Sense Networks makes location-based advertising relevant

While mobile advertising is still not the big money maker that online advertising is, the hope is that location-based targeting will make mobile ads more lucrative for publishers and more efficient for advertisers. But so far, many location-based ads aren’t that sophisticated, targeting users based on their general distance to a merchant.

But New York start-up Sense Networks believes it’s got a way to make location-based ads effective by looking not only at place, but matching it to the unique behavioral profile of users. The company has been building a huge database of points of interest around every location, so it can identify what’s nearby when a person provides location coordinates. But it also builds a behavioral profile on people based on hundreds of attributes, so it can match a person’s interests to location-based ads.

The company is putting its know how to use with two new products that are debuting today. AdMatch takes what it knows about a user and pushes out the most relevant local offer or daily deal from a merchant via a mobile banner ad. So a bunch of mobile users in one place will still get different offers and ads tailored to their tastes. What’s smart about AdMatch is that it doesn’t just serve up ads that are nearby at that moment but it also considers the other places that a user likes to go. That allows Sense Networks to find ads that are more relevant to a user. The company said its ads can beat the performance of more “ring-fenced” mobile ads by 4x increase.

The second product, AudienceSense enables larger publishers to build predictive location-based behavioral segments of their users, so they can sell ads against these segments. AudienceSense can identify more than 100 segments such as business traveler or luxury shopper. This means publishers do not have to share their mobile data with other publishers.

Sense Networks works by using a persistant identifier like UDID, which is being phased out by Apple (s aapl); OpenUDID; or cookies to obtain location information on a user. It anonymizes the data and then builds a profile on what it knows about a person, whether they like golf, go out late at night or travel a lot. David Peterson, the CEO of Sense Networks said the key to good location-based advertising is not only collecting a lot of data on the world, but combining it with a good behavioral profile.

“Other companies are looking at location analytics, but we go beyond place,” said Peterson. “We believe user plus place is better.”

Sense Networks’s ads only work with publishers who can collect location-data. Many apps don’t do that because location is not core to their services. But Peterson believes that over time, more impressions will move to mobile and more of them will be able to use location. Another issue is that demand is still building for this kind of location-based ads. Some merchants don’t know they can target mobile consumers in their area.

But over time, location-based targeting is likely to be the key driver for mobile advertising. That’s a level of context that is unique to mobile and can really help marketers target consumers. We’ve already seen that some advertisers are paying 4x more for location-based impressions. If location-targeting can get more sophisticated and advertisers see more of the value in location-based ads, the trend should only grow.