Mister Beacon Episode #50
Location Based Advertising and the Beacosystem – VerveSeptember 06, 2017
Acquiring location data is challenging, but how do you monetize it? Verve is one of the few companies who have been able create a successful location based ad network using billions of location data points. We talk to Brian Dunphy, a veteran of Qualcomm, Gimbal and now Verve about what it takes to be successful in this market.
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Steve Statler 00:14
With Mr. Beacon, our purpose is to allow you to hear directly from the people behind the companies that are making digital physical convergence happen. And bringing IoT to life. Brian Dunphy is a great example of that he was there right at the beginning of the beacon ecosystem at Qualcomm through Gimbal. And we've taken the opportunity to catch him just as he's moving to a new company verv to get his perspective on the ecosystem, and also his insight into Verve, we're a company that is growing and successful, and actually making money out of the beacon ecosystem in the realm of advertising. We hope you enjoy it. So Brian, this is the 50th episode of the Mr. Beacon podcast. I can't think of a better person to have on the show. I can't imagine why we haven't had you on sooner. Thanks so much for joining us on on the Mr. Beacon podcast.
Brian Dunphy 01:16
Steve, I'm honored to be here at a milestone event like you're 50th. That's awesome.
Steve Statler 01:21
So Brian, I was thinking that if this is development, people were rock stars, and in many ways, I think they are rock stars, you would be like the Elvis Costello of the of the beacon business, that context business, the beacon system, whatever you want to call this. It's not the sidebands it's because you have just you've worked with so many different people. You're like Elvis Costello, Burt Bacharach, Paul McCartney, are just listening of people, Annie Lennox, and you have worked with some amazing companies. I can't believe that you started life as a PWC. Auditor. But you did. And you've you spent a long time at Qualcomm doing some pretty amazing things developing incredible partnerships with people like major league baseball, and you did the original beacon deal for with Apple, which was pretty cool Citibank, South by Southwest. So there's a there's just an amazing set of experiences you've been through. And so what I want to do today is talk about your latest gig, which is at a fascinating company called Verve based just up the road from San Diego in Carlsbad, so let's talk about what they're doing. But also, I'd love to get your perspective at this kind of transition time about the proximity location, ecosystem as a whole.
Brian Dunphy 02:39
Yes, I joined Verve recently, and Verve is one of the leaders in location based mobile advertising. They've been in business since 2005. And one of the pioneers in actually Location Location driven advertising. Very early on, they realized that the first party data signals that you can get with location insights can actually drive behavioural insights to drive much more contextually relevant advertising, which results in a higher performance where consumers are interested in the advertising that they're receiving, more likely to act upon it and clicked on it and engage with it, which results in higher CPMs. So what what excited me about that firm was not only there, they're being in the business, as long as they have is their vision on IoT, and how all these location signals whether it's coming from GPS or Wi Fi or Bluetooth beacons. And now of course, visual light communications, NFC, whatever, whatever the IoT signal that's being admitted. Those are all precise signals of location and potentially behavioral interests of of mobile users that opt into mobile apps for having more more IoT engagement. Now, a lot of these signals that come out of that are, you're getting billions and billions of of events that are happening on on a daily basis if you have scale. And the challenge is, how do you make sense of that, and what what really liked about Verve was their investment in data science, they've got a very large data science team that analyzes the data insights that are happening from these location events, and to help advertisers and their app publishers to build profiles and audiences about who the different segments of people that are, have a diverse in the in the daily in the world. And that, in itself drives a much higher value to the advertiser at the end of the day.
Steve Statler 04:48
So give us a few metrics to get a so we can get a sense of how how big Verve is.
Brian Dunphy 04:54
Okay, so Verve has 250 employees. They've got offices headquartered here. We're in San Diego and Carlsbad, New York, Denver, San Francisco, Chicago, and a presence in in the UK as well. And from a from the size of their addressable audience for advertising, they have over 225 million device IDs that they're able to engage with for, for mobile advertising. Now they have an SDK that goes into, into, into their application partners over 5000 premium apps have got the verb SDK incorporated in it. And over 50 million monthly active users are seen by the Verve SDK, what that is doing is generating over 250 billion location events per month. So extreme, extremely large scale in both the reach of, of the addressable audience that's out there across these diverse mobile applications, as well as the amount of location events that are being triggered. For example, the average daily active user that they're that has the verb SDK is generating about 50 location events a day. Wow.
