Report: Local Mobile Advertising Poised to Grow

When the economy turns around, local mobile advertising is poised to be the next big advertising trend, especially spending on local mobile search.

The framework for the emerging ad market is finally in place, according to a forecast from The Kelsey Group, a division of BIA, which will present its findings later today (Thursday, May 21) at BIA’s Winning Media Strategies conference in Washington, D.C.

By 2013, local mobile ad revenue is expected to reach more than $3.1 billion, up from $160 million in 2008. Mobile search will make up the lion’s share at $2.3 billion, dwarfing SMS, which garnered $100 million in 2008.

In five years, more than half of mobile advertising, or 56 percent, will be spent on local search, even though local search will make up a little over 35 percent of all searches, according to TKG.

The ability to more precisely target consumers gives local search advertising a revenue edge. “Mobile gets you closer to the point of purchase because it goes with you to the store,” said Michael Boland, senior analyst for TKG. “That’s good for categories where sales leads are highly valued, such as retail, restaurants, and arts and entertainment.”

If not for the economy, a mobile advertising market might have happened sooner rather than later. Today, 54 million consumers use mobile Web, growing to 95 million users by 2013. Smart phones, such as the iPhone, are getting smarter and easier to use with 15 percent of iPhone applications local.

While local made up 27.8 percent of all searches in 2008. But by 2013, that will reach 35.1 percent.

“When we come out of this, we’ll see a sudden interest and demand in mobile marketing,” Boland said.

To leverage the opportunity, advertisers will still need a point of entry, akin to today’s traditional advertising networks. “No one has really packaged local mobile search for advertisers,” said Boland. “Sales forces and strategies are yet to be determined.”