Q3 2014

MOBILE ADVERTISING’S GUIDE TO LOCATION ACCURACY

LOCATION SCORE™ INDEX

THIS REPORT FOCUSES ON HELPING MARKETERS UNDERSTAND:

The current state of location data quality in the mobile ecosystem

How location data is generated

When location accuracy matters

THINKNEAR’S LOCATION SCORE INDEX CONTINUES TO DRIVE THE INDUSTRY TOWARDS BETTER ACCURACY

METHODOLOGYLocation is at the core of every marketer’s mission of providing the right content at the right place and right time. However, the quality and accuracy of location data remains top of mind for senior-level marketers. This second edition of the Location Score Index provides an update on the state of the industry and seeks to help marketers understand why accurate location matters — not just for hyper local campaigns, but for ALL campaigns.

Since publishing our first Location Score Index in May, the industry has taken notice and is making moves to improve location accuracy. In July, the IAB published 12 Questions Every Buyer Should Ask about Location Data, and in August, the MMA launched the Mobile Location Data Accuracy Committee with Thinknear and other industry players to focus on the critical issue of location accuracy.

Location is enabling better targeting and driving better consumer experiences, but data accuracy will be the key to ensuring further growth of the industry. The Location Score Index is the benchmark for measuring the mobile industry and we are committed to improving transparency and accuracy for marketers.

LOCATION ACCURACYMATTERS

The Thinknear platform accesses the largest sources of location-enabled mobile inventory in the U.S. To compile this report, we sampled and analyzed data from over a billion ad impressions and ran location accuracy tests on close to 500,000 consumer ad experiences.

2 Location Score Index Q3 2014 twitter @Thinknear

68% OF AD REQUESTS INCLUDE LOCATION DATA IN 2014 WHILE IN 2012 ONLY 10% OF ALL AD REQUESTS CONTAINED LOCATION DATA.

Location accuracy starts at the publisher level, and app developers have realized it pays to share location data. Publishers use a variety of sources to determine user location, with the accuracy of these sources ranging considerably.

ACCURATE LOCATION DATA ENABLES:

o Enhanced audience targeting

o Higher engagement

o Better creative

INACCURATE LOCATION DATA RESULTS IN:

o The wrong audience

o Negative brand perception

o Wasted money and effort

LOCATION DATA IN THE MOBILE ECOSYSTEM

MOST ACCURATE

GPS satellites maintain a constant orbit around the earth, sending signals to the ground allowing a smartphone to calculate location within a few feet under optimal conditions.

A-GPS can be a battery drain, so developers choose other solutions. Additionally, weather and building interference can reduce effectiveness.

LEAST ACCURATE

A-GPSAssisted Global Positioning System

1

3Cell towers are typically three-sided with a transmitter on each side. Location accuracy to within ¾ of a square mile is possible when three towers are present and there is no interference.

When a user has coverage from a single cell tower, or even two towers, the location approximation can range over many miles. Building interference can alsoreduce accuracy.

CELL TOWERS

It’s typical practice for an app developer to ask a user to share their postal code or home city when registering for an app. The app developer then pinpoints the center point of that geographic region.

Real-time location data is effectively always wrong for this type of location information.

USER REGISTRATION

2

4

5

A device’s location can be approximated using its IP address as assigned by the network operator; however, in terms of identifying the true location of the user using standard network techniques,it’s almost universally wrong.

IP

Nearly all Wi-Fi connection points have been mapped to a location, so depending upon the availability of Wi-Fi networks, triangulation within 10 to 100 meters is relatively easy.

The downside: Users are not always neara network, or they may simply have turned off the phone’s Wi-Fi.

WI-FI

Regardless of source used, location data is typically translated into latitude and longitude.

LOCATION ACCURACY DEFINED“Location Accuracy” is defined as the proximity of a user’s stated location per the ad request, compared to the user’s actual location in the real world. Stated vs. actual location can vary by a matter of feet or a matter of hundreds of miles. Identifying the user’s true location is the goal of any ad network, as it enables enhanced targeting opportunities and better performance. The primary sources of location are below.

PRECISION VS ACCURACYIt’s important to clarify the difference between “precision” and “accuracy.” Precision relates to the granularity of the data, a DMA, a zip code, a city block, or a specific latitude and longitude. Accuracy refers to whether the data is actually correct. So while a “precise” ad request may specify a user’s location to within a matter of feet, that data is worthless if it is not accurate.

