Considerations for selecting a geocoder

July 13th, 2018, Published in Articles: PositionIT

Location is at the heart of key business questions. Geocoding – associating each location-based record with accurate geospatial coordinates – is key to the process. This article looks at choosing a geocoder for business.

Business operations are more reliant than ever on location intelligence. Location intelligence is the art and science of analysing the connections between geospatial locations (latitude and longitude coordinates) and what exists or occurs in these locations (customers, businesses, crimes, weather events, traffic and so on). But before one can analyse the connections, one needs to define them, associating each location-based record with accurate geospatial coordinates. That is geocoding.

Location is at the heart of key business questions, such as how can we sell to more homes within our service area, is the insured property in an area with increased risk of natural or manmade hazards, or is a home loan portfolio overexposed in a high-risk market?

Get to know geocoding

It is tempting to think of geocoding as a simple conversion process: Input a street address or location name, output geographical coordinates. If that is all there was to it, buyers would justifiably look for the least expensive geocoder that delivers reasonably accurate results. However, there are many potential pitfalls in the geocoding process. If you are unaware of these, not only might you obtain inaccurate geocodes, but you also might not realise they are wrong. This could have a major impact on business outcomes.

What to look for in a geocoder

With so many factors affecting the geocoding process, rational assessment of geocoding solutions can be an overwhelming task. To help, consider these five categories of geocoder capabilities:

  • Matching: The interpretation of an input address and matching it to reference data.
  • Positional accuracy: How close the geocode is to the specific addressable location being targeted.
  • Throughput: How many records per unit of time the geocoder can process. It is an essential business consideration.
  • Metadata: The data about the geocoding results, which enables operational automation and insights.
  • Deployment options: Where will the geocoder reside? On what platform will it run? How will it integrate?

But before proceeding, here is a caveat – proceed with caution when considering:

  • Black box solutions: This type of software or service offers no visibility into the sources or methods of determining the geocode, so it is hard to evaluate the quality of the results. Also, due to their one-size-fits-all approach to geocoding, these solutions may not align with your business model.
  • Basic/free solutions: Because these solutions are not enterprise-ready, you may find your costs increasing significantly as you employ expensive resources to develop and deploy the additional functionality you need.


Look for advanced algorithms and comprehensive datasets.

Match rate

This is the proportion of input addresses that the geocoder accurately matches with the reference data, which could be streets, boundaries, addresses, and so on. Simply put, a higher match rate gives more answers. This is essential if you want to embed geocoding capability in heavily used applications, especially those that are business and mission critical.

However, the high match rates of some geocoders also come with a high rate of false positives. Geocoders with more sophisticated matching algorithms tease out the right address, even with incomplete input data. This is essential for automated decision-making applications, or for minimising manual error correction and other human interventions.


If you are targeting a single country, look for a geocoder with national address coverage. If your scope of business is international, you will also need to specify coverage for all the countries you target. The best way to ensure the broadest coverage is to use a geocoder that combines the data from the various sources into a single unified offering.

Database update frequency

Keep in mind that the human landscape is highly dynamic. Addresses change, as do territory designations, such as postal codes, neighbourhoods and administrative boundaries. Look for quarterly, or even monthly, updates whenever possible.

Positional accuracy

Make sure the geocodes serve business needs.

When decisions depend on the attributes of specific residences or businesses, geocodes calculated to the ZIP code, neighbourhood or even street centroid are not precise enough. You need flexible positional accuracy, that is, the ability to obtain coordinates that are most appropriate for each use case. Demographic profiling, for example, requires less positional accuracy than insurance underwriting.

In any case, the geocoder should provide metadata specifying the accuracy level attained. Companies that use geocodes in automated decision-making processes need this metadata to minimise the risk of decision errors.

Flexible positional accuracy is key to answering a variety of questions:

  • Is a house in an area of high fire risk?
  • How can we target advertising to families living in apartments with more than two kids?
  • Which downtown businesses can be serviced with existing fibre optic infrastructure?


Keep up with high-volume analysis and big data processes.

Geocoders are the foundation of highly automated operational processes where addresses and their locations power the outcome. Leading geocoders can process hundreds of millions of records per hour.

Throughput is also an important factor for geocoding for big data analytics. If your organisation operates, or is considering deploying big data environments such as Hadoop and Spark, you will want to insist on a geocoder that runs within in these environments, which minimises the need for custom software integration.

Take the example of property and casualty insurance. In this industry, profitability hinges on the accuracy of risk assessments, and location attributes are key factors in these assessments. Because location attributes change frequently, many insurance companies update geocodes for their whole book of business every month. Only with high throughput is such an effort practical for the business.


Gain more insight with data-rich geocodes.

Advanced geocoders are well-equipped to support automated decision-making and in-depth analysis by generating and delivering various metadata. Geocode metadata may include information about how well the input address matched the reference data, the type of point returned and its level of positional accuracy.

Another type of metadata is a unique persistent identifier, or key, which can be used to quickly obtain the address in the future, even if the location of the address or the address itself changes. This can improve operational processes between systems or companies and even unlock additional information from data files or APIs.

Metadata about primary-secondary relationships between locations (such as suites within an office building) can save countless hours of research.

Finally, metadata that consists of links to additional information related to the geocoded location can speed up analytical processes by revealing previously unknown relationships between location-related data.

Imagine you are considering investing in office space in a large building. Geocoding the exact mailing address can tell you about that geographic location and the specific office. But are there issues with other offices in the building that may impact your business?

Relationship metadata allows one to quickly track down information about locations with the same primary address (for example suites within an office building). Or, if you are interested in the entire building, that single geocode can provide all the metadata for the individual office properties within the building.

Deployment options

Choose a geocoder that flows with your business.

Deployment environment

As a business evolves, so will its IT needs and capabilities. Choosing a flexible solution now will save potential headaches and unexpected costs later. On-premises geocoding should be easy to embed into server and desktop applications. Cloud-based geocoders should offer the same results and rich capabilities as on-premises options.


Apart from GIS professionals, few business users need geocodes as their final output. Most users performing spatial analysis need geocoding built into their business process workflows and applications. The faster one can integrate a geocoder into existing and new applications, the shorter the time to value. To make integration easier, look for solutions that interface with multiple web service protocols (such as REST and SOAP) and support various programming languages and operating modes, such as client/server, batch and interactive.

Can your geocoder provider say yes to all these deployment options?

  • On-premises
  • In the cloud (public or private)
  • Hybrid deployments
  • Big data environments
  • Any operating system

Contact Pitney Bowes,

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