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MOBILE MEASUREMENT AND TARGETINGEight Challenges Advertisers Face

JANUARY 2018

Yory Wurmser

Contributors: Tricia Carr, Lauren Fisher, Chris Keating, Victoria Petrock, Jillian Ryan, Tracy Tang

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MOBILE MEASUREMENT AND TARGETING: EIGHT CHALLENGES ADVERTISERS FACE ©2018 EMARKETER INC. ALL RIGHTS RESERVED 2

MOBILE MEASUREMENT AND TARGETING: EIGHT CHALLENGES ADVERTISERS FACE

Despite rapid growth, mobile advertising has been hampered by fragmented formats and standards, which limit

what marketers can do with the newer and richer types of marketing data available in mobile. Full consolidation of

standards is still years away, but improved measurement and transparency will help marketers make some progress

in 2018.

■ On mobile, apps and websites track identity and measure performance in their own way, making identity resolution and attribution more difficult than in a desktop environment. Consolidation with common standards has begun, but much more needs to occur.

■ Lack of transparency of publisher data is a huge issue for mobile marketers, and it contributes to ad fraud and poor targeting. Media Rating Council (MRC) guidelines and auditing tools have made a difference, but acceptance is still early, with viewability a notable exception.

■ Most of the impact of mobile advertising occurs away from smartphone screens, in the physical world or on other devices. As marketers demand proof of performance, mobile platforms are offering cross-device and online-to-offline (O2O) services.

■ More than three-fifths (62%) of US publishers use geotargeting, but the bigger value of location data may come in building better audience segments and a deeper understanding of consumer journeys.

■ As personalization improves, advertisers need to scale creative in numerous platforms and are turning to dynamic creative, which is still more difficult on mobile than on desktop.

WHAT’S IN THIS REPORT? Eight challenges of mobile measurement and targeting, and how the industry is addressing each.

US Mobile Ad Spending, 2016-2021

Mobile ad spending(billions)

—% change

—% of digital adspending

—% of total mediaad spending

2016

$46.70

47.4%

65.2%

23.9%

2017

$58.38

25.0%

70.3%

28.5%

2018

$70.05

20.0%

74.7%

32.6%

2019

$82.31

17.5%

78.1%

36.3%

2020

$93.01

13.0%

79.1%

38.7%

2021

$102.31

10.0%

79.2%

40.6%

Note: includes classified, display (banners, rich media, video and other),email, lead generation, messaging-based advertising and searchadvertising; includes ad spending on tabletsSource: eMarketer, Sep 2017230239 www.eMarketer.com

KEY STAT: Despite measurement and targeting obstacles, US mobile ad spending grew 25.0% in 2017 and will grow an additional 20% in 2018. Continued progress in measurement likely will sustain high growth rates.

CONTENTS2 Mobile Measurement and Targeting: Eight Challenges

Advertisers Face

3 Mobile Measurement and Targeting: Eight Challenges

3 No. 1: The Thickets of Identity Resolution

5 No. 2: Finding that Elusive Common Ground in Measurement

6 No. 3: Publishers Are Coy with Data

7 No. 4: Ad Fraud

9 No. 5: Measuring Off-Device Actions

11 No. 6: Improving Targeting via Location Data

12 No. 7: Finding the Right Moment

13 No. 8: Personalization that Scales

14 eMarketer Interviews

16 Related eMarketer Reports

17 Related Links

17 Editorial and Production Contributors


MOBILE MEASUREMENT AND TARGETING: EIGHT CHALLENGES

In 2018, more than a third of all advertising dollars in

the US, 34.5%, will go to mobile, even as its share of

adults’ media time will only reach 29.4%.

% of total

Share of Average Time Spent per Day with SelectMedia by US Adults vs. US Ad Spending Share,2017-2019

2017 2018 2019

Digital

—Mobile (nonvoice)

—Desktop/laptop*and other connected devices

TV**

Radio**

Print**

—Newspapers

—Magazines

Timespentshare

50.4%

28.1%

22.2%

34.0%

12.3%

3.4%

1.9%

1.5%

Adspending

share

42.9%

30.2%

12.7%

37.1%

7.4%

12.6%

6.1%

6.4%

Timespentshare

51.8%

29.4%

22.4%

32.9%

12.1%

3.2%

1.8%

1.4%

Adspending

share

46.1%

34.5%

11.7%

35.4%

7.1%

11.4%

5.3%

6.1%

Timespentshare

53.0%

30.4%

22.6%

32.0%

12.0%

3.0%

1.7%

1.4%

Adspending

share

49.1%

38.3%

10.8%

33.6%

6.7%

10.5%

4.8%

5.7%

Note: ages 18+; time spent with each medium includes all time spent withthat medium, regardless of multitasking; for example, 1 hour ofmultitasking on desktop/laptop while watching TV is counted as 1 hour forTV and 1 hour for desktop/laptop; ad spending share excludesout-of-home; numbers may not add up to total due to rounding; *timespent with desktop/laptop includes all internet activities on desktop andlaptop computers; **excludes digitalSource: eMarketer, Sep 2017230594 www.eMarketer.com

Despite these rosy numbers, mobile marketing could capture even more ad dollars if measurement and targeting were easier. “Marketers know that consumer attention on mobile devices is growing rapidly, but unless we can prove that this attention can be converted into brand health, footfall, or offline and online sales, their allocation toward mobile media won’t ramp as it could,” said Andrew Dubatowka, vice president of marketing at mobile advertising platform AdColony.

eMarketer has identified eight persistent challenges in mobile measurement and targeting that will likely absorb much of marketers’ attention for the next few years. The rest of this report focuses on each of them.