Steve Statler 06:14
So that's huge. And I do want to get into a little bit more of who the customers are and what they're getting out of it and so forth. But under the covers you you guys bought a beacon company. So there's, you've got beacon hardware rock cemetery, right?
Brian Dunphy 06:31
That's right. Proximity is one of the early pioneers in the beacon space. When we were coming out with beacons when I was at Qualcomm starting gimble. The proximity guys were starting their company out in Denver, and had a very similar philosophy that beacons combined with geolocation with geo fences and Wi Fi, could be a powerful engagement tool and similar philosophy around security on beacons, and that they needed to have secure access so that unauthorized applications couldn't access them. So I was very excited when I joined the verb team to partner up with the proximity guys, and I've been aware of them since 2013, when we first met at South by Southwest at a beacon event. Great guys.
Steve Statler 07:20
So part of it one part of it, at least is the speaking thing. And it sounds like you're doing kind of the conditional access. They're rolling IDs that only it's paid to play. So there's you're protecting privacy, and only the folks that are supposed to access the beacons can access the beacons, is that correct?
Brian Dunphy 07:40
Correct. And I think it's important because you hit on a few key points there one, privacy is is is the most important thing that this industry needs to embrace, consumers need to be opting in for these services. And the applications that are being able to access these beacons need to have permission from the beacon owners, because these beacon owners are putting thing these these devices into their high valued locations. Whether whether it's a retailer deploying beacons inside of their store, or whether it's a a stadium owner putting beacons inside of their stadium, this high value real estate, they can't be hijacked by by any any third party application that can see these signals. So it's very important to have a security model that enables digital ownership of the device so that the beacon owner can have control of who's seeing it and privacy around the data that's being transmitted off it, as well as from the application publisher standpoint, having the right permissions for consumers opting into beacon technology and location enablement.
Steve Statler 08:49
So, one of the things I'm really interested just occurred to me to ask you this is how he is kind of got over that bootstrap problem of having critical mass of beacons in order to do location based advertising. Because one of the things I think when we first started looking at this business back in the Qualcomm days was advertisers don't just want to advertise in one city, they want to do large campaigns that are broadly deployed across lots of venues and lots of locations. So clearly, Verve is is big, and you're doing a lot of business. So I'm assuming that you don't have beacons absolutely everywhere. How do you overcome that that need to do you want to have advertising that is triggered based on precise location, which is something that beacons give? And yet, I don't think anyone's really achieved the Nirvana of having beacons everywhere.
Brian Dunphy 09:46
No one has achieved the Nirvana of having beacons everywhere. And I think one of the one of the challenges and one of the things that I have in hindsight now is a more desire to be focused and where So where are you using beacons and what you're driving beacons into into locations. Because one of the things that first excited me when we we brought beacons into the market back in 2012, and 13 was the exponential number of use cases that that beacon technology enabled. And we were very focused on the experiential side. But one of the things I've grown I've got a larger appreciation for now today, after doing this for so many years is the experiential side takes a lot of work. And it's one thing about triggering engagement inside of an application, whether it's sending an offer to a consumer at the right time, or enabling a mobile ordering solution for a quick service restaurant to work, or to have a VIP be recognized when they walk into a stadium, ballpark. But all those are really cool experiences. But behind the scenes, there's a lot of work that needs to go in to get that deployed at scale. Now for that to work, you've got to have the workforce that is working inside of that retail store, understand how that experience now works with their analog processes. Same thing with inside of a stadium that if you're dealing with a quick service, restaurants mobile ordering solution, there's a whole set of back office systems and other environmental challenges that aren't appreciated. So where I think Verve is focused is around leveraging beacons initially for attribution, retargeting behavioral analytics for the app provider and the brand that is deploying the beacons. But really kind of narrowing the use case, embracing experiential capabilities on it, but leaving that to third party solution providers to to build those out. But from an initial ROI standpoint, attribution and retargeting capabilities really are, are where the the bread and butter for beacon technology with with verb lies because they can now leverage the location engagement put their macro location technology platform is doing using geo targeting, from cell tower to GPS and Wi Fi signals to augment that now with with beacons. So we can now say, we know you were influenced by an advertisement that encouraged you to go visit a particular retailer in San Diego, near Carlsbad, and that you actually showed up inside of the retail retailers location at the mall, because you crossed that that geofence. So we know where you were first influenced and where you arrived. But with a beacon now we can actually get inside the store and say that person actually walked in the store and potentially walked up to the product shelf if the beacon is deployed there.
