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Location-Based Mobile Ads to Reach $4.5 Billion This Year

April 10, 2014

by Mark Walsh

Spending on location-targeted mobile ads will increase 55% from $2.9 billion in 2013 to $4.9 billion this year, and reach $15.7 billion in 2018.

During that five-year span, the share of overall mobile ad revenue earmarked for location-targeted campaigns will increase from 40% to 52%. As a portion of total U.S. ad spending, it will jump from 2.2% to nearly 10%. All stats are per a new forecast by local media research firm BIA/Kelsey.

Since its last forecast in November, BIA/Kelsey has raised its outlook for U.S. mobile advertising, projecting a more than fourfold rise from $7.2 billion in 2013 to $30.3 billion in 2018. The higher forecast is a result of guidance from mobile ad networks and ad share leaders, such as Google and Facebook.

Driving the upswing in location-targeted advertising are factors including growing demand, performance and resulting increases in mobile ad rates. The category is also benefiting from wider adoption of location-based tactics like geo-fencing, click-to-call and click-to-map by national advertisers, who account for the bulk of mobile ad spending.

Small- and medium-sized businesses have been slower to embrace localized advertising because of budget and resources constraints and less technology expertise. Still, increasing tech-savvy and access to self-serve platforms like Google AdWords and Facebook will help SMBs increase their share of location-focused advertising.

Looking at formats, search is expected to account for the lion’s share of location-targeted mobile advertising, at $2.5 billion followed by display ($1.1 billion), native/social ($499 billion), video ($317 million) and SMS ($110 million).

In addition to interviews and company reports, BIA/Kelsey says its mobile forecast is based on usage trends, mobile ad spending across formats, consumer adoption patterns and ad performance measurements, among other data. Projections do not include promotional expenditures such as coupons.

The firm defines location-targeted advertising as campaigns that are geographically targeted for user impressions or engagement within specific locations. In addition, ads with location-specific copy or calls-to-action also fit within this definition.

Source

"Location-Based Mobile Ads to Reach $4.5 Billion This Year." MediaPost, 2014.

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