Location awareness to drive a revolution in mobile advertising

Mobile advertising is set to explode in terms of revenue, but it’s also going to get smaller. According to BIA/Kelsey, location-targeted ads will make up 70% of the total U.S. mobile advertising revenues in 2015 as more advertisers and marketers take advantage of the geo-location capabilities in handsets.

The overall U.S. mobile advertising market will grow from $790 million in 2010 to $4 billion in 2015, according to BIA’s new Local Media Annual Forecast. Those numbers sit in the middle of a wide range of projections with Gartner predicting North American mobile ad revenues of $5.8 billion in 2015 and eMarketer claiming mobile ads will account for $888 million in 2014, though it only counts display advertising (Unfiltered: Mobile advertising will be worth $887.6M in 2014. Question is: to whom?). But the most interesting part of BIA’s study is pride of place it gives to location-targeted ads.

Today, local ads 51% of mobile spending, according to BIA, and while their portions of revenues will only increase, the proportion of local to non-local ads appearing on phone screens compared to non-local ones may stay low.

“Revenues will grow from not only ad volume, but also premiums placed on location-targeted ads,” BIA senior analyst Michael Boland said in a statement. “These premiums result from higher performance for locally targeted mobile ads when compared with non-local ads, due to higher relevance, immediacy and consumer buying intent, all of which are more prevalent in mobile than many other print and digital media.”

Marketers opportunity to place those premium ads will increase as smartphone penetration increases and mobile data plans proliferate. The location awareness of these mobile platforms will allow many small and medium businesses to get into digital display, search and SMS advertising as they’re given more assurances that their ads will be seen by customers who can feasibly purchase their services, Boland said.