NO. 1: THE THICKETS OF IDENTITY RESOLUTION

Unlike desktops, where browser cookies and

IP addresses lead to fairly reliable identities,

smartphones have a fractured app and mobile web

landscape that makes identity resolution much

more difficult.

Compounding this fact is that on the mobile web, third-party cookies were eliminated by Apple in its latest version of iOS, released in September, and they are highly constrained on Android. Within apps, publishers and advertisers can usually identify a user through login information and device ID, but they have limited ability to link this identity to activity elsewhere on the phone or other channels without integrations through third-party identity networks.

Without a holistic view of identity, marketers have a hard time targeting ads based on anything other than immediate context, or measuring any effect beyond an immediate click or view.

In order to resolve this challenge, advertisers have turned to identity graphs that link identity across apps, the mobile web, desktop and other channels. There are various ways to do this using login information, log-level data sent to a server, first-party cookies, third-party software development kits (SDKs) in apps, or IP addresses linked to a specific place, such as a household.

Platforms with persistent logins across devices, such as Google, Facebook, Twitter, Snapchat, Pinterest and Amazon, have an edge when it comes to building identity graphs. “They have such a huge advantage from an identity perspective, from a cross-screen perspective, from a measurement perspective,” said Anne Frisbie, senior vice president of global brand and programmatic and general manager at InMobi, a mobile advertising platform. “It’s a much more one-stop shop than trying to piece together the rest of the ecosystem.”

Identity graphs are particularly critical for marketers taking a more audience- or people-based approach to advertising. A LiveRamp and Wakefield Research study in September 2017 found that nearly half (48%) of US marketers listed the absence of such identity resolution technology as a challenge for people-based measurement.


% of respondents

Challenges of People-Based Measurement Accordingto US Marketers and Advertisers, Sep 2017

Can't bring all data together for analysis 49%

Don't have identity resolution technology 48%

Online sales data limitations 42%

Don't know how to get started 42%

Source: LiveRamp, "The State of People-Based Measurement" conductedby Wakefield Research, Oct 10, 2017233247 www.eMarketer.com

As data on identity improves, marketers will find they have the power to make distinctions that were once difficult or impossible. For instance, in a household with several people, many of them are likely to have multiple devices, and some mobile devices—particularly tablets—can also have multiple users. All of this adds additional layers of complexity to bucketing identities. “More than ever you have to tie in so many different resolutions, from household, to user, to device, to IDs within that device,” said Haylee Adkins, global head of client strategy at Drawbridge, an identity management company.

On the app side, which will eMarketer estimates will capture 80.6% of mobile ad expenditures this year, an app publisher can have a persistent view of the individual through login information and device ID. Advertisers of in-app inventory, however, rely on information from attribution SDKs, which send identifiers in different formats that need to be reconciled.

Many of the more sophisticated media buyers are switching their focus to getting the device ID. “We’re shifting away from cookies altogether, and focusing on the device ID and using it to get that holistic view of the device itself, which also gives us access to [the user’s] email address,” said Brooke Wilcox, director of digital business development at MNI Targeted Media, a media planning and buying company.

Once an advertiser has an email address, they can link up to other online and offline data sources, including offline credit card transactions. “Device ID is now part of [many clients’] data management platforms [DMPs],” Frisbie said. “I think there will be more appreciation for app inventory because of those really clean data signals and clean user identities.”

But while things may be getting easier for in-app identity resolution, recent changes made by Apple are making it more challenging for the web. Released in September 2017, iOS 11 includes Intelligent Tracking Prevention (ITP), which has essentially eliminated third-party cookies as

an identity tracking tool, and has made first-party cookies more transient. The new rules have thrown media buyers for a loop.

Now first-party cookies last only 30 days and will reset after a phone or an application has been turned off—and these cookies don’t carry over to different browsers. “Every single application on a mobile device ... is a completely siloed environment in regard to cookies, and cookie pools are not shared between those environments,” said Keith Petri, chief strategy officer for the US at identity management company Screen6.

In the long term, the industry may manage to move toward a consistent identifier for both the buyer and seller parts of the mobile web ecosystem, but progress has been halting. One initiative, DigiTrust, would speed up the delivery of ads by reducing the number of attribution tags, but it’s stalled. “We’re not working together, and because everybody is in competition with one another, we’re not making any progress,” Petri said of the whole ad ecosystem. “It’s one step forward, two steps back.”

One other step forward that is likely to affect identity resolution in the long term is the General Data Protection Regulation (GDPR), a group of rules surrounding data opt-in and security set to roll out across the European Union in May 2018. This EU law requires publishers to tell users explicitly which data they are collecting, and for what purposes. In many cases, publishers will also need to get clear consent from users to actually use the data, and they must comply with user requests to delete data.

Although this law will only affect some identity resolution providers, it will likely limit many third-party ad tech companies that collect user information themselves rather than receiving first-party data.

For more information on the GDPR, see eMarketer’s January 2018 reports, “Western Europe Digital Trends for 2018: GDPR, Harmonization, the On-Demand Economy and Voice” and “Digital Security in the Age of New Tech: Best Practices for Marketers.”

http://totalaccess.emarketer.com/reports/viewer.aspx?r=2002167






NO. 2: FINDING THAT ELUSIVE COMMON GROUND IN MEASUREMENT

Data may be plentiful in mobile, but advertisers

and media buyers also need comparable metrics,

which remain hard to implement. “The mobile world

is different from the desktop world, and it is more

fragmented in terms of measurement standards,” said

Jonah Goodhart, CEO of Moat.

“To capture measurement around mobile campaigns, you have to account for both mobile web and in-app impressions, as well as a wide range of ad formats and types of exposure,” he said. “Given the complexity of the mobile environment, advertisers need deep expertise on how best to reach, activate and measure their intended audiences.”

