"Mobile geo-location advertising will be a big number in 2015" - Nick Lane, Chief Strategy Analyst, MobileSQUARED
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“Mobile geo-location advertising will be a big number in 2015” Nick Lane, Chief Strategy Analyst, MobileSQUARED
Summary Mobile display advertising is growing at a phenomenal rate. It is now starting to open up business models like geo-location advertising that have been written about for years. This White Paper presents a balanced status quo of the market for geo-location mobile display advertising in the USA and Western Europe. The overarching goals of this paper are as follows: a. Explore current and future issues that may dampen growth and how gaps may be addressed b. Analysis of emerging trends and options for advertisers as the geo-location scales c. Overview of current pricing for delivering geo-location campaigns across mobile ad networks Introduction Location puts mobile advertising on the map, literally. The ability to identify a user’s location and deliver relevant and contextualised ads in proximity with their surroundings in real-time whether using search, display, or messaging delivers a game- changing feature to the world of advertising. So much so, that the convergence of mobility, advertising and location, will make mobile the most potent media for advertising. This convergence is creating a compelling platform for brands of all sizes to com- municate with consumers. Yet the nascent stage of mobile geo-location advertising’s evolution means campaigns and associated business models remain in the experimental stage, though developing apace. Part of the speed of that development emanates from the fact that mobile has already surpassed the existing online elements of tracking and measurability, by delivering end-to-end location-based accountability in real time. An ad being served to a user 200 metres from a shop with a promotion to encourage footfall into the shop is a prime example. The most commonly used phrases for mobile location advertising are geo-targeting and ringfencing. Geo-targeting covers a geographically recognised region, such as a State or city, whereas ringfencing (effectively a subset of geo-targeting) serves ads within an identified location, such as a 500-metre radius from a retail outlet. To avoid confusion, for the remainder of this report, we will refer to mobile location advertising using the umbrella term of ‘geo-targeting’.
What’s happening today
Knowing something about where The accuracy to which an for geo-targeting, in that the
a person is located with a mobile individual mobile device can majority of consumption over WiFi
device fundamentally drives be pinpointed varies depending occurs either at the home or in the
geo-location. Locating a device on the technique used and the office where users have their WiFi
has been achieved through information available to each of hotspots setup. Let user activities
technological advancements of the parties in the value chain. conducted in the outside world
mobile ad networks and location The technology can range from typically occurs over the mobile
specialists. Accuracy of geo- GPS-based latitude and longitude operators’ networks.
targeting varies from entire States coordinates often shared via opt-in
in the US, to DMA Nielsen regions, in application environments to ZIP This leaves the mobile advertising
to metropolitan-wide campaigns codes shared by publishers based industry facing something of
over a designated radius, to a zip on opt-in user profiles they have a double-edged sword: WiFi
code, street and even a shop. A collected. Today, the majority of overcomes the customary delays
number of European-based mobile geo-location volume is determined now associated with 3G networks,
ad networks claim to be able to much in the same way as online, but it lacks the ubiquity, whereas
serve contextualised and relevant using the IP (Internet Protocol) 3G networks have ubiquity but
ads to a consumer within “feet” of address from WiFi connections not the reliability. But before the
the advertiser’s location. to derive latitudinal-longitudinal widespread deployment of 4G can
coordinates. address both these reliability- and
Furthermore, the ability to serve ubiquity-based issues, there are
geo-targeted ads is being driven by Mobile wifi vs mobile commercial hurdles to tackle.
demand from a variety of sectors operator’s networks
such as retailers, automotive, For example, mobile operators do
hotel chains, restaurants, and According to mobileSQUARED not provide location data to third
airlines, to name a few. For research, advanced mobile parties, preventing mobile ad
example, retailers are now markets such as the US and networks from detecting a user’s
supplying their outlet’s geo- UK are seeing rapid uptake of location over a 2G or 3G network
coordinates. These can then mobile WiFi usage, because such to deliver geo-location advertising.
