Location based advertising dollars will grow from $12 billion in 2016 to $32 billion in 2021, climbing to 45 percent of overall mobile ad revenue by 2020, reports local marketing and analyst firm BIA Kelsey.
The demand for location-targeted ads is rapidly growing, driven by changes in mobile user’s commercial intent and advertisers’ evolution to align with that behavior, states the report, Getting to $72 Billion: BIA/Kelsey’s Mobile Ad Revenue Forecast.
“The smartphone’s location-tracking abilities and portability, combined with users’ transitory behavior, make location-targeted content a natural fit,” observes Mike Boland, BIA/Kelsey Chief Analyst. “Google in fact reports that 30 percent of searches have explicit local intent, while 76 percent of those result in a store visit within a day.”
It helps that the overall mobile ad market is climbing at a 17 percent CAGR (compound annual growth rate), from $33 billion in 2016 to $72 billion by 2020. Naturally, this is fueled by the burgeoning usage of Smartphones in the U.S. In fact, by 2021, Smartphones will represent 97 percent of mobile phones in the U.S., compared to 79 percent today.
Boland, the report’s author, goes on to argue that localized mobile ads play a significant role in driving the path to purchase and enable advertisers to track offline conversions. He also explains that the value of location-targeted ads is not just derived from higher campaign performance, but also due to the considerable influence that local mobile ads exert over offline consumer spending. How much influence? Well, $2 trillion worth of consumer transactions are influenced through mobile, he states.
Many of the report’s finding support what Bluedot Innovation has long observed: engaging with customers where it matters leads to higher revenue.
Another notable finding from the report: native-social is the fastest growing mobile ad format although search advertising will remain dominant. Native-social ads— visual or textual content that merge with the organic interfaces of mobile social apps—are expected grow from $10.2 billion currently to $24.2 billion over the next five years.
For real-world examples of native-social at work, look no further than popular mobile social apps, such as Snapchat, Facebook, or Instagram. Evolving to align with the usage behavior of millennials, these apps seamlessly serve ads or branded content next to regular content.
Snapchat offers location-based filters, or geofilters, on-demand. Users create a design, pick a geofence where their filter will appear along with the time and date, and buy their geofilter online.
If you’re interested in reading the full report, download it here.
To learn more how Bluedot can power location based advertising and marketing in your mobile apps, sign up for a free demo.