The pivot to privacy is roiling the location-based ad market, calling into question its future direction at a time when people are alert about the collection of their geographic information.
Apple’s iOS 13 update, released in September, includes regular reminders when apps are sucking up a user’s location data. The pop-up gives a user a chance to choose from the following options: allowing data collection at all times, or only when the app is open — or only one time. Four months in, ad tech sources are reporting the result that some observers had predicted: There’s less location data coming from apps.
Right now opt-in rates to share data with apps when they’re not in use are often below 50%, said Benoit Grouchko, who runs the ad tech business Teemo that creates software for apps to collect location data. Three years ago those opt-in rates were closer to 100%, he said. Higher opt-in rates prevailed when people weren’t aware that they even had a choice. Once installed on a phone, many apps would automatically start sharing a person’s location data.
Apple’s latest privacy protection move, however, is making people more aware that they do have a choice about which data is shared. Seven in 10 of the iPhone users tracked by location-verification business Location Sciences downloaded iOS 13 in the six weeks after it first became available, and 80% of those users stopped all background tracking across their devices.
“People have decided to stop their phones’ sharing location data at a universal level,” said Jason Smith, chief business officer at Location Sciences.
All the background location data that previously had been made available for targeted advertising is lost to marketers when people decide they don’t want their apps to share it with other companies.
“This also impacts the ability to tie users that research online and purchase in store or driving, and measuring footfall for clients becomes far more opaque,” said Paul Kasamias, managing partner at Publicis Media agency Starcom. “The drop in spend is also likely to come via small- to medium-sized advertisers, where cost efficiency is paramount and there is a physical footprint, as targeting the right user at the right time will become more difficult.”
Other media buyers say they are starting to feel the ripple effects of Apple’s move when they work with certain ad tech vendors.
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“We have seen a drop in sales pitches from providers on location-data solutions, and there is a rise in ensuring that the data-exchange piece is addressed transparently up front as part of bigger deals,” said Sargi Mann, evp of digital strategy at Havas Media.
The move is a further blow to the location advertising market. In 2018 when the General Data Protection Regulation went into effect in Europe, companies that traded location data, such as Verve and GroundTruth, axed their European divisions to focus on other markets. Others like Factual worked hard to have a presence on consent management platforms for the largest apps they drew data from.
“The state of the location data industry is similar to most things in ad tech,” said Raman Sidhu, cofounder of Beemray. The executives steering those businesses are “shortsighted” when faced with privacy; they are only working off the next iteration that Apple or Google impose, he said.
“Anyone exploring how to deal with location data in a privacy-centric world is best positioned to deliver sustainable differentiation and growth to advertisers and publishers,” Sidhu said.
There is a silver lining: The location data that still remains available to advertisers is all the more valuable. And the market for location data is still active, according to ad tech executives.
“We’re still being approached by location data businesses that are telling us they’re growing, and more importantly [that they] have more data than they did a year ago,” said Doug Chisholm, CEO of Rippll. “I haven’t seen any change in the amount or type of data being collected and sold, so there may well be some players skirting the regulation, waiting for more clarity from the Information Commissioner’s Office,” he said, referring to the U.K. data watchdog.
Still, the work-arounds come at a cost of lower quality, according to ad buyers.
“We’re seeing less location data that’s coming from the [Global Positioning System] technology in someone’s phone, which is the most precise source of mobile location data,” Smith said. “Instead, there’s a lot more of the lower-quality data, whether it’s carrier or [Internet Protocol] data, that are often the least accurate sources of mobile location data available.”