be ringfenced by the mobile technologies offer ubiquitous Consequently, mobile ad networks
advertising service provider – coverage and provide a compelling must rely predominantly on
either mobile ad network or user experience. Other developed location-based data supplied from
operator – and can then serve the mobile nations are not too far a user’s IP address over WiFI,
ad within the specified radius, behind. However, for geo-targeting and on the small (but growing)
whether 500 metres or 10 miles, to successfully drive commercial footprint of applications that
based on the specifications of the models it needs to have critical enable users to opt-in to sharing
campaign. The gambling industry is mass across countries embracing GPS coordinate data. This severely
a consistent big spender on mobile geo-location advertising. While restricts the mobile inventory
advertising, and the sector is now IP address location look up works available for geo-location
exploring options for geo-targeting well online for desktops at work or targeting. The cumulative impact
around live events, such as race at home, that is not the case for of these factors is damaging to the
meetings or football matches, to mobile. The issue with mobile WiFi growth of emerging location based
drive people into their outlets is that its critical mass does not advertising business models.
when a match kicks off, correlate with the requirements
for example.Geo-targeting is not for every ad network... yet
The ability to deliver geo-location location options, with a quarter that there are over 100 million
targeted campaigns may become exploring its potential and likely uses of its data every day. This
a differentiator for the mobile ad to invest in the technology or shows that services such as
network community when possible partner with a location specialist navigation and mapping are
at a global level. However, in such as Navteq in the short-term. becoming mainstream and starting
the USA agencies and advertisers The remaining 25% of mobile ad to generate the critical mass
expect ad networks to offer state networks included in the research required for geo-location business
and DMA geo-targeting options. were adamant that it is not an models to kick-start.
Not every mobile ad network essential component of their
provider is experiencing demand service offering in the short term. “Research by mobileSQUARED
for geo-location campaigns reveals that less than 50% of
and thus many are not offering Mobile ad networks that are mobile ad networks interviewed
the service. Research by providing geotargeted campaigns
are offering geo-location
mobileSQUARED reveals that less include Adfonic, Admob/Google,
options.”
than 50% of mobile ad networks InMobi, JumpTap and madvertise.
interviewed are offering geo- Location specialist Navteq claims
Geo-location business models
1. Display advertising
Banners and Rich Media: Spend forecast ( USD ) 2010 – 2014
$ 1400 m
$ 1207 m
$ 1200 m
$ 1000 m $ 883 m
$ 800 m
$ 594 m
$ 600 m
$ 376 m
$ 400 m
$ 202 m
$ 200 m
$m
2010 2011 2012 2013 2014
Source : eMarketer Report; Excludes search, messaging and video2. Coupons
The proliferation of smartphone However, there are a number surrounded by clusters of shops,
devices (in particular iOS and of issues associated with the today’s GPS systems lack the
Android devices) has led to the development of mobile couponing power to detect the consumers
evolution and development of as a business model. First of all, pin-point position in order to
mobile coupons as a way to drive is the lack of widespread adoption deliver the correct coupon. This
footfall into retail outlets and by retailers and food places, which also depends on which retail
food places. Using smartphones, may lead to some disappointment outlet or food place the consumer
consumers can receive mobile by consumers trying to find is physically located at that
coupons via MMS or in-application offers in their preferred places. moment in time.
to redeem in-store. The Secondly, even with today’s latest
“The couponing “boom”, has
couponing “boom”, has been smartphones’ GPS systems, there
been further supported by
further supported by companies are limitations on the accuracy
companies like Groupon,
like Groupon, LivingSocial and and relevancy of the locations
LivingSocial and foursquare
foursquare investing heavily in returned. For example, if you
investing heavily in building
building loyal customer bases are located in a busy street full
loyal customer bases on mobile.”
on mobile. of shops or in a shopping mall
US Adult Mobile Coupon Users, 2010-2013
millions and % of adult phone users
Adult Mobile coupon users % of adult mobile phone users
35.6 m
28.7 m
19.8 m
13.3 m
16.5%
13.5%
9.5%
6.5%
2010 2011 2012 2013
Note: ages 18+; used mobile phone (includes smartphones) in the past year to
redeem coupon/code obtained from SMS, application, mobile internet and/or QR
code for online or offline shopping; includes group buying coupons purchased via
mobile phone.
