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Data Insights Are Human Insights

Location Data Is Having a Moment

Location data is at a turning point. It’s developed in value, complexity, and uses. At the same time, consumers are becoming more selective of the data that they share. Additionally, the EU’s new privacy law, the General Data Protection Regulation (GDPR), requires businesses to do more to earn consumer trust, including the collection of location data. 

Here are some trends that are driving the development of location data and what businesses can do to unlock its potential.

Casting a wide net
Location data has come a long way from its early days of geo-targeted ads. Instead of merely sending coupons to anyone who entered a geofence, location data now powers customer insights, user engagement, and other evolving uses. In fact, the location analytics market size is estimated to reach $16.3 billion by 2021, up from $8.2 billion in 2016, according to the research firm MarketsandMarkets.

Location data is derived from multiple signals. The three most common signals are GPS, Wi-Fi access points, and cell phone tower triangulation, which can narrow a user’s location to a neighborhood or ZIP code. Location data can also be obtained from the geolocation of an IP address used to connect to the internet.

To access location data, marketers have a slew of options. They can partner with location data providers or app developers, license data from third-party vendors, use APIs for apps with access to location data, or glean location data attached to bid requests on ad exchanges, according to the Interactive Advertising Bureau.

Having so many options for collecting location data has made it easy for companies to amass mountains of data—even if they don’t have a clear purpose or end-user in mind, says Jessica Groopman, industry analyst and founding partner at Kaleido Insights.

“The culture around data today is to collect as much as possible,” Groopman says. “The idea is to cast as wide a net as possible and hope something comes of it.”

An early example of this approach is geofencing. Retailers used location data to send real-time notifications and coupons to nearby consumers. While geofencing can be useful, it has significant flaws, such as sending messages to people who are driving or don’t have time to enter the store.

Since then, companies have begun to treat location data as more than a real-time-only tool. Some also consider it a resource for insight. Enter location intelligence. Foursquare, for example, found itself in the right place at the right time to capitalize on location-based insights.

The social app company has changed significantly since it introduced the concept of the “check-in” back in 2009. While Foursquare still offers two consumer-facing apps—Foursquare City Guide and Swarm—a major part of its business is now licensing its location data to other companies like Mastercard, Twitter, Capital One, and Coca-Cola. 

Foursquare collects location data from users across its apps and has mapped 105 million venues in its database.

“We now see over 3 billion visits a month around the globe, thanks to a panel of more than 25 million people who have opted into always-on location sharing,” wrote CEO Jeff Glueck in a Medium post in January. (Glueck also wrote that the company had entered its third consecutive year of revenue growth.) All those data points enable Foursquare to glean numerous insights about consumer behaviors and predict trends.

For instance, by analyzing foot traffic at Chipotle restaurants after an E. coli outbreak, Foursquare accurately predicted that the burrito maker’s Q1 sales would drop nearly 30 percent. Foursquare also learned that formerly loyal visitors were actually 50 percent more likely to avoid Chipotle after the outbreak and have been harder to lure back in. Given that acquiring new customers is seven times more expensive than retaining existing ones, it was important for Chipotle to have these types of insights to prioritize its engagement efforts.

“Chipotle was a pivotal point for us,” recalls Michael Rosen, senior vice president of sales at Foursquare. “It was a perfect example of before you worry about marketing, you have to understand where those consumers are going and why.”

Although location data isn’t a silver bullet that guarantees a sale with one interaction, a growing number of industries are fine-tuning how they can maximize location data’s effectiveness. Besides retail, healthcare, public safety, law enforcement, and transportation are using advancements in location data to optimize their services.

What’s more, as people increasingly use IoT devices, location data will only become richer and more accurate, Groopman says. “Autonomous vehicles, for example, need to ensure an extreme level of precision and I have no doubt that the technology for increasing that precision is only getting better,” she says.
At the same time, connected cars could potentially give marketers insights into in-vehicle shopping habits, voice search activities, music preferences, etc.—with location data forming the underpinnings of these insights.

The post-privacy world
Approximately 90 percent of people keep the location services function on their smartphones switched to “on,” according to data from a 2016 Pew Research Center report. It’s an eye-popping percentage, but unsurprising, given that many smartphone apps request access to the devices’ location services. “Location data seems especially precious in the age of the smartphone,” the authors note in the Pew report.

Although some consumers will share their location data in exchange for a discount or a more functional app experience, others are quite cautious. In terms of overall feelings toward companies using personalized data, 28 percent of consumers said, “I don’t like it when companies have my information when I don’t explicitly provide it,” according to a survey by customer experience software company [24]7.

Indeed, location data can be a minefield for companies that aren’t careful about consumer consent and opt-outs.

For example, the French Data Protection Authority censured the billboard company JCDecaux for installing Wi-Fi boxes on signs that captured the unique MAC addresses of people’s smartphones without getting consent and failing to properly anonymize the data.

In the U.S., InMobi, a mobile ad network, paid $950,000 in civil penalties for tracking geolocation data (including children’s data, a violation of the Children’s Online Privacy Protection Act) even if a user hadn’t opted in to share data.

It remains to be seen what effect the GDPR will have on consumers opting to continue sharing their location and other data. It’s unlikely, though, that the privacy law will hinder innovation, says KJ Dearie, a product specialist and privacy consultant at Termly, a policy generator for websites and apps.

“The GDPR aims to give users control over their data and greater rights when it comes to the collection and use of their personal information,” she says. “The GDPR does not aim to hinder advancements in appropriate data collection and use. So long as companies are transparent about their specific use of their personal information, innovations in location data and the GDPR can thrive…fostering a user-centric and business-friendly digital universe.”  

Don’t discount human input
Location-based insights offer a multitude of possibilities to businesses and other organizations, but several fundamental requirements must be met first. App developers, publishers, and marketers need to give consumers a clear, desirable reason for sharing their location.

Businesses also need adequate resources for vetting the quality of the data and processing it, not to mention having a specific use case in mind for the data.  
Most important, like other forms of data, location data can help businesses make informed decisions, such as where to place an ad or which message is likely to resonate, but only if users are asking the right questions. And for that, companies still need innovative, human input.