The location intelligence sector is in transition. Given legislation like GDPR and CCPA, as well as private sector measures like mobile platform updates, there’s a new set of challenges for collecting consumer movement data. This was a key theme at Localogy’s Place conference and since.
Through requisite analyst diligence and speculation that’s ensued, we’ve examined the possibility of looming M&A activity in the sector. The thought is that restrictions on data collection could cause the need for disparate players to pool diminishing sources of quality location signals.
That’s already started to play out given Verve Mobile’s acquisition by Media and Games Invest. Verve joins MGI’s portfolio as part-financial and part strategic investment. Its location data will assist other media properties, and its U.S. presence will accelerate geographic expansion.
As we mentioned in our recent coverage of the event, it could be the year’s first of many acquisitions and a harbinger for further consolidation. We’re already seeing that happen, as location data provider X-Mode since announced that it will acquire the assets of U.K-based Location Sciences.
X-mode’s location data, like several location intelligence players, derives from app partnerships and SDKs that collect opt-in location signals. Location Sciences now fills some key gaps, not only with GDPR compliance but back to the point about pooling data sources in the current environment.
“As a result of recent regulation in the US and the UK, the volume of quality location data is shrinking due to the inability to get consent at scale from traditional location data sources,” X-Mode CEO Josh Anton said in a public release. “We are very eager to serve the UK and the greater European Union as the leader in the space with the highest quality data available.”
The deal also makes X-Mode the largest provider of GDPR-compliant location data in the U.K., and one of the largest providers in the European Union. Seen in that light, the deal was a sort of buy vs. build decision that accelerates X-Mode’s European go-to-market strategy.
As for ongoing M&A in this sector, CCPA and GDPR could further stimulate investment activity. As mentioned by Place IQ’s Duncan McCall and further unpacked by Localogy analyst Neal Polachek on our analyst roundtable (below), legislation could create more stability which engenders investor confidence.
Meanwhile, all of the above happens amidst an M&A uptick in the broader media and ad tech sectors. 15 ad tech mergers and acquisitions took place in Q4 according to Luma Partners and reported by Digiday. These were driven by reasons similar but more expansive than those driving M&A in location intelligence.
Within location intelligence, there has also been some existing activity including Foursquare’s acquisition of Placed last year. Though not driven by diminishing data, the principle stands that it was able to boost its data intelligence chops with more and varied sources of location data.
Looking forward given the current environment, we stand by projections that consolidation will increase in 2020. February isn’t even half over and we already have two big deals. We’ll keep a close eye on our radar screen and report back signals and strategic implications.