Source : eMarketer, Aug 2011 / www.emarketer.com3. Mobile Mapping Mobile mapping usage across Europe
The popularity of mobile Mobile Maps Users (000)
mapping, the use of maps on
mobile for navigational purposes, Feb-09 Feb-10 Feb-11 % Change
is now widespread. It is used
EUS 12,530 21,099 35,446 68%
as a substitute for fixed car
navigation systems. In the UK UK 3,070 5,700 10,602 86%
mobile mapping is now used by
over 10 million consumers, with Germany 2,159 3,870 6,927 79%
a further 25 million users across
France, Germany, Italy and Spain. Spain 1,830 3,132 5,356 71%
This demonstrates that those France 2,272 3,518 528 55%
users accept that location and
navigation can be delivered via Italy 3,198 4,879 7,465 53%
a mobile device, and that these
Sources: Strategy Analytics, comScore, mobileSQUARED Mobile Consumer Trends (MCT), http://www.
services can only operate based mobilesquared.co.uk/data / *Based on 2009-2010 growth
on the acceptance to share
data such as existing (or future) Banners and Rich Media: Spend forecast ( USD ) 2010 – 2014
locations. This is not to say that
every consumer will automatically Feb-09 Feb-10 Feb-11
adhere to the notion of accepting 12,000
location-based advertising
overnight, but it reveals the 10,000
growing trend of using location
to serve a purpose. If brands can 8,000
exploit that purpose, there is a
real opportunity with geo-location 6,000
targeting.
4,000
The fact that the majority
of mobile mapping occurs on 2,000
smartphones is not a revelatory
0
development given that UK Germany Spain France Italy
smartphones have revolutionised
Sources: Strategy Analytics, comScore, mobileSQUARED Mobile Consumer Trends (MCT), http://www.
how consumers engage and mobilesquared.co.uk/data*Based on 2009-2010 growth
interact with their mobile phone.Rapid growth in smartphone penetration
Consumption of mobile media is growing awareness and sometimes while Microsoft, Palm and Symbian
50% greater by smartphone users willingness among consumers to each accounted for less than 5%.
compared to feature phone users, share their existing location. These statistics probably reflect
while browsing is greater by a the general traffic split across
factor of five, or up to a factor of What’s even more intriguing is global mobile ad networks.
10 for iPhone users. Subsequently, the fact that consumers are being
more people browsing on their educated about the merits of As comScore says, the “ability to
smartphones, not to mention the sharing their location by brands interact with consumers on this
phenomenal levels of app usage, is that they trust, such as the launch micro-local level through special
generating billions upon billions of of Facebook Places in August 2010 offers, deals and other incentives,
pages of inventory and enormous on Facebook smartphone apps and provides brands with the real-time
opportunities for advertisers and touch.facebook.com, generating opportunity to engage consumers
brands to access consumers on the global press interest. By November through their mobile device.”
go. However, the opportunity is 2010, the service had been used
restricted depending on whether by over 30 million Facebookers. Commercial models
the user is browsing on a 3G A sizeable number in comparison
network or over a Wifi connection, to other check-in based location Part of that commercialisation
as already highlighted. services like foursquare (>8 process can include the delivery
million) and Gowalla (>1 million), of benefits and discounts,
mobileSQUARED research indicates but for Facebook’s 845 million providing a clear value exchange
that 15-20% of total mobile data global users it only accounts for between brand and consumer, as
traffic is available to mobile 0.035%. Awareness is growing demonstrated by a service like
ad networks for geo-location among consumers regarding real- Groupon. Significantly, services
targeting purposes. Whereas, time location services, but the like Facebook Places, foursquare,
for ad networks approximately educational process is only just Groupon and LivingSocial are
50% of all iOS and Android traffic starting. treading a path of acceptability
is available for geo-location for the addition of location to
targeting either because there A recent study by comScore says mobile advertising.