In order to measure ad performance in-app, publishers and attribution providers rely on SDKs incorporated by the publishers, so advertisers are faced with numerous network and user IDs, as well as measurement standards that are difficult to reconcile and normalize. Native formats with different user experiences add additional complexity. “At the moment, this apples-to-apples comparison is difficult,” said Maor Sadra, managing director and chief revenue officer at AppLift, an app advertising platform.

The fragmented measurement landscape leaves advertisers with heaps of incompatible data. “You still have to look at separate data pools through different SDK integrations to connect the dots and see that it’s the same user on the same device,” Wilcox said.

The lack of a holistic view across publishers has created a hodgepodge of essentially hacked solutions, each with an incomplete view. “We have our own proprietary attribution,” said Chris Maddern, chief product officer at Button, a company hosting an affiliate exchange between apps. “Other providers of mobile attribution have their own systems. And most of them today don’t work together, so you end up with this model where last-click comes from three sources, none of which knows about [the others].”

As a result, there is a lot of duplication of supposed credit for an outcome. At the same time, many outcomes are missed. “The value of advertising in mobile apps is sometimes lost in the value chain, because there is not a people measurement approach but this very siloed type

of screen measurement approach,” said Antoine Barbier, director of product for advertising at Adobe.

Several industry insiders expected some consolidation in the current fractured and redundant system. “In 2018, we have to solve the multiple channels, multiple sources problem one way or another,” Maddern said. “We’ve already started to see a lot of consolidation, particularly in the mobile measurement partner industry. I wouldn’t be surprised to see more consolidation that reduces the impact of some of these problems as you get more and more people on fewer platforms.”

One sign of progress is the Open Measurement SDK for viewability, released in October by the Interactive Advertising Bureau (IAB) Tech Lab. This initiative brought together coders from a variety of providers to create a single, open-source SDK.

For publishers, this should reduce the number of updates, since they only need to worry about changes in a single SDK that will work with a slew of providers. This should also reduce the latency and instability of apps that come with multiple SDKs and frequent updates.

For advertisers and participating third-party measurement firms, they get access to viewability metrics for more publishers and also do not need to update their own viewability SDKs constantly, nor do they need to wait for publishers to install their own SDK. “That’s a positive for the industry,” Frisbie said of the Open SDK. “It’s been a frustration for brands.”


NO. 3: PUBLISHERS ARE COY WITH DATA

Viewability is just one element of a broader concern

among advertisers for more transparency and

reliability in audience and location data. The problem

is heightened by the fact that the largest mobile

advertising publishers have walled gardens, so the

data gathered on the platform stays right there.

“We see the biggest challenge as transparency and fidelity of data,” said Jason Hicks, vice president of marketing and client services at mobile attribution platform Kochava. “The data is coming from the people that are selling the information.”

Marketers want more transparency throughout the mobile ecosystem. When Digiday and Factual surveyed US publishers in October 2017 to see what they look for in data providers, 60% listed data transparency as one of the most important features.

% of respondents

Most Important Features When Considering a NewData Partner According to US Publishers, Oct 2017

Data transparency60%

Data quality33%

Cost24%

Reputation of the data provider14%

Targeting specific audience13%

Scalability8%

Other2%

Note: respondents chose their top 2Source: Digiday and Factual, "State of the Industry: Navigating Mobile withLocation Data & Measurement," Nov 2017233059 www.eMarketer.com

“Data providers need to be held to more accuracy,” Wilcox said. “They need to be more transparent in sharing their sources and how they gather data.”

In order to improve the quality of data, a consortium of advertisers and vendors in the Media Rating Council (MRC) have created guidelines for various types of publisher data in areas such as viewability, location and audience measurement. The Open Measurement

SDK uses the MRC guidelines, which for instance set a minimum for video of 50% of pixels viewed for at least 2 seconds. A May 2017 World Federation of Advertisers survey of worldwide brands found that 57% of respondents had started implementing viewer tracking via a third-party vendor over the previous year, and 40% had invested in inventory that met MRC standards.

% of respondents

Timeframe During Which Brands Worldwide HaveTaken Select Actions to Manage Media Viewability,May 2017

Started implementing viewertracking via a third-party vendor

Invested in inventory which meets the minimum industrystandards laid out by MRC/JICWEBs

Devised own veiwability criteria

Were alreadydoing this

(more than 12months ago)

31%

23%

17%

Started in the

past 12months

57%

40%

20%

Haven'tstarted,but plan

to

9%

26%

20%

Note: numbers may not add up to 100% due to exclusion of "don't plan to"or "don't know" responsesSource: World Federation of Advertisers survey as cited in press release,Aug 16, 2017230944 www.eMarketer.com

With the exception of viewability, the guidelines remain mostly aspirational. “The MRC guidelines are just guidance at this point,” Hicks said. “It’s great that they’re there, but I don’t know that it’s changed anything in a meaningful way yet. But I think it’s set a good road map for what needs to happen.”

“The guidelines are useful in that they provide advertisers and the system providers with more insight into what’s out there,” said Kate Owen, vice president for Northern Europe at geolocation provider Digital Element. “They are more likely to demand quality data and possibly more likely to cross-check it.”

Many of the bigger agencies and advertisers are also relying more on first-party data and re-engaging existing users. To enable this, some are creating their own DMP, or asking their third-party DMPs to house their proprietary data—including information on device IDs, which will let them get the more holistic view. “The growth is going to be exponential for the DMPs that are managing first-party data,” said Damian Garbaccio, executive vice president of Nielsen Marketing Cloud.

The combination of these approaches is making a difference. “In the last year or so, we’ve seen great improvements—particularly with in-app inventory—with our measurement and brand safety partners, in terms of brand safety as well as viewability detection and targeting,” said Steve DeAngelis, vice president for North America at M&C Saatchi Mobile.


