From National to Local: Mobile Advertising Zeros In
Michael Boland, 1/9/2013
This foundation paper explores the advantages, performance indicators and challenges in the area of location based mobile advertising. Top players are profiled and best practices examined to determine where there are opportunities for growth and value generation in the fast moving sector. This most notably includes the "localization" of national mobile ad campaigns and the many moving parts to its value chain.
Mobile has gained more attention and investment than any other tech and media sector over the past three years.
Advertiser adoption hasn’t caught up with mobile usage. Mobile holds a 10 percent share of U.S. consumers’ media time, but only a 1 percent share of ad revenue.
In terms of ad market economies, this is tantamount to an imbalance in supply (user impressions) and demand (ad dollars). This has lowered demand-driven ad rates such as CPMs; as well as ARPU levels for companies leading the mobile revolution including Google, Facebook and Pandora.
A few factors will "save" mobile ads from this supply/demand imbalance that has mitigated the sell-side monetization opportunity. For one, mobile’s heightened user engagement, relative to other ad supported media, will create premium inventory that boosts advertiser demand and ad rates.
Improved ad performance will result from location targeting – a concept already evident from data shared by mobile ad networks cited in this report.
Advertiser demand will follow in a slow but inevitable process of market evolution and education over the next 12-24 months.
This will include a down-market shift to the SMB segment where mobile advertising hasn’t penetrated to a meaningful degree.
The larger opportunity will be for national advertisers that build effective mobile local campaigns.
This local shift is in line with the "native advertising" movement, which incorporates the mobile device’s unique capabilities and use cases.
This will play out through a developing value chain of publishers, ad networks, location data providers and ad tech startups. This report examines best practices and challenges seen throughout the components of this ecosystem.