Local mobile ad spend increasing with inventory growth: report
By Chantal Tode
April 10, 2014
Mobile local ad budgets continue to grow
As more national brands adopt local advertising tactics such as geo-fencing, click-to-call and click-to-map, the share of overall mobile ad revenue attributed to location-based campaigns will grow from 40 percent in 2013 to 52 percent in 2018, according to report released today by BIA/Kelsey.
Big brand advertisers are expected to shift a bigger share of their mobile ad budgets to location-based targeting as inventory increasingly becomes available and they witness the effectiveness of the strategy. In 2014, ad spend on mobile location-based ads is expected to reach $4.5 billion and by 2018, that number is forecasted to reach $15.7 billion.
“Growth is faster for both overall U.S. mobile advertising and the segment of that spend that we measure as location targeted mobile advertising,” said Michael Boland, senior analyst and director of content at BIA/Kelsey, Chantilly, VA.
“We’ll see growth in ad revenues that result from premium ad rates,” he said. “That will result from the developing art of attribution, and the placement of ad units that carry the ability to more clearly define ROI post-ad exposure.”
Yelp, YP partnership
The factors driving the growth in location-based mobile ad budgets include growing advertiser demand, higher ad performance for location-targeted ads and increases in mobile ad rates.
The adoption of location-based ads by small- and medium-size businesses, while slow, is growing and will also impact the growth in ad spend.
Yelp's recently announced partnership with YP is an example of the accelerating mobile innovation, sales and bundling efforts of local media companies that will contribute to the growth in local mobile advertising. In the deal, YP's 4,000 local sales reps will now be able to offer Yelp advertising packages that include mobile.
Yelp's iPhone app
Local search advertising
By tactic, mobile local ad spending on search will grow from $4.3 billion in 2014 to $10.9 billion in 2018.
Native social local ad spend is expected to reach $9.9 billion in five years, up from $2.3 billion this year.
Display is forecast to reach $6.1 billion, up from $2.4 billion while video will reach $3.1 billion, up from $1.1 billion.
SMS will inch up from $332 million this year to reach $381 million in 2018.
Overall, BIA/Kelsey predicts total mobile ad revenues will grow from $7.2 billion in 2013 to $30.3 billion in 2018, an increase from its previous forecast. Factors driving the growth of in total mobile ad revenues include increased projections from Google and Facebook.
The report pinpoints Google's Enhanced Campaigns as an important factor in accelerating the mobile advertising curve and adoption cycle for search advertisers.
The share of spend on location-targeted mobile ads relative to all other local media is also expected to grow. In 2013, just 2.2 percent of the overall local ad spend was attributed to mobile, but by 2018 that number will increase to 9.9 percent, according to BIA/Kelsey.
As the ability to attribute a sale to a mobile ad becomes clearer, marketers will be better able to determine the return on investment of their efforts which should lead to be bigger investments, according to BIA/Kelsey.
“For example, tracking user behavior after they’ve seen an ad to determine that they showed up at a store or, even better, made a purchase,” Mr. Boland said. “We have the ability to do this through incorporating transaction data or, applying attribution technologies from mobile ad companies like xAd and Verve.
“And their ability to do so is emboldened by underlying technologies, smartphone penetration and emerging standards for in-store engagement like iBeacon,” he said.
Chantal Tode is associate editor on Mobile Marketer, New York
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