is a Wifi connection available or 16.7 million US mobile subscribers
the users has opted in to share used location-based “check-in” But the real value will be
location information via an app. services on their phones in March delivered when, having attracted
In other words, either an app 2011, of which 12.7 million check- consumers into the world of
user had opted in to share GPS in users were using a smartphone. real-time location services, the
coordinates or a Wifi connection A demographic breakdown of services contain stickiness to drive
returns valid longitudinal and check-in users revealed that 58.5% repeat usage. In 2010 foursquare
latitudinal coordinates. were aged 18-34 years. users check-in the most, (doing
so over 2.5 million times per day)
The mass adoption of Satnavs The data revealed Android amounting to half a billion check-
and, more recently, check-in accounted for the largest share of ins, which was significantly higher
services like foursquare and check-in service users, with 36.6%, than Facebook Places.
Facebook Places on smartphones, while 33.7% of users checked in
has created a geo-location aware from an iPhone. RIM accounted mobileSQUARED believe foursquare
society, leading to at least a for 22% of check-in service users, is principally a checking-in andlocation-based service with the other forms of mobile advertising mobile are now enquiring about
potential of receiving discounts, like SMS opt-in databases. Mobile how they can capitalise on the
whereas Facebook is based on privacy is now a major area being location element that mobile
digitally socialising with peers, addressed by the relevant mobile delivers. This research is in stark
and is not a platform that people marketing trade bodies and contrast to the views expressed
associate with checking-in. will, no doubt, very soon lead to 12 months previous, when the
common standards being agreed majority of media agencies
Regardless, the number of and rolled out. claimed their clients were
check-ins is considerably down expressing little or no interest
on Navteq’s 100 million daily Mobile display advertising works in location as part of a mobile
data uses, indicating that real- in much the same way as online campaign.
time location services remain display advertising. Whether an
predominantly functional online user is on a mobile or fixed But it is not just the big brands
(mapping/navigation) rather broadband connection, geo- with the big agencies that are now
than commercial. The short-term location targeted display ads can using or exploring the possibilities
challenge is to commercialise be delivered by either a valid IP of geo-location targeting. With
the functional location users, address being available or the the addition of location, mobile
whilst simultaneously increasing user opting-in to share location advertising is being thrust deep
the location-aware community, information via an app. According into the heartland of suburbia
both of which are opening up to research, 80% of US consumers and the local retailers and
the opportunity for geo-location are prepared to share a little of merchants, restaurateurs, bars,
targeted ads on mobile devices. their location data provided they and hairdressers to name a few,
get something back in return, and are now using the service. Geo-
Until 2008, the mobile industry that their data is not shared and location targeting delivers a real-
had held endless conferences and they retain control of the data. time digital directory experience
events debating the commercial to consumers that will entice
opportunity for location-based Opt-in in the app world is different the smaller brands into what
services. Beyond the realms of once more. On iOS, when apps has primarily been a mobile and
enterprise services like fleet are opened users are asked if they national brand’s playground.
management, the majority of the would like to share their location,
industry were left dumbfounded whereas on Android the process is Research by JiWire in 2010
and head scratching. less frequent, based on when an showed that consumers are more
app is downloaded or when it is likely to engage with location-
That was until the launch of, no, updated. relevant advertising. Thirty-
not the iPhone, but the Apple nine percent of consumers said
App Store and promulgation of Geo-location targeting comes ‘coupons for nearby stores’ was
apps. Apple adopted a simple at a premium one of the most appealing aspects
approach by asking users to share of location-based advertising while
their location when opening an With such measures in place to they were out and about, while
app. This ‘on-the-spot’ form of protect the interests of geo- 29% said they would welcome
opt-in that allows consumers to location aware consumers, information on promotions and
make an immediate and informed research conducted by savings. And that is good news for
decision, removes the more clear- mobileSQUARED in April 2011 the brands.
