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US Mobile Local Ad Revenue Could Reach $4.5 Billion This Year

Mobile Commerce Insider Featured Article

April 14, 2014

US Mobile Local Ad Revenue Could Reach $4.5 Billion This Year

By Joe Rizzo
TMCnet Contributing Writer

Last week, a new report forecasting mobile local ads in the U.S. was released by BIA/Kelsey. The prediction is that locally targeted mobile ads will represent more than half of the overall U.S. mobile ad spending in the next couple of years. This will be largely driven by local marketing initiatives of national advertisers.

We have been experiencing this for some time. It seems that a strong aspect of mobile commerce is that advertisers can target consumers on a local level. Users can be tracked through their mobile devices, giving advertisers the opportunity to locally target these potential consumers.

According to BIA/Kelsey’s forecast, advertisers adopting mobile local advertising tactics such as geo-fencing and click to map is driving what is seen as the localized share of mobile ad revenue. We are looking at the revenue reaching the $4.5 billion by the end of this year.

This represents about a 60 percent increase from last year’s revenue.  In BIA/Kelsey’s report entitled “Annual U.S. Local Media Forecast (2013-2018)” the firm projects mobile local ad revenues to more than triple over the next five years. The expectation is that it will reach $15.7 billion in 2018.

BIA/Kelsey, who has been a resource to the media, mobile advertising, telecommunications, Yellow Pages and electronic directory markets, as well as to government agencies, law firms and investment companies since 1983, defines the local media advertising marketplace as those media that provide local audiences to all types of advertisers. Mobile local advertising is defined as advertising that is targeted based on a user’s location.

This report draws its information from multiple sources that include proprietary data from companies, industry and country information in the public domain, as well as discussions with clients and non-clients about the direction and pace of development in the local media marketplace. 

Now, on the flip side of revenue, we also have spending predictions for advertisers. According to the forecast, total U.S. mobile ad spending will also almost triple in size. It is expected to reach $11.4 billion this year and then reach $30.3 billion in 2018. By the end of the forecast period, locally targeted mobile ads will represent 52 percent of overall U.S. mobile ad spending.

When we take into consideration the fact that things like Apple’s iBeacon is becoming a little more mainstream, more and more advertising companies are lining up to use the service. This is the type of concept that allows advertisers, stores and brands to let local consumers know what products are displayed in the store. The use of geo-location pinpoints where the mobile device is and local advertising can be sent directly to the consumer.

Michael Boland, who is senior analyst and vice president of content at BIA/Kelsey, said “Advertiser demand will be driven by natural market forces to follow undervalued inventory. Mobile advertising’s appeal includes higher performance, clearer ROI, tangible conversions and a shorter purchase funnel. These qualities of mobile content and advertising present a rare alignment between typical mobile user intent and advertisers’ stated objectives.”

The forecast actually breaks down the mobile local media by format. Several formats are considered, they are textual search, display, video, commercial SMS and native social advertising. The breakdown of mobile local ad spending by format is as follows:

  • Search (advertising applied to search queries on mobile devices) will grow from $4.3 billion in 2014 to $10.9 billion in 2018
  • Native social (visual and textual brand messaging merged into organic feed-based interfaces of mobile social apps such as Facebook and Twitter (News - Alert)) will grow from 
    $3.3 billion in 2014 to $9.9 billion in 2018
  • Display (display advertising applied to app and mobile Web inventory) will grow from $2.4 billion in 2014 to $6.1 billion in 2018
  • Video (rich media ad units distributed within app and mobile web inventory) will grow from $1.1 billion in 2014 to $3.1 billion in 2018
  • SMS (commercial SMS messaging) will grow from $332 million in 2014 to $381 million in 2018

Edited by Maurice Nagle

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