3 Location Score Index Q3 2014 twitter @Thinknear

55LOCATION SCORE™

VOLUME BY ACCURACY LEVEL (Q3, Q2)

46% HYPER LOCAL Accurate to within 100 meters or less of the

user’s true real-time location. (Size of a football field)

9% LOCAL Accurate between 100 and 1,000 meters of the

user’s true real-time location. (Approx. 0.6 miles)

18% REGIONAL Accurate between 1,000 and 10,000 meters of

the user’s true real-time location. (Approx. 6 miles)

16% MULTI-REGIONAL Accurate between 10,000 and 100,000 meters

of the user’s true real-time location. (Approx. 60 miles)

11% NATIONAL Accurate to within 100,000 meters of the user’s

true real-time location. (Greater than 60 miles)

4934%

9%

30%

20%

7%

TOP 5 APP CATEGORIES BY LOCATION SCORE

INDUSTRY AVERAGELOCATION SCORE

SOCIAL NETWORKING

TECHNOLOGY & COMPUTING

WEATHER SOCIETYSHOPPING

Out of the 27 app categories analyzed, the five above demonstrated the highest location scores.

100

90

80

70

60

50

40

30

20

10

0

95 83 80 77 74

We score location on a 100-point, non-linear scale. Thus, it’s easier to grow a score from 25 to 35 than it would be to grow from 75 to 85. We constantly update the algorithm used to calculate Location Score, so industry scores fluctuate from time to time.

We score location on a 100-point, non-linear scale. Thus, it’s easier to grow a score from 25 to 35 than it would be to grow from 75 to 85. We constantly update the algorithm used to calculate Location Score, so industry scores fluctuate from time to time.

4 Location Score Index Q3 2014 twitter @Thinknear

Location Score is based on the principle that accuracy is always important for a campaign, regard-less of whether the desired targeting area is the size of a few meters, or an entire DMA.

Every ad request that passes location data is scored on a simple 0−100 point scale, where highly accurate data is scored higher than data with low accuracy. However, the scoring scale is non-linear; highly accurate data is weighted more heavily than less accurate data.

Based on our analysis, the industry score of 55 indicates that there is a very broad spectrum of data quality in the mobile ecosystem. We found some mobile inventory sources — both at the publisher and aggregator levels — to be relatively accurate (scoring in the low 90s) while other inventory sources were extremely inaccurate (scoring in the low 20s).

The Industry Location Score increased from 49 in Q2, to 55 in Q3, 2014, a 12% improvement in location accuracy. The Location Score Index and pressure from marketers is starting to increase the transparency and quality of data in the industry.

WE ANTICIPATE THAT LOCATION ACCURACY WILL CONTINUE TO IMPROVE OVER TIME AS PUBLISHERS AND OTHER INVENTORY SOURCES INCREASE THEIR FOCUS ON LOCATION.

Additionally, tools such as Thinknear’s Location Score™ platform that filter out questionable data will force “bad players” to adapt or exit the space.

INTERPRETING THE RESULTS

INDUSTRY LOCATION SCORE TREND

Q3 2014

12% improvement quarter

over quarter in Industry

Location Accuracy

Q2 2014

55

50

45

5549

5 Location Score Index Q3 2014 twitter @Thinknear

LOCATION Q&A WITH VICTOR MILLIGAN, CMO @ NEXAGE

HOW IMPORTANT IS LOCATION DATA TO MOBILE ADVERTISING? Location data is a strategic asset — a high-value currency — for mobile advertising. Precise location data is unique to mobile, giving brands and retailers an extraordinary opportunity to drive affinity, foot traffic, and most importantly, sales.

This is the reason that spend on lat/long-enabled inventory on the Nexage Marketplace more than doubled from before Black Friday throughout the holiday season in 2013. Advertisers and media buyers place a higher value to lat/long inventory, which can command upwards of a 2-3X CPM premium relative to non-location-enabled impressions.

HOW IMPORTANT IS IT FOR BUYERS TO RECEIVE ACCURATE LOCATION? It is critical. Buyers will price, and maybe more importantly execute hyper-local campaigns with the expectation that location is accurate. And it should be accurate. Nexage helps buyers understand the exact nature of the location parameter by sending signals to media buyers as to whether they are buying centroid-derived lat/long or GPS-derived lat/long — where GPS-derived is substantially more accurate and valuable. Our goal is to ensure advertisers and media buyers can decision on accurate location signals and get the strategic value out of location data they need to drive business results.

HOW HAS KNOWING YOUR OVERALL LOCATION SCORE AND YOUR PUBLISHER’S LOCATION SCORES HELPED YOU MAINTAIN A LEADING POSITION WITHIN THE PROGRAMMATIC SPACE?

At Nexage, we have a similar view — and a strong builder sensibility. We have made real and important steps to both increase the availability and integrity of location data, especially GPS-derived data, for buyers and advertisers while ensuring publishers accrue the full value of making that data available.

