Advertisers want to use location data in ad targeting, but they’re finding the coming enforcement of the General Data Protection Regulation is throwing a wrench in those plans.

In theory, the GDPR makes location data more attractive because it’s typically less personal and more generic data for targeting purposes. But complying with the requirements of the GDPR, which requires user consent, has sapped the number of suppliers. Some ad exchanges, for example, are reducing and redacting the information made available via their logs, according to three ad tech executives who spoke to Digiday. This has created a supply and demand imbalance.

From an advertiser perspective, there’s never been so much interest in leveraging consumer location information for analytics and insights, said one of the executives. But as advertisers start to ask more questions about the source of location data, they’re finding that in many instances, they can’t use those suppliers in a post-GDPR world, the source said.

The data many location companies use to build profiles is plucked from the bid requests. This can’t happen under the GDPR because those same companies haven’t gotten consent to use the data.

Some supply-side platforms are even considering stopping the flow of certain data through all bid requests, said an ad tech specialist at a publisher, who wished to remain anonymous. Between pushback from exchanges and crackdowns from supply-side platforms, Europe is looking less hospitable for location data vendors.

“As the well of indirectly sourced location data dries up in Europe, we are already seeing brands start to create their own first-party location intelligence assets via direct collection,” said Tim Norris, head of marketing tech startup mParticle’s Europe, Middle East and Africa business.

The technical issue is this: The GDPR’s requirements mean location data must be completely anonymized and made nonpersonal. For that to happen, more generalized data such as city or region must be used so that it applies to many people in that area, rather than a specific person’s residence.

And if they can’t get that data, then some ad tech firms will need to rethink their business models. This week, location data firm Verve moved to close its European and international offices. Cross-device targeter Drawbridge is also set to exit the market, though some industry observers believe the GDPR is being used as a scapegoat for broader business challenges.

The GDPR will bring a much-needed barrier to cheap location data collection and could increase the value in the data exchange model between the collector and the consumer, thanks to analytic systems and or specific software development kits, said Reza Ghaem-Maghami, global chief strategy officer at customer-relationship management agency Proximity Worldwide. This will then allow for a “deeper consumer understanding based on multiple data sources versus only where the consumer happens to be now,” Ghaem-Maghami said.

Go deeper into GDPR by downloading Digiday’s full guide including checklists, definitions and more. 

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