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New BIA/Kelsey Report: The National-Local Shift in Mobile

By: 10 January 2013

Today we release a report that brings together months of coverage in mobile local advertising. One important trend we’ve seen is how national advertisers are evolving into “native” thinking in mobile.

Among the ways that’s materializing, localized ad campaigns are a top initiative seeing attention and investment. This is also one of the things that will reverse the downfall of mobile ad rates that’s hampered the medium’s adoption.

Highly relevant local ads are already showing greater performance and ROI for advertisers. That in turn increases their demand and thus demand-driven ad rates. This is especially the case among national advertisers.

There are lots of ways this is developing and lots of companies leading the charge. The report examines who’s doing what draws out some common best (and worst) practices we’re seeing today. There’s much to discuss.

Below is the executive summary and TOC. We’re interested to hear from you if you’d like to buy the report or engage over its findings (mbolandATbiakelsey.com). Clients of BIA/Kelsey’s mobile coverage will receive a copy.

We’ll be doing a few of these reports per year, so the discussion continues around what’s working in mobile local advertising. Much more to come.

Executive Summary

– Perhaps more than any other tech and media sector, mobile has gained attention and investment over the past three years.

–This has been driven by hardware innovation, smartphone penetration and resulting increases in mobile Web and app usage.

–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.

–One of the main sources of this premium inventory will be location targeted ads. Their value will be a function of congruence with user intent, such as 50 percent of Google mobile searches that seek local information.

–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. We’re only beginning to see such strategies develop, but they’ll be common to the winners in mobile advertising.

–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.

Table of Contents

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