How confusing tech, GDPR, and a shifting consumer climate killed the once huge promise of location-based ads

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A number of location-based tech firms are trying to ditch their advertising businesses that target ads based on someone’s whereabouts to focus on data instead.
GDPR and privacy questions have cut back on investor interest, but a couple of companies that don’t focus on advertising have recently gotten new funding.
Agencies say they want to use location data in more ways than tech firms offer — like being able to mash it up with their own email and app data.

Marketers have long been intrigued by the potential to zap ads at consumers’ phones with precise targeting based on the stores they routinely visit.

It’s become a tired ad industry cliche: “Someday, you’ll be walking by a Starbucks and you’ll get a coupon for your favorite drink.”

But the hype hasn’t worked out the way that industry veterans once expected. It’s still safe to walk by Starbucks.

In fact, explaining to advertisers the complex ways that ads are served to someone from GPS technology built into phones, as well as mounting consumer privacy concerns, is causing tech firms to rework their businesses.

Over the past few years, a number of location tech firms have tried to shift their business models from advertising into software that brands use to track foot-traffic patterns. Firms are also under growing scrutiny from the European Union’s General Data Protection Regulation that puts strict regulations around how businesses can explicitly use data to serve and measure ads without explicit permission from consumers, causing investors to cool.

Just this week, The Washington Post reported that Google’s practice of collecting location data is under investigation in Arizona.

“It has definitely been morphing over the years and as far as investor interest, I would say that it has probably waned a bit if it is focused on advertising exclusively,” said Brian Andersen, cofounder and head of digital marketing investment banking at Luma Partners. “But with things like data-focused companies, there’s still definitely interest.”

Case in point: Two of the most recent companies to receive funding in this space don’t sell ads.

Venture capital money is moving away from location ad companies to newer models

Hyp3r is a startup that plugs into Salesforce and Adobe’s marketing clouds and matches up location data with CRM data from email, apps, and websites for brands like Marriott and 24 Hour Fitness. The company has attracted $17 million in Series A funding that CEO and cofounder Carlos Garcia said will go to growing a team to partner with other enterprise companies.

And last week, Factual raised $42 million to expand its Asia-Pacific business, bringing its total funding to $104 million. The firm’s business is split between an arm that helps advertisers analyze and measure location data and a non-advertising arm that pipes location stats into apps like Uber and Apple Maps.

“Because we’re a data company, we don’t sell any media — we primarily work with brands and agencies to help them understand how to use location data but they access it through a network of ad-tech platforms across the ecosystem,” said Factual CMO …read more

Source:: Businessinsider – Tech


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