A new report claims that U.S. mobile advertising revenues from search and display is projected to grow to $3.1 billion in 2013, an almost 20-fold increase from $160 million last year.

Mobile local search advertising revenues -- a subset of overall mobile ad spend -- is also projected to grow from $20 million to $1.28 billion during the same period, according to The Kelsey Group's Mobile Local Media Forecast (2008-2013). This marks a projected compounded annual growth rate of 130.5 percent for mobile local search ad revenues compared with 81.2 percent for overall mobile ad revenues.

"We see the growth of mobile and local search will be tied to the growth of the mobile Web," said Mike Boland, program director for mobile local media at Kelsey, Princeton, NJ.

"Tied to that, the local portion of mobile search, both search volume and revenues, will be considerable because of mobile's form factor -- the local awareness and the portability of the device makes it conducive to looking for things to do, buy or see locally," he said.

"In that respect, the local portion of mobile search volume will be greater than the local portion of online search volume."

Local touch
Indeed, the percentage of mobile searches with local intent is projected to grow from 27.8 percent in 2008 to 35.1 percent in 2013, Mr. Boland said in his report titled, "Going Mobile: The Mobile Local Media Opportunity."

In terms of revenue, the percentage of mobile searches with local intent is projected to grow from 50.3 percent in 2008 to 56.1 percent in 2013 -- not a big jump, but already coming off a large base.

"So far we've seen most of the advertiser interest and activity happen with large or national brand advertisers, whereas SMB [small to midsized business] advertisers have limited advertising inventory at a local level," Mr. Boland said.

"That's because the relatively low volume of mobile searches are spread thin at the local level based on the many different categories and locations that mobile users can search, and that results in limited ad inventory at the local level," he said.

"Looking forward, that will probably scale up with the growth of mobile search over the next five years."

The potential for mobile's use in local marketing is not limited just to search. Kelsey estimates that nearly 15 percent of iPhone apps are local, leaving room for much growth.

Web of growth
Meanwhile, Kelsey's analysis of the growth of mobile advertising revenues shows a gradual progression.

Per the market researcher, U.S. mobile ad revenues will double this year to $330 million. It is expected to reach $720 million next year, $1.54 billion in 2011 and $2.26 billion in 2012.

Of that amount, U.S. mobile search ad revenues will grow fourfold this year to $81 million, from $20 million in 2008. The comparable numbers for 2010, 2011 and 2012 are $242 million, $564 million and $905 million, respectively.

Kelsey's projections for mobile Web users and total handsets handsets for the United States make for an interesting snapshot.

Per the data, there were 54.5 million mobile Web users last year -- one-fourth of wired Internet users -- compared with 266.4 million handsets.

The market researcher expects the number of mobile Web users to grow this year to 63.6 million, while the handsets will inch up to 274.7 million.

Mr. Boland forecasts that there will be 73 million mobile Web users next year and 279.9 million handsets.

For 2011, he is projecting 82.3 million mobile Web users and 285.5 million handsets. The comparable estimates for 2012 are 91.7 million mobile Web users and 291.2 million handsets.

The number of handsets in 2013 is expected to plateau at the previous year's level, but the number of mobile Web users is expected to grow to 95 million.

Google, what else?
"I believe that because the mobile Web is becoming more and more like the online Web that we know, with more and more devices that can render more HTML pages, we'll see a lot of online user behavior carry over in the mobile environment," Mr. Boland said.

"For example, Google's current market share of mobile searches is eerily similar to its online share of search -- and that's about 63 percent in both cases," he said. "So, Google is positioned well to be the front door of mobile search, just like it is online."

That pattern of behavior will affect advertising decisions, too.

"On the advertiser side, [Google] has already begun to integrate tools within AdWords to target mobile searchers," Mr. Boland said. "As it makes that prowess easy and more seamlessly integrated with online campaign management, it could be likewise positioned well to capture a commanding share of mobile ad revenues.

"I think that because the mobile device is closer to the point of sale we'll see a lot of interesting product-search applications that tie in cost-per-action or promotions such as coupons for items purchased," he said.

"These will involve data such as point-of-sale inventory systems of retailers that tell mobile users exactly what items are on the shelves right now and for what price.

"One interesting example is TheFind, an iPhone application. We'll see more of these that pull in the data feeds of companies, like Crillion and NearbyNow."