Fighting the “10% Problem”: Verve Launches Place Insights

Fresh off $14 million in funding, Verve Mobile today launched Place Insights, a new ad targeting technology that better utilizes data about specific locations. This is part of the ongoing progression of “Big Data meets Local” which we’re watching closely.

There are lots of different location targeting methods developing along these lines — notable recent announcements including xAd’s SmartLocation and JiWire’s Location Graph. Verve’s announcement is interesting because it creates a unique combination of methods.

Specifically it creates hexagonal overlays on any geographic area. Somewhat similar to Moasis, hexagons represent areas where advertisers can target mobile display ads.  These location segments also characterize (and are characterized by) their inhabitants.

From the Press Release:

“We have divided the world into hexagonal micro-grids (hex-grids) as small as a city block and then associated large amounts of data with each grid so that we understand what’s there and what that can tell us about users who are in those hex-grids.” said Chris Nicotra, CTO of Verve. “We ingest, store and make sense of massive amounts of demographic, transactional, commercial, social and other data types that allow us to understand the audience that is likely to be in a hex grid at a certain time. For example, if a suburban shopping center occupies a certain hex-grid we can understand the demographics of nearby neighborhoods, the mix of commercial establishments, and other data that will tell us a lot about a user in that grid. And, over time, as we see a unique user in multiple grids we can develop an anonymous profile of a user based on their place-based attributes. ”

To further compare, it accomplishes place level targeting like PlaceIQ (which Verve works with) and audience profiling like Sense Networks, Placed and JiWire. Like JiWire’s Location Graph user characteristics can be built on combinations of geographies they visit.

This importantly helps to overcome what my colleague Rick Ducey and I have begun to refer to as the “10% problem.” Based on myriad factors (i.e., iOS-required user opt-in for location sharing)  roughly 10% of display ad impressions have lat/long level accuracy.

This is explained well by Verve CEO Tom MacIsaac:

There are many sources for actionable mobile location data. The device can share GPS level data (provided the user has opted in to share location with an app or web site). This GPS data is typically represented by latitude and longitude coordinates (lat/long) and is generally very accurate. The network can share data derived from cell tower triangulation which is also quite accurate. There is also user-supplied location data (e.g. when a user provides his zip code when registering for a site or service). Another method of deriving location is IP address analysis, which can range from very accurate to completely inaccurate. An IP lookup can resolve to a terrestrial wifi network (like an airport or coffee shop), most of which are well indexed to location. But an IP lookup can also resolve to a carrier IP address and carrier IPs vary widely in accuracy. Many carrier IP locations are accurate to the metro or zip level, but many resolve to “backhaul” addresses – which are the locations where the carrier aggregates mobile data for transport over fiber trunks in the telecommunication infrastructure — which are generally inaccurate.

The crme of the crop in location data targeting is device-level GPS lat/long data. Highly targeted mobile advertising campaigns that are focused on targeting people in an area the size of a city block or a shopping center or a big box store require this precise lat/long data (and potentially wifi data). The problem is that lat/long data is very scarce. Most industry experts consistently estimate that about 5-10% of mobile ad impressions have lat/long from users who have opted in to share location with an app or site. This makes sense. Most apps and many of the largest mobile consumer apps – like internet radio or game apps — aren’t allowed by Apple to ask for location. One of the rules for app store approval is that, if the developer of an app has built in a feature that asks the user for location, he must have a good reason for doing so – location-based apps like Foursquare, mapping apps or local media properties sites/apps that are providing geo-aware weather, sports scores or movie times are good examples of apps that can ask for location and with which users tend to share location.

Verve’s new technique will derive meaning out of precise location signals during that fleeting 10% of the time, to be used for more effective audience targeting during the other 90% of the time.  This is smart, and aligned with JiWire’s David Staas’ past comments to us.

“Ten percent of mobile advertising has true location targeting,” Staas said. “We can use that to power the location graph and create user profiles, then use it to reach the additional 90 percent of ad inventory. Once I know an individual is a mom, I can reach [her] any time any place.”

This also importantly  meets brand advertisers half-way during these early days of mobile local ad adoption. As discussed in our recent white paper, using location to define audiences brings the discussion closer to what they’ve been doing for years — audience targeting.

In addition to speaking their targeting “language”, this likewise satisfies brands’ hunger for scale. Even when accurate, location targeting comes at the expense of sheer reach.  Place Insights seeks to broaden the locus of targeting beyond impression-depleting locales.

We’ll continue to see innovation to overcome challenges inherent in mobile location targeting; and advertiser adoption drivers. This is core to our recent and ongoing forecasting (new installment next month), and upcoming Leading in Local Conference. Stay tuned.