cut opt-in or opt-out processes revealed that approximately 70-
more commonly associated with 80% of brands that are active in Geo-location targeting positionsbrands in front of the consumer at advertising beyond the existing of $0.30 per click, both of which
a point in time when they are in a internet-based model of display are more in-line with existing
decision making frame-of-mind. So and search that has been the standard campaign rates, and
the delivery of relevant content to foundation of the industry, indicates that location is yet to
a consumer when they are near a towards a direct marketing command a premium rate.
store and drive footfall is a very model that replaces volume with
compelling proposition. targeting. Consequently, as mobile That said, a more dynamic
advertising sacrifices the volume- distance-based model is already in
Consumers are undoubtedly more play that has become its bread operation by a handful of mobile
receptive to mobile advertising and butter, the business models ad networks, with more launches
when location is applied. Location associated with geo-location later this year, whereby a retailer
relevant ads increase the digital targeting will have to remain will pay a CPM rate that indirectly
mobile advertising average mobile dynamic to address the multitude correlates with the customer’s
click-through rate from 0.5-0.8% of location-based possibilities distance from the store. For
to 1.5-2% and upwards. Results available. mobileSQUARED expects example, a customer that engages
from the US reveal that geo- a flurry of hybrid business models with a mobile ad within 50 metres
location targeting delivers 10-20 to enter the marketplace in of a store will cost the advertiser
times the click-through rates the next 12 months as mobile $0.3 based on a CPM of $300,
compared to the web, depending ad networks introduce pricing whereas a customer 500 metres
on the mobile ad network. When innovation. away could cost $0.15 based on a
compared to push-based mobile $150 CPM.
marketing approaches, response Pricing Models
rates for messaging-based geo- Although a $300 CPM appears
targeting in the UK and US range Presently, mobile ad network extortionate when compared
from 11-35%, increasing up to providers have adopted both directly to existing average
65% when delivering a promotion the CPC and CPM advertising premium mobile ad network
within close proximity to the models for geo-location targeted CPMs of $5-10, the fact it has
location. campaigns, whereas online, this the potential to directly drive
was skewed more towards CPM footfall – even measurable footfall
With significantly enhanced priced campaigns. if the user has been served a
response rates comes a premium. voucher – offers unassailable
But it is a premium that is Because of the nascent stage of its value in relation to other forms
having a disruptive impact on development, pricing models for of advertising to the retailer.
established mobile advertising geo-location remain very much in Placing this rate into context,
business models. The real-time the experimental phase. A number direct marketing mail-shot
component of geo-location of mobile ad networks told campaigns can command a CPM
targeting fundamentally alters the mobileSQUARED that location costs rate upwards of $1,600. Though
dynamics of the mobile advertising are being bundled into existing this could effectively become the
marketplace because it removes rates, while other providers said geo-location targeting nirvana, as
the volume element that has only the average campaign price hike companies continue to experiment
recently made mobile advertising was by a factor of 10 on existing with various pricing models.
attractive to brands. rates. Research by mobileSQUARED
reveals that the CPM rate for geo- It is also incumbent on the mobile
Furthermore, geo-location location based campaigns in the ad network to understand the
targeting advances mobile US is between $3-5 CPM, or a CPC brand’s requirements.For instance, some brands would mobileSQUARED research 10,000 per targeted campaign for
value a CPM at five-to-10 miles reveals that premium rates for example, instead of deploying a
the same as 50 or 500 metres. To geo-location are unlikely to national one-size-fits-all campaign
incorporate such flexible demands impact the growth of mobile costing hundreds of thousands of
outlines why hybrid business advertising. Brands in the US dollars. Put numerically, a geo-
models will be required for geo- are now frequently spending location targeted campaign costing
location targeting. six and seven figure budgets on $10,000 can yield a response rate
mobile advertising campaigns, of 2% compared to a national
mobileSQUARED believes geo- and can easily consume the campaign costing $200,000 for a
location targeting can potentially additional costs associated with 0.5% response rate.
