• by Gabriel Cheng , Eli Portnoy , September 5, 2012

For the last decade hyper-local ads were the next big thing. Today, thanks to the proliferation of smartphones and a maturing mobile marketplace, advertisers can reach consumers with a level of location granularity that enables a new form of storytelling. These types of campaigns are now real, but understanding the nuances of location data and the privacy implications are key to running a successful campaign.

To understand these nuances, we have suggested four questions you should ask to make the most of hyper-local and mobile marketing opportunities. 

1: How precise and granular are your location targeting capabilities and where are you getting the location data to target my campaign? The location data that allows an advertiser to target hyper-local ads can come from a variety of sources. At a high-level, the location can come from the device, from registration data, or by triangulating the IP of the device.

The most accurate location data comes from the mobile device itself, but even in this case there are three ways that the location can be captured: the GPS signal, the wi-fi networks near the phone, and the nearest cellphone towers. These data sources vary in quality and accuracy. GPS is by far the best, followed by wi-fi.

In addition to device-generated location data, publishers sometimes collect zip code data when a user registers for their service. This data is sometimes used for location targeting purposes.

2: Are you relying on registration data for location targeting? There is a major distinction between location data that comes straight from the phone and location pulled from a registration form. Device location tends to be active and real-time in that the device is telling you where the person is right now. However, registration data is static and tells you that the user lives in an area, but not that they are there right now. Registration data can also be outdated as few people update this information.

3: How do you ensure the integrity of the location data? There are many data quality issues when it comes to hyper-local. The primary issue is that some publishers are able to collect DMA or ZIP code data, which they then convert into a fake latitude and longitude coordinate. This is a widely used practice that resembles taking a beat-up Toyota, giving it a fresh coat of paint, and slapping a Lexus emblem on it. The problem is many advertisers can’t tell the difference between a real hyper-local impression and one of these dressed-up ZIP code impressions, which can really hurt campaign performance.

4: Does all of your location data come with user consent? Are you collecting and storing location plus PII data? At the heart of every location-based advertising campaign is the consumer. Ultimately, we are trying to create ad experiences that engage and delight users. So a cornerstone of every campaign has to be consumer privacy.

At the core of the privacy issue is getting user consent. So how does a publisher get access to this data? If the data collected is from a GPS, wi-fii signal, or cellphone signal the publisher must ask the user for permission. In the case of IP based location data, the publisher can theoretically access this data without any user knowledge. For registration data, the consumer has to provide this data, and generally the publisher will have a privacy policy that governs how that data is used.

The second major privacy concern is whether PII data is being collected that can help advertisers track location and identify a user.

5: Do you have enough location-enabled inventory to run a campaign at scale for me? While location-based mobile ads hold great promise for the industry, the current reality is that only 5 to 10% of all mobile impressions can be targeted at a hyper-local level. The limited availability of this highly valued inventory makes it essential to understand how much of this inventory a partner has available. The good news is that as smartphone penetration continues to soar and the value location brings to their mobile experience is better understood, location information will be more readily available and scale will become a non-issue.