Mobile Marketers: Be Skeptical Of Centroids

Centroid locations can be used by ad tech companies to build high-level personas and target campaigns on a regional level with localized offers. But beyond that they’re the digital equivalent of dropping leaflets from a plane into a specific area.

Precise and accurate location-based advertising can impact a campaign’s success in a hugely positive way.

Indeed, location data is a key ingredient in mobile advertising.Recently, BIA/Kelsey estimated that U.S. mobile ad spending on location-targeted placements would rise 56% this year to $6.7 billion, or 37% of all mobile ad dollars.

Advertisers are increasingly delivering personalized and relevant experiences based on their knowledge of a consumer’s location. It turns out, however, that ad tech is relying heavily on a fuzzy location measure that has the potential to weaken location-based ad campaigns, resulting in wasted ad impressions–and money.

Location-based marketing should lead to delivering a relevant message to the right person at the right place and time. There are two separate ways that publishers can obtain someone’s location: by using an IP address or through a device that has location services turned on (on-device location). Though both of these will result in a latitude and longitude, only one method will get the accurate location of a device.

Based on data seen by Skyhook, 84% of location is obtained by publishers using an IP address. Unfortunately, most of the time the latitude and longitude returned using IP location is the center of a civic area. This is known as a centroid, and it brings with it a large margin of error.

Since centroids are often the center point of large areas, the average margin of error range is a square mile. There have been, however, scenarios where centroids are placed not only in the wrong state, but in the middle of the country.

A centroid location making it look like everyone in Denver is at the ninth hole on a golf course; whereas on-device location can place people in their actual locations.

The truth of the matter is that location has levels of precision, and not all location data is created equal. Yes, centroid locations can be used by ad tech companies to build high-level personas and target campaigns on a regional level with localized offers. But beyond that they’re the digital equivalent of dropping leaflets from a plane into a specific area.

However, with on-device location data, advertisers can get location specificity and derive hyperprecise locations, such as address and venue category.

Here’s an example of the difference a couple of decimal places can make when determining location: A user is shopping at Steve Madden on Newbury Street in Boston. A latitude/longitude with four decimal places would position a user at the Steve Madden store. But if the latitude/longitude is truncated or rounded down to two decimal places, we’ll be led to believe that the user is actually blocks away and standing near the Prudential Mall. The accuracy is gone and the user’s movement is imprecise.

In addition, any profiling of this user based on the inaccurate two-digit latitude/longitude will be ambiguous. If the location was derived from an IP address that provided a latitude/longitude for the ZIP code associated with Steve Madden on Newbury Street, the user will be placed in the middle of a centroid associated with that ZIP code. In this case, the user would be placed inside a church.

It is important to note that many brands and agencies assume that location-enabled impressions include accurate and precise location; however, app publishers may be providing inaccurate location data–many without even realizing it.

By using powerful tools such as venues, geofencing, and personas on top of a data point, it is possible to provide both better experiences and targeting. It is clear that on-device location and centroid location cannot both provide the same level of granular targeting.