Steve Statler 12:48
So you've said a lot of really interesting things. I want to unpack a few of them summarize them. You know, one thing that service successful, that's really clear, and you're doing something that a lot of people have tried to do and and not achieved. And it sounds like part of the secret success is acknowledging that beacons are great for experiential things. But it sounds like what you're saying is sure, you know, we can use beacons for also, you know, where's the nearest restroom in a stadium, but that's really down to the stadium app. And what your focus you guys are focusing on is essentially the ad network piece that you can use the same beacons.
Brian Dunphy 13:28
Yeah, and really, it's it's per help drive, the ROI and the business case for broader deployments of these beacons, because most of the beacon deployments that have happened over the last few years have been through the innovation budgets of these companies. So you'll hear you'll get you'll see a good press release out there about a great experience over at Barneys and in New York. That was that was a great article. But that is one that's one store is their flagship store in in New York, that's probably hit the innovation budget, how to get that broadly deployed out across all all locations, the CIOs of those companies, and the CMOS need an ROI driven use case that can actually say, we're this is driving results right now that are measurable for us to invest in, in the deployment, because it's not just the cost of of these beacons, which have come down considerably, you know, you can get them now for less than, than then than $5. And you can get them at a at a few dollars here that, but it's not the cost of the hardware, the actual deployment, the building out of the application, the user experience and then training the workforce personnel on this new user experience takes a lot of time and, and that will happen I think we always like to tell clients about when you're looking at beacons, do a crawl, walk, run approach to it. If you're crawling and you want to get a ROI driven use case is looking at attribution look at retargeting. Look at just the the analytical insights about how often users come to particular locations inside of your venue. How we're, how they got there, what was the what was the consumer journey inside of there? And what what influenced them to get there.
Steve Statler 15:20
Got it. So what I'd like to do now is just wrap up a few last questions about verb and then let's talk about the state of the beacon ecosystem proximity and location more broadly. So I just want to make sure I'm understanding the flow of money, who gets paid what in the business? So you have all these publishers, a large number of publishers who've got the verb SDK in there. And then you have brands that are advertising. And then you also have venues those are kind of like the three legs of the triad. And so presumably, I'm Heineken. I'm cause or Estee Lauder, and I want to buy advertising, I would work with you guys. I buy ad units or whatever I'd pay for the targeting the targeted ads and the attribution. And then you share money, presumably with the publishers of of the apps? And do you share money with the venue's as well, or is it just with publishers.
Brian Dunphy 16:19
So, the business model we work with, we've got a number of teams that work across the ecosystem. We have a media sales team that works with the top national brands, Procter and Gamble, Pepsi, the likes, and the major agencies that that support the those brands. They're the ones that are looking for the audiences and providing the advertising dollars to reach these consumers. We we, we then partner and deliver the advertising through our publisher network, reaching the audiences that they're looking to reach in this specific locations that they're they've asked us to target those users. And we share the media advertising dollars with the with those publisher partners, we also have a model where we provide a white label solution where the velocity platform that a brand that has a load that has a local sales force that is out there selling local mobile advertising and local digital advertising where they could basically use the verb lofty platform and and use that as their mobile advertising powered engine as more of a white label type offering.
Steve Statler 17:33
Okay, so the there are some companies the kind of go to folks that have beacon infrastructure, say I've got all the beacons in Times Square, pretty valuable bit of real estate, can I work with you guys to somehow monetize those? Or is that just not the model that you use?