NO. 4: AD FRAUD

Ad fraud thrives in part on lack of transparency and

measurement fragmentation, but is certainly large

enough to rank as its own distinct challenge. In an

InMobi survey of app marketers in North America

in July 2017, 47% listed ad fraud as a concern. This

ranked slightly higher than attribution.

% of respondents

Concerns Facing In-App Advertising According to AppMarketers in North America, July 2017

Ad fraud 47%

Attribution 45%

Ad blocking 29%

Third-party measurement 28%

Transparency 27%

Privacy concerns 18%

Other 5%

Note: n=119Source: InMobi, "State of App Performance Marketing Survey," Aug 15,2017231207 www.eMarketer.com

The scope of mobile ad fraud is massive. A Q1 study by app analytics firm Tune identified over 15% of clicks as fraudulent. Hicks of Kochava said that in campaigns on even trusted sites, as much as 40% of the clicks can be fraudulent.

Fraud comes in many forms. Some of the most prevalent approaches are spoofed (fake) websites, manipulated audience or location data, or device farms that constantly reset and then reinstall apps.

Creating completely fraudulent apps is more difficult than building spoofed websites. However, as fraud detection and prevention practices become more mature for both mobile and desktop web, fraudulent activity is shifting into apps. Nearly half (48%) of app marketers in North America listed invalid traffic generated by bots and scripts as the leading type of ad fraud they encountered, according to the InMobi survey.

% of respondents

Primary Type of Ad Fraud Encountered in AppMarketing According to App Marketers in NorthAmerica, July 2017

Invalid traffic by bots and scripts 48%

Unauthorized re-brokering13%

Click cramming 13%

Ad stacking 10%

Click injection5%

Other 11%

Note: n=119Source: InMobi, "State of App Performance Marketing Survey," Aug 15,2017231211 www.eMarketer.com

Much of this invalid traffic comes from device farms that focus on app install ads. “The players engaged in mobile user growth know that fraud is out there, but they have a fuzzy understanding of what types of fraud are most damaging,” said Jasper Radeke, director of marketing for North America at AppsFlyer. “Device reset fraud makes up approximately 50% of all app fraud, and it’s based on both massive device farms at a scale of literally thousands of devices as well as smaller-scale, homegrown fraudsters.”

For more information on different types of ad fraud, see eMarketer’s May 2017 report, “Common Forms of Digital Display Ad Fraud: Faking Traffic, Sites, Attribution and More.”

Various mobile-first ad verification providers have popped up to help marketers better police this arena. Whereas a year or two ago marketers may have tolerated levels of in-app ad fraud for lack of proper verification tools, today that tolerance is waning. “As the tools get better, advertisers have the data they need to go to networks and demand fraud-free traffic,” said Jeff Turland, corporate trainer at Kochava.

These providers are also working to weed out fraudulent traffic before demand-side partners and advertisers attribute the effect, which would address one of the complaints from advertisers and ad tech partners. “Yes, they catch it,” said Galia Reichenstein, general manager for the US at Taptica. “They’re doing well, but in the end, there’s still a lot of workflow that needs to be done around deducting and looking at it.”

Other positive advancements in the fight against fraud include the rollout of the IAB Tech Lab’s ads.txt, which certifies that a website is authentic. Ads.txt is just a partial solution for mobile advertisers, however, in that





it only works for browsers, whether mobile or desktop. However, Frisbie and others noted that the industry is already hard at work looking to bring a comparable solution to apps.

The industry is also experimenting with blockchain to increase the transparency of sites and data. Several initiatives are underway, including XCHNG by Kochava, which is an open blockchain ledger that eventually could serve as a substitute for open exchanges; Faktor, which utilizes blockchain for verifying identity; AdEx, which is a blockchain-based ad exchange; and adChain, which stores nonfraudulent domain names. Several more exist, and the IAB Tech Group launched a working group in September 2017 with the goal of “exploring ways to leverage blockchain to improve efficiency and value realization in digital advertising.”

For performance advertisers, shifting to pure performance advertising models is also likely to cut down on fraud. Here advertisers only pay for an ad if there are verifiable performance metrics, such as a sale, fully viewed video or engagement with a game. “The way to get around [fraud] is to track post-impression performance,” said Tony Zito, CEO of Rakuten Marketing.

More generally, the vast amount of data generated by mobile makes performance advertising easier. “You have branding in mobile as well, but … with the data that you have there, you’re able to do very performance-oriented campaigns,” said Reichenstein, who also noted “a big shift this year to moving to cost per action [CPA] rather than cost per install [CPI].”

This shift reflects both the massive amount of install fraud as well as the realization that post-click engagement and lifetime value are the real endgame. “Sophisticated marketers are looking at these downstream actions,” said Ben Roodman, director of marketer development at AppsFlyer.

The larger networks, such as Facebook, Google and Pinterest, offer ads optimized for CPA, but still billed on cost per thousand (CPM) or cost per click (CPC). But there is also a move to more direct affiliate models that bill on CPA. “There’s certainly been an uptick in demand recently for the quality-tier-targeted ads in the affiliate marketing sector, which is quite interesting,” Owen said.

NO. 5: MEASURING OFF-DEVICE ACTIONS

Much of the effect of mobile advertising occurs

elsewhere, on other devices or in the physical world,

and the better such effects can be measured, the

better advertisers will be.

“The biggest challenge we see when it comes to mobile measurement and targeting is with tracking and targeting a user throughout the funnel,” DeAngelis said. “To do this effectively, accurate cross-device targeting at scale is needed, which is something we don’t feel has fully materialized.”

