Mobile Local Advertising: Not Just for Early Adopters Anymore

Over the past few years I’ve done some axe-grinding about the lack of location targeting in mobile advertising — and the fact that desktop ad strategies have largely been ported over to the small screen, particularly among large brands and agencies.

There are lots of reasons brands and agencies have done this, including “habit creep” and comfort. It’s not unlike the way that the first automobiles had reins; or the first television ads that basically filmed the radio-esque format of a guy reading a script. But beyond inertia preventing mobile ads from being more “ground-up” (dare I say native), location targeting is inherently challenged. By definition, it segments audiences — which runs counter to a core principle of brand advertising: reach.

But in recent months we’ve started to see some of those habits break down, beginning with newer companies in mobile that don’t have to “unlearn” anything to get there. xAd is a notable example — leading a pack of mobile local ad networks with the tagline “Location at Scale.” But the hard part isn’t the ad networks; it’s the adoption of the buy side; again back to the brands and agencies. There are exceptions such the agencies that joined me in January for the “Big Brands Go Local” panel at the Street Fight Summit in New York. (Street Fight’s new white paper, Hyperlocal Targeting on the Mobile Platform, also covers notable progressive players in this space.)

On a broader scale, location adoption is increasingly showing its face. In the past month alone, I’ve seen reports from xAd and Verve Mobile that break down the campaign activity on their networks. Marchex pumps out quality data regularly.

The Verve study released just last week, shows that among Quick Serve Restaurants (QSRs), 70 percent of campaigns apply location targeting. These saw a 2x lift in click through rate and a 3x lift in foot traffic. Interestingly, 55% of these advertisers applied geo-aware targeting (DMA-level), 28% used geo-fencing and 17% used geo-defined audience targeting. This means that location targeting native to mobile (the second two) are seeing adoption.

xAd published similar results in its Mobile-Location Insights report last month. With different but comparable terminology than Verve, the geo-precise ad targeting on its network increased from 27% to 58% year over year.

Beyond ad placement, there are other aspects of location targeting that can boost performance. Geo-defined audience targeting mentioned above is one of them. Location-centric ad copy and calls to action are others.

xAd is big on the latter, shown most recently in its Pinkberry campaign. It set a geo-fence of 1 mile around store locations — a strategically devised radius for distance the average consumer will travel for this particular product. Alternating promotions based on distance then led to a landing page with closest location, details and option to save coupons for store redemption. The result was a 2x increase in the ROI for Pinkberry in the first 2 weeks of the campaign.

Interestingly, both Pinkberry and the QSRs in Verve’s study are defined by location. They’re also low-consideration items where speed and convenience (read: location) can trump brand affinity and other factors in influencing purchase decisions. That’s telling of what location targeting can do when certain variables are in place. But I expect to see advertiser adoption curves likewise rise in verticals with larger geo-fences, varying brand affinity and higher ticket items (i.e car dealers).

Beyond location targeting tactics often acknowledged (geo-fencing) and those sometimes ignored (ad copy), another hidden lesson here is the holistic application of location. It has to be present from inception to execution to analytics.

Inception is key, because the wrong campaign goals stand behind the undervalued ROI holding back brand advertisers who shoot for desktop-esque targets (i.e impressions). Mobile local advertising can only hit its mark if the right target is set.

Mike Boland is senior analyst at BIA/Kelsey, where he heads up the firm’s mobile local coverage. Previously, he was a tech journalist for Forbes, Red Herring, Business 2.0, and other outlets.