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Local mobile ad spend to surpass national advertising by next year: BIA/Kelsey

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January 23, 2013

The spend on local mobile advertising will surpass what is being spent on national mobile ads for the first time next year, driven in large part by shift in focus from national advertisers, according to a new report from BIA/Kelsey.

In the report, “From National to Local: Mobile Advertising Zeros In,” BIA/Kelsey forecasts that the spend on local mobile ads will reach $3.1 billion next year compared with $2.9 billion for national mobile advertising. The national number was the bigger one for the past several years but local spending is growing as national advertisers focus in on the opportunities provided by more precise location targeting.

“The mobile local ad spend will be driven not only by these advertisers evolving to the realities of mobile and launching more localized campaigns, but the proven performance of localized campaigns which is causing premium ad rates,” said Michael Boland, program director of the mobile local media practice at BIA/Kelsey, Chantilly, VA “That further drives the dollar share shift towards mobile local. 

“This will be significant because as the above factors materialize, it will provide more proof points for the power of mobile local advertising, thus educating the marketplace and accelerating adoption by Madison avenue,” he said.

National advertisers go local
Local mobile ads are those that are localized in some way such as via a geotargeted placement or with a geotargeted call-to-action. These ads are typically used by both large national advertisers and small businesses.

The report found that advertiser demand for local mobile ads will grow over the next year and beyond. BIA/Kelsey forecasts that the spend on local mobile ads will total $4.5 billion in 2015 compared with $3.6 billion for national mobile ads. By 2016, the local component of mobile advertising will total $5.8 billion, or 58 percent of the total, compared with $4.1 billion for national ads.

For media companies, app developers and others that are looking for ways to monetize mobile products and attract ad dollars, the larger opportunity will be with national advertisers that build effective mobile local campaigns.

One of the factors driving local mobile advertising will be adoption by local media companies, which will begin offering mobile marketing bundles.

Location drives results
However, the larger reason for the mobile-local share shift will be the evolution of national advertisers who will shift their spend toward local mobile ads because of the results.  

“Many of the mobile ad networks we talked to report higher performance for mobile ads that apply location targeting,” Mr. Boland said. “That not only goes for standard metrics such as click-through rates, but also lower funnel user actions otherwise known as secondary actions.

“These include things like phone calls and directions, which provide a more concrete ROI for advertisers that want the phone to ring – i.e. autos, professional services – or want to drive foot traffic in a measurable way – i.e. restaurants, retail,” he said.

Despite the strong track record for local mobile ads, many ad campaigns today still apply objectives that are more conducive to branding media such as print or TV.

However, while mobile can be an effective branding tool, BIA/Kelsey’s research shows that mobile user behavior tends to be more locally oriented and lower funnel.

“With that reality, campaigns should include more actionable components to meet that user intent half way and offer users the ability to call a business, or get directions, or view store inventory,” Mr. Boland said.

“This is in keeping with the principles of native advertising that we’re hearing so much about these days – build content that’s aligned with the form factor and use case,” he said.

“But it’s still not happening as much as it should.”

Mr. Boland suggests national advertisers put more of a focus on local mobile ads going forward and not just in the form of geo-targeting.

“Mobile has the ability to get more granular – not only in the location-based placement of the ad – who sees it – but deeper ways to localize the experience such as calls to action and ad creative that ground it in location relevance and boost performance in measurable ways,” Mr. Boland said.

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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