Here again, identity resolution becomes an essential tool for piecing the full cross-device picture together. “Our goal at the end of the day is to have this user approach,” Adobe’s Barbier said. “That’s what advertisers are looking for, and helping them to target, measure and understand the user journey across devices and the fragmented landscape is where we see both the opportunity and the challenge.”

But devices are only part of the story. “Online ads and online organic, everything is driving users into the physical stores,” said Kishore Kanakamedala, director of product management for offline and online measurement at Google.

Online-to-offline (O2O) measurement, which connects online advertising with offline purchases and other actions there, has grown rapidly in the past year. In a 451 Research survey of multichannel marketers in North America in spring 2017, the two most important types of data tools listed were store visitation data and store purchase data. The survey was commissioned by location firm PlacedIQ, but analysts interviewed by eMarketer confirmed strong interest in O2O solutions. “When people say the word measurement right now, 90% of them are thinking about linking offline transaction data to digital exposure,” said Jeff Smith, CMO and general manager for the brands practice at LiveRamp.


% of respondents

Level of Importance of Select Types of Data/ToolsUsed to Measure Marketing Performance Accordingto Multichannel Marketers in North America, Spring2017

Consumer location data to measure lift of store visitation

Consumer purchase data to measure in-store sales lift

Your company'sproprietary data (e.g., marketing software, CRM, etc.)

Multitouch attribution services

Brand surveys and research

Publisher data todetermine onlinereach

Media measurement services

1—most

important

57%

47%

41%

28%

23%

21%

19%

2

24%

30%

19%

29%

24%

34%

24%

3

7%

13%

20%

17%

22%

27%

23%

4

4%

7%

7%

15%

17%

10%

11%

5

-

2%

7%

6%

6%

6%

10%

6

6%

1%

6%

2%

-

2%

7%

7—least

important

2%

-

-

3%

8%

-

6%

Note: n=200Source: 451 Research, "State of Integrated Marketing 2017: Mapping theJourney to Success" commissioned by PlaceIQ, Sep 13, 2017231019 www.eMarketer.com

The 451 Research survey found that 25% of respondents used location data to measure store visitation as of spring 2017, and a further 21% were testing it; 24% were using consumer purchase data to measure in-store lift, while 34% were testing it. “If you’re a retailer and you don’t measure offline, you’re in the minority now,” said David Shim, founder and CEO of Placed. “There’s been a big shift in the past 18 months.”

% of respondents

Usage and Awareness of Select Types of Data/ToolsUsed to Measure Marketing Performance Accordingto Multichannel Marketers in North America, Spring 2017

Brand surveys and research32% 37% 27% 4%

Your company's proprietary data (e.g., marketing software, CRM)27% 39% 29% 5%

Publisher data to determine online reach27% 36% 31% 6%

Multitouch attribution services25% 34% 33% 8%

Consumer location data to measure lift to store visitation25% 21% 45% 9%

Deployed Testing Aware Unaware

Note: n=200Source: 451 Research, "State of Integrated Marketing 2017: Mapping theJourney to Success" commissioned by PlaceIQ, Sep 13, 2017231018 www.eMarketer.com

Consumer purchase data to measure in-store sales lift24% 34% 39% 3%

Media measurement services23% 39% 35% 3%

A range of location services companies have O2O services, and most of the larger platforms, including Facebook, Google, Snapchat, Pinterest, Twitter and Pandora, have added offline metrics to their ad platforms.

Google, for instance, introduced offline conversions and store visitation as metrics in AdWords in 2013 and 2014, respectively, and since then the company has measured more than 7 billion visits in 20 countries, according to Kanakamedela. Google claims to have access to 70% of credit card transactions in the US via partnerships with credit card companies.

Traffic measuring tools generally rely on the location signals emanating from a phone and captured by an app as the primary means of tracking visits, although some also use panels to confirm visits or get more detailed information. Analytics firms also need a control group to find the incremental lift to get an accurate view of the effectiveness of an ad.

Although location data from apps is usually better than from the web due to their ability to tap GPS, Wi-Fi or beacon signals, it’s hardly foolproof. Apps can transmit inaccurate or incomplete latitude-longitude (lat-long) data or not have location tracking data available to them. Or the location could be a mall or other place where it is difficult to distinguish between stores. “We’ve seen the accuracy problem pretty consistently in every form of location data and in every use case,” said Jake Moskowitz,


vice president of measurement at location verification service Placecast.

Knowing the lat-long coordinates of the user is only half the challenge. O2O measurements also need to match that location with a distinct place. “It’s a very complicated process to create an accurate place attachment by taking that lat-long number, understanding what it means in the real world, and [combining it with] where that person is,” said Ocean Fine, vice president of agencies and strategic partnerships at Factual, a provider of verified location data.

With identity graphs, advertisers can also use conversion data for O2O. This data comes via credit card data, point-of-sale feeds, or a variety of APIs or batch uploads of customer relationship management (CRM) data. As with visitation, analytics firms need to find the incremental lift to get an accurate view of the effectiveness of an ad.

Visitation and offline sales serve different purposes as metrics. For some sectors, such as quick-service restaurants, car dealers or travel, visitation is a strong indicator of ad effectiveness. For others, such as consumer packaged goods (CPG), it’s less useful. “If a retail brand wants to know if you bought a pair of its jeans, and it’s only using foot traffic to know you went to a store, it doesn’t know if you bought the jeans or not,” said Tim Jenkins, CEO of 4Info. “With offline sales we are able to tie out to an SKU or UPC level. There’s no question that offline sales data that comes from a point-of-sale system is far more accurate and useful than foot traffic.”

