Location and the Local Ad Market Opportunity

As check-in and other location apps and services get a lot of press, once again the possibility of successfully tapping the $23 billion local ad market using mobile is becoming a very real opportunity. Location is emerging as the key to relevance on mobile, but as both consumers and small businesses are finding, location relevance at scale is much more difficult than a simple click to check in. Just because a smartphone has a GPS on it doesn’t mean that whatever marketing a user receives on it is automatically relevant (not to mention trying to run these programs with the 193 million Americans using feature phones).

Consistently delivering location relevance at scale on mobile requires the ability to solve for several different challenges simultaneously, most notably:

  • Correct location data – as our prior post points out, this is a somewhat arcane plumbing issue, but one that is the first critical piece in being able to return relevant content and offers to a user based on place and time. And on mobile, nothing is worse than having your phone point you to something nearby, only to find that the business no longer exists or has moved.
  • Manage content attached to locations – making decisions on the fly about what relevant content or advertising to send a consumer based on place and time requires having the updated content to deliver.  A robust content management system specifically focused on managing locations can pull user reviews and pictures, venue information, events nearby, discount or coupon codes tied to a specific location, check-ins and even traffic or weather to make the experience relevant.
  • Campaign management for location – for any mobile marketing program to be relevant, it must deliver authenticated geo-targeting (to ensure that a consumer doesn’t check-in from across town), frequency capping (so that a user never sees the same ad twice), and even CRM or behavioral targeting data dynamically mapped into a marketing message or ad unit (think of adding the nearest retail location or a favorite product category automatically to a message sent by a brand) – as part of each and every program.

When any one (or more) of these pieces are missing from a solution, location relevance falls apart. And while an irrelevant Starbucks ad may simply be annoying, for a sole proprietor with a small marketing budget, the inability to correctly attach and delivery their marketing dollars to a nearby user who is interested is a non-starter.

The good news is that small businesses are more rapidly embracing location-based tools, and the potential is very real. Lots of recent data indicates that small and medium-sized businesses (SMBs) are crafting location-oriented offerings: more than 90% are also on Facebook and Twitter, 80% have claimed their Google Place Page, 40% use Yahoo Local, and almost 20% use Microsoft’s Bing Maps for marketing outreach. And Google has certainly taken note, rebranding its local business center as Places and offering small businesses $25 fixed price listings. Can Twitter be far behind, now that they are publishing venues  with each tweet? Certainly, there is an opportunity for them to copy Google’s Place Pages and aggregate location-based inventory for both monetization and search capabilities.

From a consumer perspective, there is no doubt that that the interest level is high. Some of Yelp’s iPhone stats are astonishing when it comes to location, including half a million calls and a million point-to-point directions to local businesses generated directly from the iPhone App. A next major move we can expect to see is mobile developers aggregating continuously-updated and correct location content from many different sources to create a genuinely relevant experience for consumers. This and the tools described above create the tipping point for local marketing dollars to flow into the location-based space.

For more interesting reading on this topic, check out:

Twitter: The Local Monetization Strategy

Foursquare’s Starbucks Mistake: Five Ways Foursquare Advertising Is Getting Less Interesting

Only 10% of Businesses Would Pay for Foursquare: Survey

Yelp Stats Show iPhone App Usage Staggeringly Deeper Than Website

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