Archive

Will ‘Local’ Eat Mobile Advertising?

Mobile_Blog_Slideshow_622px

The IAB 2016 ad spending report released earlier this week, showing that mobile ad spending in the US had overtaken PC digital advertising, surprised many people. And despite the fact that mobile ad revenues have now crossed 50%, many brands and enterprises are still “trying to figure mobile out.”

If ad spend and time spent were perfectly aligned, mobile ad revenues in 2016 would have been closer to $50 billion (vs. $37 billion) of the total $72.5 billion. And as mobile advertising grows so too will the “local” component ad spending. However we need to look more closely at the definition of “local,” which is now in flux.

IAB mobile advertising revenue

Definitions of local that have been used in the past, as the basis of forecasts or estimates of future digital ad spending, are outdated. That’s because of how broadly location data are now being used and will be used in the future:

  • Audience targeting and segmentation for brands/enterprises
  • O2O/in-store attribution (enterprises and SMB)
  • Cost-per-visit/guaranteed visits ad models (enterprises and SMB)
  • Real time location or geo-targeting (DMA, sub-DMA, geofence)

If we define the category to include campaigns that use location data in any of the above ways, it’s reasonable to argue that the vast majority of mobile campaigns will integrate location in some capacity data going forward. That represents a massive, multi-billion dollar scenario.

If we focus on just the retail and automotive segments there’s a significant amount of money in play.  Most of the transactions in these two categories are offline. According to the IAB, 21% of all digital ad spending in the US — or $23.9 billion — is attributable to these two categories. Not all of this is mobile of course but more of it will be migrating over time.

Ad spending by category 2016

Another interesting thing to consider is the growing adoption of location analytics to track traditional media such as TV and outdoor. Would in-store/offline visitation tracking justify including TV spending in the “local” bucket? For example: the Honda ad that drives local dealer visits or the national McDonalds campaign that includes store visitation tracking?

Regardless, the use of location data is about to get a lot more widespread, even “disappearing” into the background in many if not most cases. Indeed there will be more audience defining and attribution use cases than those that include local creative or involve traditional geotargeting. That’s going to require everyone to rethink their models and definitions.

Leave a Reply

(Comment Guidelines)

*

Close

First Name

Last Name

Company Name

Email Address