operate at similar CPM levels geo-location. What’s more, the
to traditional direct marketing research reveals that mobile The impact of this development
campaigns, if not higher. When budgets are now increasing at will be two-fold. Firstly, it will
considering that the justification a scale not experienced on the create a hierarchical mobile
of investing in a geo-location web. In 2010, the average US ad campaign spend structure,
targeted campaigns emanating mobile ad campaign spend was whereby major brands will have
from the medium’s accountability, approximately $80,000. That a national mobile advertising
including redemption or figure is expected to approach strategy supported by smaller
transactional capability, the $110,000-120,000 in 2011. regionalised activity. In markets
transformation of mobile from such as India and China, where
marketing channel into a sales Marketing budgets for mobile there is a strong divide between
vehicle, will be able to a command the urban and rural communities,
a high premium on the already Agencies in the US are now and in particular, the literate
premium rate. starting to dedicate budget to versus the illiterate, geo-location
mobile, instead of extracting a can ensure a brand such as Coca
In relation to the difference proportion of the online budget. Cola has the capability to deliver
between a direct and indirect geo- The increase in spend in mobile one campaign but change the
targeted campaign, direct geo- geo-location advertising will occur messaging depending on the
targeting campaigns will command when the ingredients of location location to deliver a much-
a premium CPX compared to an have a certain meaning, such as an improved response rate.
indirect campaign. airport, or a museum. One of the
leading protagonists in this Secondly, innovative business
It is still early days and that means space is Starbucks, using mobile models allow smaller brands to
that there is a disparate approach to drive footfall using discounts become mobile advertisers, and in
to pricing, with companies and voucher schemes to a geo- doing so, this will significantly
experimenting with the concept location-aware audience. broaden the revenue potential of
and potential business models. mobile advertising.
While CPM remains a dominant However, the introduction of geo-
model online, mobile ad networks location will not only impact the For instance, a CPM model would
are exploring a variety of cost dynamics of the business models, not apply to a campaign for a
per actions, such as cost per but also on how the brands will small-town coffee shop that is
visitor and cost per transaction by approach the mobile medium. unlikely to have 1,000 visitors in a
connecting to the store’s In the US in particular, brands month, let alone a day or even an
EPOS system. can now target specific towns, hour. However, a model based on a
cities or States, spending $5,000- call-to-action, such as a coupon orvoucher delivering an immediate like McDonald’s and Burger King footprint, national campaigns can
in-store promotion, clearly for example, will look to use be supported by more targeted
represents maximum return for geo-location targeting to drive localised campaigns.
the merchant. footfall using regional takeovers.
In the same way brands do site Regardless of whether the brand is
And that’s why geo-location takeovers today, we will inevitably big or small, geo-location removes
represents a significant see brands investing sizeable existing mobile ad campaign
opportunity for every brand, from sums on a geo-takeover to ensure wastage, by honing the relevant
hotel chains and airlines, to local they saturate local inventory and contextualised message to
florists and hairdressers. Either and prevent local rivals from people in a particular area that a
way, if said local florist is having advertising. brand intends to connect with.
a slow day, it can invest in a small
campaign to serve a promotion Large brands have the budget Ultimately, this changes how
of a 20% discount voucher using to adopt such a strategy. Small offline businesses will approach
display- or messaging-based brands do not. The likelihood is marketing, by using online mobile
inventory, to people within 500 that the smaller brands, identified consumers to drive customers into
metres or 10 miles of the store as the “Digital Classifieds” will the offline world and purchase
to boost footfall. generally spend small amounts on physical goods and services.
