenue. Each of these deals hits on a theme that we expect to drive future M&A in this market.

Although initially divided between beacon management and mobile advertising firms, we now see five distinct product segments emerging in this market. For a discussion of those segments, along with potential targets in each, read our full sector IQ report on the topic.