U.S. behind in adoption, monetization of mobile local media: Kelsey
By Dan Butcher
July 27, 2009
For Google, Yahoo and Microsoft going mobile means going local
The Kelsey Group forecasts mobile search advertising revenues in Western Europe to grow from $55.5 million in 2008 to $3.3 billion in 2013, representing an annual growth rate of 125.4 percent.
Revenues for the local segment of mobile search will grow from $25.6 million in 2008 to $2 billion in 2013, a 139.3 percent growth. Mobile display ad revenues for the region will grow from $19.9 million in 2008 to $1.56 billion in 2013, a 138.3 percent growth rate.
"Currently it's mostly brand advertisers or agencies that are investing most heavily in mobile advertising for branding reasons," said Michael Boland, senior analyst and program director at the Kelsey Group, San Francisco. "In most cases this means just taking an online ad format like display advertising and porting it over to a smaller screen.
"Others are working with branded apps that are meant to capture some form of engagement like a game," he said. "Many of these attempts so far fall short because they are derivative of online strategies and don't fully take advantage of the unique aspects of the mobile device and how people use it."
The Kelsey Group, a division of BIA Advisory Services LLC, is a provider of research, data and strategic analysis on directories, small-business advertising, online local media, vertical market advertising and mobile advertising.
Mike Boland is senior analyst and program director of mobile local media at BIA/Kelsey
Brands should keep in mind that advertising can be all about location.
Location-aware advertising should open up more opportunities to drive conversions at the point of sale, rather than just focus on a branding experience.
As mobile becomes more saturated into consumers' lives and as the technology continues to improve, marketers will realize the importance of doing these things and devoting budget to mobile marketing.
Yellow Pages' iPhone app
It mostly comes out of the digital bucket today, creating a zero-sum situation within that budget.
This doesn't bode well for mobile marketing's adoption -- especially in the current economic environment."
So, what types of publishers stand to benefit most from the boom in mobile search advertising?
Local search sites that adequately create mobile experiences could benefit most, given the location awareness and portability of the mobile device.
These things make it very conducive to local search, per Mr. Boland.
"On the mobile device we see the percentage of overall searches that are local as two- to three-times greater than that same percentage online," Mr. Boland said. "People search for things that are around them and have a sense of immediacy on the mobile device.
"Companies that can do things like tell users specific product information along with accurate real time pricing and inventory data have a better shot at success in the mobile realm," he said.
Also, those that limit inputs such as bar code scanners or similar technology will have a better shot, according to the study.
"Some we're seeing already are the ShopSavvy app for Android and Google's bar code scanner on Android-based phones," Mr. Boland said.
Time for U.S. to target mobile local media
A comparison with Kelsey's United States mobile ad forecast released earlier this year shows Western
Europe leads the U.S. in adoption and monetization of mobile local media, primarily due to the greater number of mobile handsets in the region -- 499 million in 2008, compared with 266 million in the U.S.
Additional findings from the U.S. mobile ad forecast include:
- U.S. mobile search ad revenues will grow from $39 million (27 million euros) in 2008 to $2.3 billion (1.6 billion euros) in 2013.
- U.S. mobile local search ad revenues will increase from $20 million (14 million euros) in 2008 to $1.3 billion (915 million euros) in 2013.
- U.S. mobile display ad revenues will grow from $21 million (15 million euros) in 2008 to $567 million (399 million euros) in 2013.
In addition to the higher number of mobile subscribers in Western Europe, rapid proliferation of smartphones is helping drive the growth in mobile advertising, according to Kelsey.
Kelsey's forecast indicates the number of smartphones in Western Europe will grow at a 35.7 percent compound annual growth rate during the forecast period, from 32 million in 2008 to 149 million in 2013.
So, what are the differences in the evolution of the U.S. and Western European mobile local search ecosystems?
"It's the handset penetration and the greater degree of mobile use that is more of a cultural factor than anything," Mr. Boland said. "The U.S. is catching up to that with greater smartphone penetration, as a percentage of overall mobile subscribers.
"But the smartphone penetration in Western Europe will continue to grow and the revenues from search and display advertising in the region will be higher than the U.S. over the next five years," he said.
Yellow Pages case study
The Kelsey Group has served as a market research and consulting firm to Yellow Pages and local search space over the past 20-plus years.
"Yellow Pages, as traditional ‘owners' of the local space, are going hard and heavy after mobile strategies," Mr. Boland said. "This includes their own branded search products that cross many handsets, platforms and mobile operating systems; as well as distribution deals they're forming to distribute their listings on other mobile local search applications.
"This will allow them to cast a wide net and have the best shot at monetizing mobile local traffic," he said. "Their physical sales force that has high touch points with the Server Message Block (SMB) segment positions them well to own the majority of the revenue opportunity at the SMB level."
This touch point is important.
"Like search marketing, only a certain amount of SMBs will sign up themselves," Mr Boland said. "The majority of the opportunity will involve delivering it to them and bundling it with other local marketing products.
"This is especially true in mobile's early stages, where it's somewhat experimental and hasn't seen wide adoption at the SMB level," he said. "Again, it's mostly been brand advertisers and agencies so far."
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