Facebook and Google Are Marching Directly Into the Physical World. Carriers Hold the Key to Breaking the Duopoly

opinionThe following is a guest contributed post to MMW by Alistair Goodman, CEO of Placecast.

Among the usual cacophony of adtech news in the last few weeks were some very significant developments: Facebook and Google are both making very big steps into mining data about the physical world and applying it to advertising. Specifically, both have launched offerings that enable an understanding of how consumers behave in the real-world, and these signals can be tied to their already robust online profiles. These moves are huge steps to connect the digital and physical worlds of consumers with massive implications for agencies, brands and consumers.

While it’s not surprising to anyone that Google and Facebook are ingesting more data signals, it has profound implications that most have not yet considered. With this move, both companies are deploying scalable solutions that effectively make use of a comprehensive ID graph, connecting all the data about consumers from all their devices in the digital and physical worlds, mining their behavior, and connecting those data points for the benefit of advertisers. Let’s explore these effects in more detail.

The real-world data graph

There are two fundamental data sets that unlock the data graph of the physical world. They are simply: where things are (stores, airports, transit hubs, parks, etc. – known as point-of-interest data) and where people are, as evidenced by an ever-increasing set of different signals from both mobile and fixed devices. At the intersection of those two data sets emerge a wide variety of products and services: profiles of real-world behavior (e.g. “Fashion Shopper” because an anonymous consumer is regularly seen at high-end clothing stores), proximity messages that can be triggered near a store, insights for measuring whether you visited a store, planning tools that can model/predict certain likely behaviors and many other use cases.

In this latest news, we read that Google is using much of their stack applied to store visit measurement–Earth and Maps, POI data, Wi-Fi signal strength in stores, GPS signals, search query data, and a panel of over 1 million opted-in users provide their on-ground location history, validate data accuracy, and inform the modeling of visit behavior. This enables new ad units and targeting that leverages location, and gives advertisers the ability to understand and measure the real-world ROI of their ad spend.

Facebook announced that it too is using data from GPS, beacons, Wi-Fi, radio signals, and cell towers matched to place data like the location of a store, and they’re also baking in some actual transaction data via Square and Marketo–all again matched to consumer behavior.

These moves are the clearest validation yet of the undeniable size and scale of the opportunity to harness real-world data in the marketing equation.

Implications for agencies and brands

With 90% of commerce still happening in the real-world and most consumers with a smartphone in their pocket, the scale is now available for marketing that drives traffic into stores. Location-targeted mobile ad revenues in the U.S. will grow from $6.8 billion in 2015 to $18.2 billion in 2019 according to data from BIA-Kelsey. Google and Facebook have finally taken notice, and begun activating features that specialty data and tech firms have been working with for the past several years.  These most recent announcements showcase offline attribution and measurement – areas where retailers in particular are increasingly have been leveraging the ability to understand real-world ROI. Audience development, validation and targeting based on place and time are increasingly being used, as are applications for planning and executing out-of-home (Billboard) buys.

With large-scale ID graphs coming together, marketers increasingly have the ability to weave together messaging across multiple devices and platforms, and measure the impact not just of online purchase behavior, but also in-store visits. Search, native and display ad units can now be made “location-aware” – either informed by real-world behavior, and/or triggered based on real-time location. These technologies also enable the measurement of behavior post-ad exposure – in essence, confirming that a consumer went to a store.

Carriers can emerge as a third path

In the battle for the real-world ID graph, few players have the scale, data management and consumer consent frameworks to compete. Duopolies are generally bad for buyers, and in the case of the ad market, agencies and brands are clamoring for alternatives. With Google and Facebook on track to control nearly 70% of digital ad spend, mobile carriers are among the only companies with the scale and data sets to effectively compete. Furthermore, with access to near-perfect data about consumer content consumption and consumer behavior in the real world, carriers can effectively deliver high-quality validated audiences in a fraud-free environment, at scale, to rival Google and Facebook. AOL-Verizon are the most visible in the US in this endeavor, but innovators like Telstra, Singtel, Telenor, Rogers and Telefonica are all now competing in this arena. With mobile surpassing online for time spent by consumers, carriers are poised to become the gatekeepers of mobile advertising.