CCPA, Data Privacy, GDPR, Geolocation data, Personal Data, Privacy Policy, Third-party Obligations

What is Geolocation Alternative Data?

By definition, ‘geolocation data’ refers to the estimation of real-word geographic location of some object based on latitude and longitude coordinates. Hedge funds use geolocation data to complement their investment models and research for a target company. The primary use case for geolocation data is to measure location-based consumer behaviors and to analyze how that behavior is impacted by special events, seasonality, and other factors that influence a company’s performance. It provides indications of consumer traffic to certain stores or certain locations. The ultimate goal is to generate alpha and beat the market.

Use Case Example

One of the most cited use cases of geolocation data value was in relation to Chipotle [NYSE: CMG]. Back in 2016, the CEO of Foursquare, a social-media app that allowed users to check-in to whatever location they were currently located, accurately predicated that Chipotle’s 1Q sales would be down nearly 30%. This prediction was based on the fact that the number of Foursquare check ins at Chipotle had dropped significantly. Hedge funds who subscribed to this data would have successfully predicated Chipotle’s downfall and traded accordingly prior to Chipotle releasing its earnings for that quarter.

Similarly, this data can be used by marketers to create a target audiences that frequently visit certain stores, particular locations, car dealerships, etc. to analyze footfall traffic.

How Geolocation Data is Collected

Typically, geolocation data of consumers is derived from mobile phone apps installed on millions and potentially billions of devices that provides the latitude/longitude of a particular phone connected to a mobile network. Using a timestamp, it is possible to track the movement of a specific device and user behind the device.

Sources of mobile location data include:

  • GPS signals collected via an in-app SDK
  • Wi-Fi and connected MAC addresses or IP addresses
  • bluetooth-based beacon SDKs
  • cellular triangulation
  • user-reported registration data

Data Privacy Risks to Consider

With changes in regulatory landscape around data privacy it is important to consider what this means under the GDPR and CCPA:

  • Under the GDPR – ‘personal data’ includes all information relating to an identified or identifiable living natural person. This includes device IDs, location data, browser types, IP addresses, etc.
  • Under the CCPA – one of the CCPA’s category of ‘personal data’ includes geolocation data (post address, IP address, etc.)
  • In addition to staying compliant with the applicable law, all data must be completely free of the risk of PII, include all necessary disclaimers in a privacy policy, end-user notices regarding the collection of anonymized geolocation data, opt-out/do not sell provisions, hashed or anonymized IP addressed and city-level latitude/longitude coordinates.
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1 Comment

  1. Top 7 Alternative Datasets Companies Use - Chain of Demand

    June 9, 2021 at 8:06 pm

    […] consumer behaviors can assist them in making the right decisions regarding further investments. Geolocation data is one such way to know that. Along with that, it is significant in pointing out the differences or […]

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