Last week, we were in Austin for Localogy’s Place Conference. Coverage continues as we unpack takeaways. Stay tuned for more session coverage retrospectively over the coming weeks and see all session coverage aggregated here. 

One week after Localogy’s Place Conference, we’re still processing and synthesizing all the macro and micro topics we heard from the stage. One of the macro-topics that threaded throughout the program was the location-based ad industry’s looming privacy winter, due to regulatory and technological factors.

An offshoot of that thread was a principle introduced by Place IQ’s Duncan McCall: Due to state regulations like CCPA and open market dynamics such as privacy restrictions at the mobile OS level (further unpacked here), the bar will be raised for the collection of location and movement data.

That could lead to a market shakeout. Specifically, regulations will weed out the data-collection bad actors. And OS restrictions could limit the abilities of players with less footing or diversified data sources. This all happens as an abundance of location intelligence players have emerged in the past few years.

But for some of the incumbents with firmer footing, it could mean greater barriers to entry/competition which puts them in a better spot. That includes the established location intelligence providers I interviewed on stage for an executive panel, including PlaceIQ, Ninth Decimal and GroundTruth.

Also entering the equation is the growing demand for location intelligence. As we’ve examined, and as validated by the aforementioned panel, location intelligence is moving beyond marketing to a range of operational support in other strategic enterprise functions (think: supply chain logistics).

So if you connect all the above dots, we could be looking at greater demand (broader application of the data) and diminished supply (market shakeout and raised barriers to entry). That creates a favorable position for whoever can survive the oncoming privacy winter. To the winner go the spoils, etc.

Adding to this is yet another market dynamic. McCall believes there could be consolidation in the location intelligence sector’s future. It makes sense for lots of reasons including the need to gain network effect for data collection. This strength-in-numbers approach drove Foursquare’s Place acquisition.

But there’s a massive caveat there. More consolidation won’t happen in the current environment due to investor uncertainty. Given uncertain outcomes from the above regulatory and technological factors, investors and acquirers don’t have the confidence required to place multi-million-dollar bets.

But as regulation and iOS 13 issues set in and create more certainty (even if outcomes aren’t great), it could provide investor confidence that leads to M&A activity. That confidence could also notably come from proposed federal regulation for privacy control — something that McCall strongly advocates.

It’s a lesson in industry dynamics and investment markets’ aversion to uncertainty. We’ll see it play out over the coming months and years as all of these looming variables settle in. These will be factors to watch closely for their potential chain reaction in this key subsector of local media and advertising.

For more on this topic, we broke it down on the latest episode of the Above the Cloud podcast. The relevant clip is below. 

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