There’s no doubt that location-based services are growing, but a new report from Juniper Research further confirms the trend.
According to the report, the mobile context and location services market will reach $43.3 billion in revenue by 2019. That’s up from an estimated $12.2 billion in 2014. The report also found that by 2019 more than two-thirds of revenues will be driven through highly targeted and contextually aware ad-supported apps. The primary drivers of this revenue will be social apps like Facebook, which help marketers target specific groups of consumers.
Local search apps will also play a role, generating a large portion of ad-spend. Juniper points to Google opening up its deep-linking API as one of the reasons for this trend. The search giant accounted for almost half of U.S. mobile advertising revenues last year, and last summer the company introduced Enhanced Campaigns, a new format that effectively tore down the wall between its mobile and desktop inventory
The growth in the location-based app market is due in part to the growing premium which advertisers are willing to pay for a user’s location data. As marketers shift larger portions of their budgets to mobile, and competition over inventory increases, location data has become a critical tool in identifying audience — and publishers have seized the opportunity.
According to a report released recently by Telenav’s Thinknear earlier this year, the percentage of mobile advertising impressions which include location data has exploded in recent years, ballooning from roughly 10% in the early days to 67% today. The problem is that the growth far exceeds the rate at which publishers have gone through the process to formally obtain a user’s permission to obtain their location and pass that data to marketers.
A portion of the spike stems from questionable practices by opportunistic publishers. Some publishers peg a user’s latitude and longitude using lower-quality location data such as a zip code. Meanwhile, others have added location-services components to apps without a clear use case for the consumers. In December, the FCC reached a settlement with a popular Android Flashlight application for allegedly concealing the fact that it sold users’ location data.
As the market for mobile advertising grows, it will be increasingly important for the industry to develop clear rules and expectations around the use of location-services in order to avoid the type of public outcry seen that could stymie user adoption.
Juniper’s report also looked at in-app purchases which it expects to be increasingly important for navigation, social, and tracking apps. Juniper predicts that the model will grow on average over three times more quickly per year than the traditional pay-to-download model.
“Even in the case of navigation apps where paid-for apps have remained popular, large brands such as Garmin are beginning to emphasize this revenue model,” said Steffen Sorrell, the author of the report.
Rebecca Borison is a reporter at Street Fight.