National Advertisers: Time to Get Local
Michael Boland, who is a regular Street Fight contributor, will moderate a panel titled “Big Brands Go Local” at the Street Fight Summit in New York this week.
There’s a swelling battle cry throughout digital media circles that local is where the action is. That no doubt results from mobile’s growing mindshare, and the native advertising movement that accompanies it.
Mobile and local clearly go hand in hand. Google’s 50% of mobile searches that are local (compared with 20% on the desktop) is just one supporting point. Beyond user intent, mobile’s portability and location awareness likewise compel localized content targeting.
With these realities in mind, the tenets of native advertising tell us to build campaigns that align with the form factor. That includes localized ad placement, as well as calls to action and creative that can ground ads in performance-boosting local relevance.
But here’s the thing: “Local” is often thought to be synonymous with SMBs. In many media like television, however, huge portions of the local ad spending is from national brands that buy up geographically specific ad inventory. We call it the national-local spend.
The same thing is happening in mobile. The projected growth in mobile local ad spending is mostly to come from national advertisers that localize campaigns. Eventually, we’ll also see a shift to SMBs, as happened on the desktop over the last decade.
But for now, most of the mobile ad spend is by the former, the national players. And they’re slowly but surely evolving to deal with the realities of mobile (read: local). Mobile exchange Nexage reports 30% growth in demand and a fivefold increase in CPMs for location-targeted ads.
Much of this shift among national players comes from the realization that higher performance can be achieved from localized ads. Millennial Media reports performance deltas for finer location targeting (“HL” in the chart below), as does xAd.
But one challenge in all this stems from the fact that targeting and reach are inversely related. The more you target locally (or by any other factor), the more you segment yourself out of impressions. And reach is traditionally a big objective for brands.
Here, mobile ad networks are fighting a scale game. Their weapons of choice include the publisher networks they’ve built and the strength of their ad targeting’s secret sauce. And xAd, Where, and Verve are a few examples of the local “specialists” among mobile ad networks.
Increasingly, the larger-tier mobile ad networks are also focusing on location targeting. Millennial is the best example, as it uses its network’s scale to counter the segmentation challenge mentioned. The graphic below illustrates the impression density it’s capable of.
Even within geographic polygons — usually around an advertiser’s service area — it claims to achieve scale. Panning back (literally), it allows advertisers to reach these specified polygons but on a nationwide scale (think franchises) to further boost reach.
Based on these evolving capabilities and proof points, we expect to see a lot more national advertisers slowly migrating into the realities of mobile. The challenge is that it requires a departure from their comfort blankets of desktop tactics (i.e. IP targeting).
But challenges still abound and it’s a moving target. Among other gating factors is the quality of location data that devices and apps are passing on to ad networks. This is where many of the big data players come in to better profile audiences and locales.
As this all comes together, what we can look forward to is a clearer ROI for national advertisers, one that seeks to combine scale and performance. Their resulting adoption, albeit slow, will increase demand-driven ad rates in mobile.
That last part is huge, as oversupply of advertising inventory has kept ad rates depressed. This has in turn mitigated the monetization opportunity for all kinds of mobile app developers, publishers, and media companies that rely on ad support.
Much of the hesitance about mobile you hear from these players springs from this very point. But among the factors in line to “save” mobile and boost its monetization potential, national advertisers’ draw to location targeting will be a vital piece.
Mike Boland is senior analyst at BIA/Kelsey, where he heads up mobile local coverage. Previously, he was a tech journalist for Forbes, Red Herring, Business 2.0, and other publications.