More nuanced measurement of visits can also help determine if a visit was important by filtering out incidental store visits or near-visits (for instance by someone who was merely at a traffic light next to a store or who just stopped in for a moment). “We estimate what we call ‘dwell time’ for the duration of the visit,” said Antonio Tomarchio, founder and CEO of location analytics firm Cuebiq. “We are able to qualify not only whether the user is there or not, but also how much the user is engaging with that physical location.”

NO. 6: IMPROVING TARGETING VIA LOCATION DATA

The location signals can also be used for targeting, of

course. In fact, in a Digiday/Factual survey in October

2017, more than three-quarters of US publishers (76%)

said that they always or usually use location data

for geotargeting.

% of respondents

Frequency with Which US Publishers Use Data forGeotargeting, Oct 2017

Usually62%

Sometimes17%

Always14%

Rarely6%

Never2%

Note: numbers may not add up to 100% due to roundingSource: Digiday and Factual, "State of the Industry: Navigating Mobile withLocation Data & Measurement," Nov 2017233058 www.eMarketer.com

Location data can be used for two overarching targeting purposes: 1) to provide context about where someone is at that moment, and 2) audience building based on what people’s movements over time say about them. Ultimately, combining those elements of context and audience lets advertisers build better consumer journey maps and identify key moments for messages. “Advertisers tend to think of location only as proximity, and don’t understand the rich insights they get about consumers,” said Steven Rosenblatt, president of Foursquare. “Advertisers have to stop looking at location targeting as a ‘check the box’ strategy and start realizing that location is the atomic unit of the mobile world.”

Until recently, the majority of location targeting has focused on real-time context. This could mean a very precise location, such as a store or even an aisle within a store. Or it could be a broader area, such as midtown Manhattan, the New York City metropolitan area or even the Northeast. At its most basic resolution, it’s country-level or economic region.

As important as context may be, location data may be most powerful for what it reveals about audiences. By tracking movements over the course of weeks and months, advertisers can learn a user’s habits or interests. “The more you understand how consumers are acting


in their daily life, even when they’re not shopping, the better it informs your overall marketing effort,” said David Cooperstein, founder of Figurr, a location analytics firm.

As an example, someone who goes to a golf course every Saturday is likely to be interested in golf clubs. Yet targeting an ad for golf clubs while the person is golfing may be the worst time, since he or she is not in a buying mode. “We’ve found that it’s far more effective to engage people we see in golf stores and golf shops … on Thursday or Friday afternoons and into the evenings,” said David Staas, president of location marketing platform NinthDecimal.

The quality of location data remains a major concern. Nearly half (47%) of US C-level executives surveyed by Carto and Hanover Research in September 2017 named “ensuring data quality and accuracy” as a challenge of collecting location data.

% of respondents

Challenges of Collecting Location Data According toUS C-Level Executives, Sep 2017

Ensuring data quality and accuracy47%

Extracting data from existing systems in a usable way42%

Storing and securing the data collected42%

Normalizing and cleaning the data39%

Knowing where to find the data you're looking for39%

Gathering data in real time38%

Identifying the sources of data38%

Maneuvering location privacy issues34%

Having the appropriate technology to collect data34%

Having sufficient personnel resources to collect data31%

Maintaining the health of data system28%

Having adept personnel to collect data27%

I don't know/not sure1%

Source: Carto and Hanover Research, "State of Location Intelligence," Oct4, 2017231389 www.eMarketer.com

Apps can tap directly into the GPS or beacon signals of the phone if the user has opted in to using this

information, so they generally have the most reliable data. But even within an app environment, GPS location can sometimes make mistakes or be too imprecise to use for very focused geotargeting. Even the best app publishers send around 10% to 20% unusable location signals, according to Fine.

Publishers can tap GPS location through mobile web as well, but this generally requires an opt-in for each session. More commonly they use IP addresses, Wi-Fi or cellular data, which for the most part provide just inferred locations and are therefore less accurate.

The biggest problem, however, often occurs in the transmission of that data to advertisers. Publishers frequently send dated location information, or imprecise location data from IP addresses or cell triangulation, which they enhance probabilistically to get a more precise—but probably less accurate—location. “The seller of the ads is often so removed from the buyer of the ad that they don’t feel responsibility to provide accurate data,” said Cree Lawson, CEO of location marketing platform Arrivalist.

And then there’s outright fraud. “If I have a location that is in Manhattan, I am going to get a 20, 30, 40, 50 percent higher CPM than a location in nearby Hoboken, New Jersey,” Shim said. “While the distance is small, the neighborhood and the advertisers going after the audience in that location are very different.”


NO. 7: FINDING THE RIGHT MOMENT

Once an advertiser knows identity, audience and

context, it has the ingredients to pinpoint the right

moment for delivering an ad, which is crucial. In an

August 2017 VoltDB survey of US internet users, 78%

said that they were unlikely “to click on a relevant

ad unless it’s received at the right moment”—that is,

while they were buying something similar or related.

% of respondents

US Internet Users' Attitudes Towards Relevant DigitalAds, Aug 2017

I'm not likely to click on a relevant ad unless it's received at theright moment*

78%

I am annoyed when digital ads are irrelevant to me64%

I am annoyed when digital ads are not timely**63%

Note: n=2,000 ages 18+; *i.e., during my purchase of similar/relatedproducts; **e.g., received after I need a product/service or have alreadypurchased itSource: VoltDB, "The Psychology of Waiting: The Business Impact ofDiminishing Consumer Patience," Oct 11, 2017232662 www.eMarketer.com

Location is one trigger for messages, but smartphones send an immense array of data besides location that advertisers can use to attempt to determine the right moment for a message.

One type of data that has only recently begun to be tapped for marketing purposes is motion captured by gyroscopes and accelerometers. Signals from these sensors can determine whether someone is driving a car rather than sitting in the passenger seat. “We are able to correlate different motion signatures very tightly with receptiveness,” said Brett Bond, co-founder and president of Velocity, a company that analyzes this motion data.