geo-location but conduct repeat Consequently, this development is
One possibility is that major campaigns on a frequent basis. For expected to drive offline budgets
brands, such as fast food chains, the larger brands with a national onto mobile.
m-commerce
Helping to drive this shift in spend Starting with e-commerce, and mobile access) are growing
is the rise of m-commerce over over 50% of British adults were revenues at twice the rate of
the last 12 months. M-commerce shopping online as of March 2010, pure-play online retailers. While
will have a positive impact on according to the Interactive Media payment provider PayThru
geo-location in both a direct and in Retail Group (IMRG). This trend says retailers expect their mobile
indirect manner in equal measure. continued throughout the year and revenues to increase 59% over the
into 2011, with the UK’s online next 12 months.
A report by ComScore1 sector worth £69 billion in 2011,
identified that the majority of claims the IMRG, with mobile The signs are already very
US smartphones owners had playing a significant role. positive. Online powerhouses
performed shopping activities Amazon and eBay both reported
on their mobile devices during Already, 15% of internet access over $1 billion in sales globally
September 2011. The other key is now via mobile devices, via mobile in 2010. In the UK
finding in the study was that 38% which makes the extension of alone, eBay was making up to
of smartphone owners had used e-commerce into m-commerce £2.1 million from goods purchased
their device to make a purchase at an inevitability rather than via mobile properties per day in
least once during ownership of a possibility. The IMRG says the run up to Christmas 2010.
that device. multichannel retailers (defined Similarly, Ocado has generated £15
as a retailer providing online million revenues through its iPhone
1
ComScore December 2011 Source : http://www.comscore.com/Press_Events/Press_Releases/2011/12/Mobile_Shopping_Goes_Mainstreamapp alone. Online fashion retailer while 41% of retailers expected to geo-location will be considerably
ASOS has amassed £1 million worth have a transactional site or app more appealing to retailers than
of sales in the UK since it launched by the end of 2011. One of the developing a transaction-enabled
its mobile site in October 2010, reasons retailers are reluctant mobile site or app. A cash-
generating over £12,000 per day. to invest in mobile is that they strapped local retailer, is more
believe consumers are not ready likely to invest in an opportunity
So how is the rise of m-commerce to adopt mobile commerce. that will deliver a tangible
having an impact on geo-location return, the retailing currency
targeted mobile ad campaigns The study found that just four of footfall, which is a familiar
when the majority of mobile ad out of the top 20 most frequently measurement tool.
campaigns are brand awareness? visited retailer websites are
Mobile success stories from presently optimised for mobile, Of course, brands with an
the likes of eBay and ASOS are and only eight of the top 20 have abundance of finance will afford
raising awareness levels among any kind of mobile application the luxury of covering all paths
all retailers and digital classifieds for smartphones like the iPhone, and develop a mobile site, app and
alike. Blackberry or Android indeed supplement these activities
powered devices. with geotargeted advertising.
