ULocate Launches Ad Network for Location-Aware Mobile Devices

3/9/10Follow @wroush

Boston’s uLocate Communications, known up to now mainly as the creator of the Where local search and recommendation app popular with many smartphone owners, is turning into something more. Today it announced the launch of a geographically targeted mobile advertising network called Where Ads that other mobile publishers can also use to sell local ads for their location-aware mobile apps or Web pages.

That puts uLocate in direct competition with several other mobile ad networks, including local players Jumptap and Quattro Wireless (now an Apple subsidiary)—except that those companies don’t specialize in delivering ads relevant to users’ current locations.

In fact, uLocate is still a Quattro customer, according to Dan Gilmartin, uLocate’s vice president of marketing. But after noticing that Where users weren’t clicking on many of the ads supplied by Quattro—and in some cases said they were giving up on the app because of the low quality of the ads—the startup decided to see whether it could do better by getting location-based ads directly from companies who work directly with local merchants. One thing led to another, and now uLocate is supplying such ads to a dozen other companies, including Boston-based MocoSpace and Cambridge, MA-based Geocade, Gilmartin says.

“We were getting a lot of complaints [from Where users] saying ‘Love your app, hate the ads—sorry, I’m going to look for something else,’” he recounts. “That hurt, because we spend a lot of money on customer acquisition. We thought, ‘There’s got to be a better way.’ So we started talking to a couple of companies that aggregate local merchants and started delivering their ads in the application. And lo and behold, a couple of things happened.”

First, Gilmartin says, the complaints stopped. “We improved the service just by changing the nature of the advertisements inside the app,” he says. Second, click-through rates increased dramatically, which allowed uLocate to start selling ads for higher prices.

“We contacted a few folks and it turned out that everybody else had the same problem—lousy ad inventory that doesn’t perform well. So our announcement now is around the launch of an ad network with a focus on delivering hyperlocal ads, not only through Where but through a dozen third-party publishers.”

ULocate’s dissatisfaction with the ads it was getting through established networks is a common enough story in the mobile industry, where the supply of ad slots—places in Web pages, apps, or games where ads can be shown—still greatly outstrips the number of ads that advertisers are willing to pay premium prices to place. That’s why so many ad slots are filled by cheap, non-targeted, and (to some) annoyingly cheesy or tacky ads.

Gilmartin says uLocate still “gets really great campaigns” from Quattro, but that these campaigns never include enough ads to fill all of the available slots on Where. “When the premium inventory ran out, that was when we were getting some of the run-of-network stuff, and that is the stuff that didn’t perform well,” he says. “We love Quattro, and they obviously did some pretty cool things to get acquired by Apple, but we’ve seen, with the click-through rates on hyperlocal ads, that consumers are really reacting in a very positive way.”

ULocate’s experience aggregating content feeds for the Where app, which includes information such as local traffic, weather, gas prices, theatre listings, and restaurant recommendations, gave it a headstart when it decided to go into the ad-broker business. “To build Where, we put mechanisms in place to ingest content and reformat it if needed and deliver it to end users on any device,” and the company is applying the same mechanisms to ads, Gilmartin says.

The fact that uLocate has access in most cases to handset location data supplied by cellular operators themselves, rather than relying on built-in location-finding systems such as GPS chips, was also a big advantage, according to a blog post today by CEO Walt Doyle (who is a panel speaker at Xconomy’s Mobile Madness forum). “We have been using network-based location to improve the Where product experience, and are now also utilizing it for the optimized delivery of Where Ads across all phones,” Doyle writes.

ULocate will make money on the Where Ads program by keeping a small slice of the fee advertisers pay for each slot. But this wasn’t the only reason the venture-funded startup created the network. To make geographical targeting pay off for advertisers, Doyle writes, the company needed to be able to reach lots of people with its hyperlocal ads—more people than it can reach on its own through Where. “We needed to grow our audience beyond our own walls if we wanted to deliver an audience of scale to the local advertiser,” writes Doyle.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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