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How Placed helps advertisers measure the offline impact of their mobile ads and reveal insights into consumer behavior in the physical world. (Via Placed)

Snap just made one of its largest acquisitions to date, swooping up Seattle startup Placed for more than $200 million, as GeekWire first reported on Monday.

So why did Snap, maker of super-popular messaging app Snapchat, pay so much for a startup that had raised $14 million in its six years of existence?

Location, location, location.

Placed, which employs more than 100 people and will continue operating out of Seattle, helped advertisers measure the offline impact of their mobile ads and reveal insights into consumer behavior in the physical world. It did this by measuring millions of user locations every day from those that opted-in to share their whereabouts, and then analyzed that data to provide information on everything from how TV ad spending translates to in-store traffic, to how Amazon is impacting brick-and-mortar retailers, to the whereabouts of Pokémon Go users.

Snap, meanwhile, recently rolled out a tool called Snap to Store that allows its advertisers see whether their Snapchat campaigns actually drove users to physical locations. For example, if Burger King paid for a sponsored geo-filter, how many users who saw the ad actually then went to Burger King?

David Kaplan.

With its acquisition of Placed — Snap to Store and Placed will continue to be separate services — it’s clear that the company is investing in ways to help advertisers measure the impact of their Snapchat ads. Other competitors like Facebook and Twitter are also trying to do something similar with their digital advertising platforms.

David Kaplan, managing editor for GeoMarketing, explained why location technology is so important for companies like Snap. He said traditional ways to understand how to create and place an ad — demographics like household income, gender, education, etc. — are “too vague.”

“Even matching it with cookie-based behavioral targeting is not as valuable, since you’re constantly looking in reverse,” he added. “But if you know where someone tends to go, the location patterns they create offer advertisers, agencies, publishers/developers, and platform companies much more depth and insight. People who go to fast food restaurants in the late afternoon or people who tend to shop at Walmart or Target on Tuesdays and Thursdays give you a sense of where people are in their lives in a way that household income and gender don’t.”

Kaplan said it makes sense for a company like Snap to want to own the metrics that show how valuable its location data is, rather than paying a vendor to do the same.

“Location data is the ultimate first-party data that publishers possess and advertisers covet,” he said.

Kaplan also noted that location is even more important with the increasing adoption of voice search.

Mike Kelly.

“Instead of a list of hyperlinked search results on an infinite number of pages, location data is being used to provide specific answers based on where the consumer is,” Kaplan said.

Mike Kelly, CEO of Kelly Newman Ventures and an expert on digital media advertising, told GeekWire that location data is always the most-requested target by big brands in industries like auto and telecom — “for any scale player, it’s a must,” he said.

But Kelly also noted that given Snap’s market capitalization — $23 billion — spending $200 million to buy Placed is a “tuck-in.”

“Don’t look for big corporate strategic signals here,” Kelly said, but he added that “look for more acquisitions like this as Snap checks the box on other must-have capabilities.”

From Placed’s perspective, Kaplan thinks it may have been a good time to sell as companies like Google and Facebook build attribution into their own systems.

But he noted how Placed had some clear competitive advantages — namely that it positioned itself as the “standard” for attribution among advertising agencies.

“That ability made it important for Snap, which has built its Snap to Store attribution ad program on top of its geotagging tools in Snapchat,” Kaplan explained. “The pressure is coming from marketers to prove they can actually deliver customers to a place. Given that roughly 90 percent of purchases happen in-store, location data and the ability to demonstrate that Snapchat results in in physical sales is a valuable and necessary power to possess.”

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