Research by the Association
for Interactive Media and And this will impact on geo-
Entertainment (AIME), the Internet location because a figure released
Advertising Bureau (IAB) and IMRG by Strategy Analytics claims that
in 2010, revealed that only 8% of 94% of purchases are still made
UK retailers have a mobile site, at physical locations. That means
US Mobile advertising forecasts Impact of geo-targeting on mobile
advertising spend
Banner ads Search Mobile game
Billion Mobile music Mobile video/TV Apps Total advertising revenues
Billion
Opt-in messaging
Geo-targeting accelerator
2.5 b 6b
5b
2b
4b
1.5 b
3b
1b 2b
0.5 b 1b
$ $
2011
2011 2012 2013 2014 2012
2013
2014Show me the money
US Major Media Ad Spending, by Media, 2009-2015
billions
2009 2010 2011 2012 2013 2014 2015
TV $53.8 $59.0 $60.5 $64.5 $65.0 $67.0 $68.0
Internet $22.7 $25.8 $28.5 $32.6 $36.0 $40.5 $44.5
Newspapers* $24.8 $22.8 $21.4 $20.7 $20.2 $20.0 $19.8
Radio** $14.3 $15.3 $15.7 $16.4 $16.7 $17.1 $17.2
Directories* $10.3 $9.3 $8.2 $7.3 $6.5 $5.7 $5.0
Magazines* $15.5 $14.7 $13.9 $13.2 $12.6 $12.1 $11.6
Outdoor $5.9 $6.1 $6.4 $6.8 $7.1 $7.4 $7.6
Total $147.2 $153.0 $154.6 $161.5 $164.2 $169.8 $173.6
Note: *print only, ** excludes off-air radio & digital
Source:eMarketer, March2011
Data from ABI Research claims directories, which will see its in mobile in the US over the
businesses will spend $1.8 billion market value drop from $8.2 next three years, and therefore
on location-based advertising billion this year to $5 billion represent an uplift in spend.
by 2015. Research by eMarketer in 2015. It is the decline in
reveals that US ad spending is directories’ spend that provides mobileSQUARED estimated the US
showing signs of making a post- an indication of the impact of mobile advertising market to be
recession recovery, with projected real-time communication is having worth $1.4 billion in 2011, rising
growth of 1% in 2011 taking the on the ad market. Over a six year to $5.1 billion in 2014, with spend
total spend for the year to $154.6 period, spend on directories has dominated by search and display.
billion. By 2015, the company halved. While spend online during
predicts total US ad spend will the same period has doubled, it Geo-location as an accelerant of
be worth $173.6 billion. Online is mobile that presents a clearer mobile ad spend, will inject 11% of
spend will spearhead the total ad return for brands that had revenues in 2011, rising to 18% by
spend growth during this period, previously pursued the directories 2014. That means, the US mobile
jumping from $28.5 billion in 2011 route for advertising. ad market will be worth $1.58
to $44.5 billion in 2015. TV, radio billion in 2011, and $5.96 billion in
and outdoor ad spend will also That means there is an additional 2014. Financially, geo-location will
increase, but at low percentage multi-billion dollar opportunity be worth $162.7 million in 2011,
year-on-year growth. available in the US to the mobile rising to $904.75 million in 2014.
advertising industry if it can
The continued decline in print develop a viable channel for these
ad spend continues for both brands. mobileSQUARED believes
newspapers and magazines, that geo-location will accelerate
as does the drop in spend in the number of brands investingConclusion The long-term success of geo-location is guaranteed, but the speed at which the service becomes mass market will be largely influenced by short-term developments. Presently, the technology is now prevalent among the leading mobile ad networks, and the penetration of GPS-enabled handsets is approaching mass market in a number of developed mobile markets. While connectivity remains something of a hindrance today on a ubiquitous level, this can only be considered a short-term hurdle and will be tackled with the rollout of 4G networks. Perhaps most importantly, consumers are increasingly open to the concept of sharing their real- time data, including location. While a number of the key ingredients are now in place, geo-location is yet to become a volume game. Geo-targetable browsing and in-app traffic constitutes less than one-fifth of the total traffic seen by mobile ad networks. Geo-location will only become a volume game when mobile consumer data is widely available via WiFi as well as mobile operator connections. Until this happens, business models will remain experimental and the premium rates that geo-location is expected to command will not apply. Ultimately, geo-location will create a vast increase in the number of campaigns. For major brands, they will exploit their national footprint by supporting nationwide campaigns with targeted ongoing local initiatives to bolster return on investment. Smaller brands will run classified-based campaigns adopting a low-spend, high-frequency tactic. While geo-location will inevitably have a premium price tag attached per campaign, it represents the maturing of the mobile advertising marketplace from its infancy in an internet-based model towards a direct marketing preserve where heightened targeting and vastly improved ROI justifies a higher rate card.
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