For personalized marketing, the right moment for a message is a byproduct of where someone is in the consumer journey. “Marketing communication needs to [make] the user feel like the phone is talking directly to them vs. just receiving a message that notifies them of a deal this week,” said Eduardo Fenili, senior product manager at Kahuna. “It needs to feel like we’re learning about their usage and personalizing that experience.”

With identity resolution across devices and channels, it’s possible to create a holistic consumer journey map

that includes mobile within a unified marketing approach. “You can understand a shopper’s offline behaviors and layer that on top of the rich and in-depth online consumer profiles that marketers have already been building,” said Rebecca Schuette, director of marketing at Swirl, a proximity advertising platform. “It gives marketers that full 360-degree view.”

This cross-channel integration geared toward delivering “integrated, frictionless and omnichannel customer experience” was the leading digital transformation initiative listed by the digital transformation professionals worldwide in an August 2017 Altimeter survey.

% of respondents

Leading Digital Transformation Initiatives at TheirCompany According to Digital TransformationProfessionals Worldwide*, Aug 2017

Integrating all social, mobile, web, commerce, service efforts andinvestments to deliver an integrated, frictionless and omnichannelcustomer experience

Investing in more efficient ecommerce and mcommerceplatforms and modern processes

Modernized IT infrastructure and technologies with increased agility, flexibility, manageability and security

Further research into our customers' digital touchpoints andcustomer journey

Accelerating innovation through formal programs, internal and external

Updating customer service/support to meet the expectations of connected consumers

Creating a formal infrastructure and process around data/insights/analytics

Utilizing a more holistic and connected CRM system to empower sales teams at every customer touchpoint

Improving operational agility and modernizing policies and processes to more rapidly adapt to change

Corporate reorganization of people and departments to optimize cross-functional collaboration and efficiencies in digital

Researching and adapting the employee journey to modernizeemployee experience (EX)

Creating a culture that's more digital literate and capable

Other

46.6%

46.4%

43.0%

42.0%

39.2%

35.4%

29.4%

29.0%

24.4%

23.5%

10.6%

10.6%

0.2%

Note: n=528; respondents selected up to 5; *Canada, France, Germany, USand UKSource: Altimeter, "The 2017 State of Digital Transformation," Oct 4, 2017231528 www.eMarketer.com

“Mobile is not in a silo but is one stop in the user journey,” Barbier said. “It’s about how to make your messaging consistent in some fashion.”


NO. 8: PERSONALIZATION THAT SCALES

With better context and audience segmentation,

personalized targeting is possible. “We can now tailor

our messaging based on who we’re speaking to and

bring more personalized content to users at the right

time,” said Eunice Kim, media planner at Toyota North

America. “This capability ties back to people-based

marketing—though that term is still more buzzword

than reality, we’re increasingly employing people-

based strategies.”

Personalization, however, means nothing if marketers can’t scale creative production as well. “How many versions of that creative are you actually going to create, or do you have the bandwidth to create, as a marketer or an agency?” Smith asked. “The answer is you can’t create enough versions to take full advantage of the personalization you could be doing.”

That explains the current buzz surrounding dynamic creative. Creative management platforms (CMPs) let advertisers build numerous creative treatments for different segments. The creative can be dynamic based on audience and context, including day of week, time of day, location or adjacent content. Dynamic creative optimization (DCO) is a subset of dynamic creative in which output changes and hopefully improves on the fly, based on guidelines and available creative assets. DCO is the only way to do truly personalized messaging at scale.

The general consensus among marketers interviewed for this report was that although the technology for dynamic creative is readily available today, it’s not yet widely deployed. Celtra, for instance, lets companies import first- and third-party data to vary themes or features of an ad, providing true dynamic optimization. But few advertisers understand how to take advantage of it. “You want to marry your media strategy with your creative messaging, to have this one-to-one personalized message,” said Harry Robinson, Celtra’s vice president of brand partnerships. “Are people actually doing this? We are not seeing as much adoption as we would expect.”

According to Robinson, the bottleneck is mostly on the client side. “They’ve not thought about what to show each user or each audience,” he said. “They don’t know [for instance] what they should show a male in-market auto buyer compared with a female buyer. ... You have to know what you want to serve, what message you want to create.”

Fully dynamic content is also possible in some formats. Product ads are a good example. A dynamic product ad in Facebook or a Product Listing Ad (PLA) on Google swaps out images, text and products based on signaled intent, interest and, in some cases, location. Mobile coupon and affiliate ad companies also dynamically generate ads in the same way.

Even with these advances, adoption of dynamic creative on mobile trails behind desktop because of the proliferation of native formats that lack standardization and—in some instances—audience targeting capabilities.

The gaps in standardization and the array of sizes and environments mean that ads still mostly have to be built specifically for each platform, although CMP platforms can make a difference. Robinson described how video could be quickly adjusted for different platforms based on a core asset. “A 30-second ad gives you 30 seconds of footage that a platform like ours can help make into the right 6-second version or 12-second version, the right Instagram version, the right square version, the right Snapchat vertical version, the right interactive version,” he said.

Just as standardization in attribution may move forward in 2018, it seems likely that working with native advertising will also become more transferable. “We’ll have a lot more conversations about defining and putting standards behind native,” said Christine Peterson, managing director and digital investment lead for the US at Mindshare North America.


