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Location-based search revenue will reach $6B by 2017: study

Alcatel-Lucent, 1020 Placecast partner on location

Geotargeting strategies are getting more sophisticated

With a growing focus on context and relevancy, local search is expected to play an increased role for mobile marketers in the next five years, according to a new study from Strategy Analytics.

In Strategy Analytics' "Consumer & Advertiser Expenditure on LBS To Reach $6 Billion By 2017” report, the company looks at how location is increasingly taking on a bigger piece of media spend. The findings point to the need for mobile navigation and map apps to increase monetization efforts.

“The local search sector has become and will continue to get more crowded, with numerous companies, including Apple, Google, Nokia/Microsoft, Telmap, Where and Yelp positioning to capture this important opportunity,” said David MacQueen, London-based director of wireless media strategies at Strategy Analytics.

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“Search and location-based search in particular is clearly going to be one of the key battlegrounds in mobile for all the major ecosystems,” he said.

“I think the key takeaway is viewing the report in context.”

Local intent
Strategy Analytics forecasts mobile and search spend to reach nearly $30 billion globally by 2017.

Location-based search revenue will reach $6 billion by 2017. Therefore, the company predicts that more than 20 percent of mobile advertising will come through location-based search in 2017.

Marketers are constantly looking for ways to make location-based marketing more targeted and relevant to users. In particular, the report’s findings pose a strong opportunity for local bricks-and-mortar stores with mobile searchers often needing quick information to a specific question while on the go.

In general, location-enabled search will generate more than half of consumer location-based service revenue by 2017.

Missed opportunity
According to the report, location-based services are a primary feature for 80 percent of the smartphone installed base.

The report also predicts that there will be more than 640 million users of mobile maps by 2017.

Even though there is a large audience of mobile users, monetization and revenue models have been slow to follow for manufacturers.

For example, Apple’s launch of iOS6 replaced Google Maps with its own Apple Maps, frustrating many users with its version that integrates Yelp.

However, local businesses have traditionally relied on Google Places as the first piece of creating a location-based strategy, meaning that many marketers now have to switch over to Yelp to increase a large percentage of smartphone owners on the iPhone.

“Apple clearly sees location as a key strategic area, hence the breaking of the relationship with Google Maps,” Mr. MacQueen said.

“We expect Apple to continue to invest in this area, with now its own mapping app and also Siri,” he said. “But Apple’s consumer proposition will probably only reach Apple consumers, whereas Google and Nokia are looking beyond just integrating into their own devices and operating system to give a broader reach.”

Final Take
Lauren Johnson is associate reporter on Mobile Marketer, New York

Lauren Johnson is associate reporter on Mobile Marketer. Reach her at lauren@mobilemarketer.com.

 
Related content: Research, David MacQueen, Strategy Analytics, mobile commerce, mobile marketing, mobile

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