Brian Dunphy 17:48
No, actually, my view, and I think that the view of of leadership is, you know, we acquire proximity and beacon, and we have a beacon hardware solution that we can offer directly. But I think the overall beacon ecosystem is going to need to move to more interoperability between the proprietary beacon networks in order to provide that that reach and that scale, that's that the brands are looking for, across these these different beacon networks that are out there. So if somebody has a beacon network that's deployed across time square or across any major retail location, we'd definitely be interested in talking with them about how we could partner up to help drive more more advertising and attribution across their their beacon networks. Because I think in order for this to really scale and take it to the next level, we're going to need to rely on a number of different hardware manufacturers and beacon network providers that are out there to proliferate scale across all the high valued high traffic locations that that consumers are spending their time in.
Steve Statler 18:58
Alright. So last question is about SMB. And, you know, I, when we first started in this business, I kind of envisage this dashboard that someone who's running a restaurant or a small business could go to, and they could leverage this location based advertising, infrastructure and system. And I noticed that it seems like you guys have taken a step towards that. Does that diviner exist? Is there a dashboard that I can go to a bit like like with Facebook, you can go to Facebook, and you can place Facebook ads that are locationally targeted? Is that something that you guys offer? Or is it more of kind of speak to someone and they'll put this campaign together for you?
Brian Dunphy 19:42
So our our approach you're going after the SMB market is leveraging the velocity platform I just mentioned, the white label offerings. So the enterprise sales team that is out engaging with with partners for deploying that are working with companies like yp molasses who have local sales forces that are out dealing with these s&p, customers and giving them the local scale and reach to be able to do deliver mobile advertising and drive people into the local business areas. So that's our approach to how we tackle SMB is going after bra partner providers that have boots on the ground that need a mobile advertising platform. Like velocity.
Steve Statler 20:27
Got it? All right. So you've kind of just taken a step from Gimbal, which is well known for its beacon products, and you've moved to another company that has beacons, but they're more kind of under the covers, in a way, it's not like Verve is pushing itself as a beacon company. What's your view of the health of this beacon ecosystem? How's it going?
Brian Dunphy 20:53
So beacon ecosystem is now four years in maybe five, if you look at 2012, but really 2013 is when beacons really started to get deployed and mainstream, but if you, if you study the hype curve of technology, evolution and adoption, there was a lot of hype for the first few years, beacons were the new shiny object and everyone, everyone had to have a beacon strategy, had to be doing beacon pilots, and was testing all kinds of different use cases. And all the beacon providers that came out. And there were a lot of them in the, in the first few years, had a lot of hype, but set a lot of expectations of what beacons can do. And they can do all this. But the challenge they said earlier about just the integration challenges and all the back office systems and getting personnel and consumer adoption. That'll take time. So I think where we're at in the hype cycle curve is really at this trough of disillusionment, where a lot of the CIOs CMOS of major brands have like, we tried beacons, it didn't work out, we didn't see the ROI. That is no different than where other emerging technologies in mobile kind of went through their hype lifecycle. If you look at location based services, it took nearly a decade before it became mainstream in the United States. When when I was at Qualcomm, we we launched with with bru location based services in 2001. And it took off in Japan and Korea. But it wasn't until apps like Uber and and Lyft and Google Maps started to really kind of require consumers to have location on all the time that it became more mainstream. So this decade, it would have lbs kind of has certainly had its lifecycle of Oh, lbs is going to be the greatest thing. But it certainly in 2003 2005, in the US was at a trough of disillusionment, same thing with Wi Fi, acceptance on mobile phones, most consumers when they first got Wi Fi turned it off, they thought it was a battery drain. Now, if you look today, everyone's got Wi Fi turned on, because the operators are encouraging it, it's saving your data rates. It, it's connecting to all the connected home technologies. So I think with with beacons, we're at that trough of disillusionment. And it's been because it really hasn't hit the scale of meeting the ROI for the investments that need to be made for not only deploying but sustaining and maintaining a beacon base strategy and a network. So what you're seeing now in the industry, is a lot of consolidation. And I think you're gonna see more of it. You saw the merger of the mobile majority and Gimbal, you saw a verb acquiring proximity.
Steve Statler 23:47
I'd acquired blue vision.