EMARKETER INTERVIEWS

Programmatic Advertising Is Ripe with Opportunity, Toyota Says

Eunice Kim Media Planner

Toyota North America Interview conducted on August 18, 2017

Haylee Adkins Global Head of Client Strategy

Drawbridge Interview conducted on November 14, 2017

Antoine Barbier Director of Product for Advertising

Adobe Interview conducted on November 20, 2017

Ishan Bhaumik Co-Founder and Head of Business Development

Velocity Interview conducted on November 8, 2017

Brett Bond Co-Founder and President

Velocity Interview conducted on November 8, 2017

David Cooperstein Founder

Figurr Interview conducted on October 25, 2017

Steve DeAngelis Vice President, North America

M&C Saatchi Mobile Interview conducted on November 27, 2017

Andrew Dubatowka Vice President, Marketing

AdColony Interview conducted on November 20, 2017

Eduardo Fenili Senior Product Manager

Kahuna Interview conducted on November 15, 2017

Ocean Fine Vice President, Agencies and Strategic Partnerships

Factual Interview conducted on November 9, 2017

Anne Frisbie Senior Vice President, Global Brand and Programmatic and General Manager

InMobi Interview conducted on November 6, 2017

Damian Garbaccio Executive Vice President, Nielsen Marketing Cloud

Nielsen Interview conducted on November 8, 2017

Jonah Goodhart CEO

Moat Interview conducted on November 3, 2017

Jason Hicks Vice President, Marketing and Client Services

Kochava Interview conducted on November 13, 2017

Tim Jenkins CEO

4Info Interview conducted on November 15, 2017

Ray Kingman CEO and Founder

Semcasting Interview conducted on November 17, 2017

Gil Larsen Vice President, Americas

Blis Interview conducted on November 9, 2017

Cree Lawson CEO

Arrivalist Interview conducted on November 17, 2017

Jeremy Lockhorn Vice President, Experience Strategy, Mobile and Emerging Technologies

SapientRazorfish Interview conducted on November 30, 2017

http://totalaccess.emarketer.com/interview.aspx?r=6002504

http://totalaccess.emarketer.com/interview.aspx?r=6002504


Chris Maddern Chief Product Officer

Button Interview conducted on November 30, 2017

Serge Matta President

GroundTruth (formerly xAd) Interview conducted on November 21, 2017

Chuck Moxley CMO

4Info Interview conducted on November 11, 2017

Mike Murphy Senior Marketing Manager

Drawbridge Interview conducted on November 14, 2017

Kate Owen Vice President, Northern Europe

Digital Element Interview conducted on November 1, 2017

Thomas Pasquet Co-Founder

Ogury Interview conducted on November 17, 2017

Keith Petri Chief Strategy Officer, US

Screen6 Interview conducted on November 17, 2017

Christine Peterson Managing Director and Digital Investment Lead, US

Mindshare North America Interview conducted on November 8, 2017

Jasper Radeke Director of Marketing, North America

AppsFlyer Interview conducted on November 16, 2017

Galia Reichenstein General Manager, US

Taptica Interview conducted on November 14, 2017

Harry Robinson Vice President, Brand Partnerships

Celtra Interview conducted on December 1, 2017

Ben Roodman Director, Marketer Development

AppsFlyer Interview conducted on November 16, 2017

Steven Rosenblatt President

Foursquare Interview conducted on November 17, 2017

Evan Rutchik Head of US Sales

Ogury Interview conducted on November 17, 2017

Maor Sadra Managing Director and Chief Revenue Officer

AppLift Interview conducted on November 14, 2017

Rebecca Schuette Director, Marketing

Swirl Interview conducted on November 16, 2017

David Shim Founder and CEO

Placed Interview conducted on November 17, 2017

Jeff Smith CMO and General Manager for the Brands Practice

LiveRamp Interview conducted on November 28, 2017

David Staas President

NinthDecimal Interview conducted on September 8, 2017

Ben Stein Vice President, Marketing



Antonio Tomarchio Founder and CEO

Cuebiq Interview conducted on November 14, 2017

Greg Webster Senior Vice President, Marketing and Business Development

Mobile Posse Interview conducted on November 9, 2017

Brooke Wilcox Director, Digital Business Development

MNI Targeted Media Interview conducted on November 14, 2017

Tony Zito CEO

Rakuten Marketing Interview conducted on November 17, 2017

Kishore Kanakamedala Director of Product Management for Offline and Online Measurement

Google Interview conducted on November 30, 2017

Jake Moskowitz Vice President, Measurement

Placecast Interview conducted on November 21, 2017

Jeff Turland Corporate Trainer


RELATED EMARKETER REPORTS

Beyond the Duopoly: Exploring Digital Advertising Outside Google and Facebook

Programmatic Connected TV and OTT Video Advertising: Automation, Audience Attracts Digital and TV Ad Buyers

Search Marketing 2017: Marketers Seek Out Consumer Intent as Device Habits Evolve

US Digital Display Advertising 2018: Seven Big Bets for Buyers and Sellers

US Mobile StatPack 2017: An Atlas of eMarketer Forecasts to Keep at Your Fingertips All Year Long

RELATED LINKS

451 Research

Altimeter

Carto

Digiday

Econsultancy

Factual

Hanover Research

InMobi

LiveRamp

VoltDB

Wakefield Research

World Federation of Advertisers

EDITORIAL AND PRODUCTION CONTRIBUTORS

Michael Balletti Copy EditorKatie Hamblin Chart Editorial ManagerDana Hill Director of ProductionStephanie Meyer Senior Production ArtistHeather Price Managing Editor, ReportsJohn Rambow Executive Editor, ReportsErica Walker Copy Editor












https://451Research.com

https://www.prophet.com/thinking/altimeter/

https://carto.com

https://digiday.com

https://econsultancy.com

https://www.factual.com

www.hanoverresearch.com

www.inmobi.com

https://liveramp.com

https://www.voltdb.com

www.wakefieldresearch.com

https://www.wfanet.org

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