WHAT STEPS HAVE YOU TAKEN TO WORK WITH YOUR PUBLISHERS TO INCREASE THEIR LOCATION ACCURACY?We take a multi-pronged approach to location accuracy, including the following:

o Nexage conducts forensics on location data sold on the Nexage Marketplace to help publishers and buyers understand the fidelity of the data

o The Nexage SDK gives publishers and app developers a better opportunity to send high-quality location parameters to buyers and advertisers

o Nexage continues to help publishers and app developers make location parameters — lat/long, zip/post code, city, state and DMA — available in a privacy-safe way so that the entire mobile advertising ecosystem benefits from this mobile-unique asset

Thinknear partners with the mobile industry’s top programmatic inventory sources, including Nexage. Recently we sat down with Nexage’s CMO, Victor Milligan, to discuss the importance of location accuracy.

SCIENCE

SHOPPING

EDUCATION

NEWS

STYLE & FASHION74%

42%

24%

18%

12%

Since Q2, 2014, the Style & Fashion and Shopping app categories have seen 74% and 42% improvements in the accuracy of their location data, respectively. Developers in these categories as well as others are realizing the importance of accurate location data on user experience and have taken steps to improve their scores. For marketers, this means the availability of high quality inventory is expanding and allowing for content and creative that can be accurately localized for each campaign.

CATEGORY SPOTLIGHT: FASHION & SHOPPING APPS GO FOR ACCURACY PERCENTAGE IMPROVEMENT IN LOCATION ACCURACY

Thinknear’s Location Score is critical to ensuring that the value of location data has a direct and strategic impact to advertisers and publishers.”

6 Location Score Index Q3 2014 twitter @Thinknear

Location provides a wealth of information about mobile users and can be used to target very specific audiences. But audience traits can vary significantly over very short distances, which means location data must be highly accurate to effectively reach the target audience.

LOCATION BASED AUDIENCE

Chicago

miles

0 105

PROXIMITY BASED TARGETINGTargeting mobile users in close proximity to a brick-and-mortar location is a core tactic for retailers, auto dealers, large restaurant chains and marketers wanting to conquest the competition’s customers. Accurate location is critical in ensuring impressions are not wasted on users outside of the addressable markets.

LOCATION-BASED AUDIENCE TARGETING Location enables the targeting of specific audiences that brands would otherwise struggle to reach on mobile. Audience traits such as ethnicity, household income, family size, life stage and others can vary dramatically from neighborhood to neighborhood, making it critical to deploy accurate location data when targeting audiences on mobile.

NATIONAL AND DMA-LEVEL CAMPAIGNSTraditional brand advertisers often leverage DMA or even “national” campaigns. But even wide-area campaigns benefit from location accuracy. For DMA-level campaigns, accurate location data ensures that mobile ads are delivered in the right DMA and that creative is localized effectively. For national campaigns, location allows advertisers to deploy large-scale campaigns targeting specific audiences in each local market.

BEHAVIORAL TARGETINGTargeting mobile users based on the places they frequently visit is a key trend in mobile. However, if a marketer wants to reach users who shop at Walmart, Macy’s or Safeway, the location data used to create the user profiles must be highly accurate. Poor location data can render user profiles worthless and prevents location-based retargeting from being effective.

WHEN DOES LOCATION ACCURACY ACTUALLY MATTER?

LOCATION DATA IMPROVES MARKETERS’ ABILITY TO HIT THE RIGHT TARGET, REDUCES IMPRESSION WASTE AND IMPROVES PERFORMANCE FOR NEARLY ALL CAMPAIGN TYPES.

Marketers frequently ask if accurate location data is needed for campaigns that aren’t focused on hyper local targeting. The need for “precise” data certainly varies, but “accuracy” impacts almost every type of campaign.

More than 70% Hispanic

30 –70% Hispanic

Less than 30% Hispanic

Hispanic Population with Income > $50K

LOS ANGELES

SAN FRANCISCO

SILICON VALLEY

NEW YORK

CHICAGO

DALLAS

DETROIT

In the PC world, marketers are demanding verification of ‘viewability.’ Location Score may become an equivalent kind of metric for mobile display advertising — a way for marketers and advertisers to have confidence that they’re actually getting what they paid for.”— Greg Sterling, Opus Research

Thinknear’s Location Score™ technology powers all of Thinknear’s mobile campaigns and is used to create the Location Score Index. We are also making the technology available to marketers for use in location-based campaigns on ANY mobile network through our Location Score Tags product.

Location Score Tags is a simple and free solution that allows mobile marketers to benchmark the location accuracy of all their location-targeted campaigns.

Visit LocationScoreTags.com to learn more.

Copyright © 2014 Thinknear by Telenav. The Android robot is reproduced or modified from work created and shared by Google and used according to terms described in the Creative Commons 3.0 Attribution License.

WHAT’S YOUR LOCATION SCORE™?