Brian Dunphy 23:48
Yep, that's right. And Aruba made the acquisition a few years ago. So we're gonna see more of this consolidation that's happening. Because if you're just a standalone beacon provider, it's going to be difficult if you don't have more of a complete solution that is able to monetize and provide the full end to end value for a enterprise that is looking to deploy to deploy beacons. So again, it goes back to I think, now interoperability is going to be in really important partnerships between between companies, and you're going to see beacons morph beacons when they first came out were battery operated device and standalone devices. You're seeing beacons now being embedded into lighting infrastructure acuity, GE, Philips are all investing in in big lighting, beacon type strategies and networks using beacons embedded into digital displays and point of sale systems. So anything that can be powered that has got Bluetooth can become a beacon. And additionally, I think you'll see more IoT based devices that will have A beacon like capabilities, but not necessarily be Bluetooth low energy. So I think at the end of the day, it's it's going to be a massive ecosystem, and you're gonna have a lot of competition between different parties and probably more consolidation.
Steve Statler 25:15
I'm gonna wrap up now with final question, which is where predictions for the future, we're coming to the end of the third quarter of 2017. What are your predictions for the next year or two, also?
Brian Dunphy 25:27
We are going to see a lot more connected devices. So this 50 billion connected device number may be maybe light, I personally, I have about 250 connected nodes in my house, a lot of them are light switches and dimmers and outlets. But I've connected up every every single node in my house, you're seeing Alexa really Perler proliferating, you're seeing Apple coming out when the with the hub, more and more consumers are going to be embracing IoT, and it's these sensor based technologies are just getting smaller and cheaper, you're gonna see more RFID type tags that are out there and, and not just RFID. But Bluetooth enabled tags, like what you're going to be working on with milyon NFC type tags, and I think you're gonna see a variety of these at price points that are going to make it easy to start attaching these things to consumer products that help to close the loop on understanding transactions. And I think you'll see a variety of other other sensors from light to, to Wi Fi fingerprinting, and everything becoming more more mainstream. But I think you're gonna see consumers getting smarter on the type of control and permissions and access they give. And then they'll be willing to provide more of that access and permission based control, as long as there's a trust that's built and protected on that relationship between the consumer and the type of data that's being collected on them.
Steve Statler 27:01
It's gonna be fascinating, I think so, Brian Duffy, VP of Business Development at verv. Thanks so much for coming on the show.
Brian Dunphy 27:08
Thank you so much for having me, Steve, really appreciate it. And great luck to you and really wonderful.
Steve Statler 27:21
So what music, if you're going to Mars, what music would you take with you?
Brian Dunphy 27:27
I'm a big music guy. Actually, I perform live concerts. But yeah, if I was to go to Mars, three, three very diverse songs that I would take with me and one would be Black Sabbath, Super Nice. I really love that the power of that song and also the futuristic vision of it. It's one of the songs that I usually play on the radio and is on the way into work to pump me up. So I will take that and blast off on the way to Mars. The other song is by Sound Garden, Uutshine. That song to me show you how fragile it is to be on top of the world that one moment, and how quickly you can be knocked off and start to have self doubt. So it really kind of makes me think about keeping myself in check. And then the lastly is a song that I actually have on Sonos wakes me up every morning, which is U2's Beautiful Day. And that was one of the songs that we had in my in my weddings. And it's a sigh just really enjoyed the optimism that song and reminding you to enjoy and appreciate the beauty of the world around you.
Steve Statler 28:38
That was a great choices. I felt sure you would have the red Hot Chili Peppers in there.
Brian Dunphy 28:43
Well, you only gave me choices. But you don't give it away. Now. It's probably one of my favorite, favorite songs, especially when it comes to emerging technology.
Steve Statler 28:54
Yeah, you do you do. And all of this kind of reminds because we used to work together. And I remember the first time we worked together, we were working with Universal Music Group. And probably the highlights of my career was when they said, What music do you like to both of us? And I think we were both like, I need to what are all the UMG artists and so we kind of did that. And then these big boxes of CDs arrived. This is back in the day. Big boxes of CDs of all the artists. Yeah. So that was really cool. Very good. Thanks very much.
Brian Dunphy 29:27
I really appreciate it. Thank you so much.