U.S. Mobile Ad Market Reaches $19B
The U.S. mobile ad market will reach $19 billion in 2015. And the location targeted portion of that ad spend will be about one third. This counts all mobile ad formats (sans tablets) including developing areas like social native ads (i.e. FB mobile news feed ads). My figures also take into account things like Google’s Enhanced Campaigns, which will continue to accelerate mobile advertiser adoption. More populated search bid marketplaces will in turn raise bid pressure and cost per click rates. The longstanding lag in mobile ad rates will be counteracted to some degree by sources of premium inventory. That includes native social ads, better attribution metrics, and higher-performing location-targeted ads from companies like xAd, Verve, and YP.
Reports of Apple Pay’s World Domination Have Been Greatly Exaggerated
Apple pay will not “mainstream” mobile proximity payments in 2015. The iPhone 6 won’t reach ubiquity until late 2015, and merchants won’t upgrade POS hardware without that critical mass. Furthermore, consumers won’t be compelled to alter such an entrenched habit without a greater value exchange. That could include saving time, money, or skipping lines; as opposed to the current proposition of tapping a phone instead of swiping a card. In the meantime, Apple Pay’s killer app will be with in-app payments for offline services, such as “order ahead” functionality or on demand local services (ODLS) like Uber. The tangible utility that Apple Pay offers in these scenarios will be its biggest near-term driver.
On Demand Local Services Take Over (Uberification of Local)
ODLS are products and services summoned by mobile and fulfilled offline: Everything from hailing a ride to getting someone to walk my dog. The segment is exploding in use and investment, a la Uber. This outweighs M-commerce (i.e. Amazon Mobile) because greater than 90 percent of products and services are fulfilled offline. Yet mobile is increasingly where that transaction path begins. ODLS will continue to grow rapidly in 2015, expand into every nearly vertical, open the door for variable pricing and transform the local service economy. Factors driving this shift include smartphone penetration, cultural acclimation; and the liquidly, transparency and supply/demand balance that ODLS brings to two-sided marketplaces.
Mobile Social Sharing Goes Local
Multimedia social sharing — Instagram, vine, stapchat etc — has accelerated with better smartphone optics (capturing) and larger screens (consuming). This has reached the local level as consumers likewise capture and share transactional experiences like dining out. This will accelerate in 2015, especially within visual and sharable local verticals like arts & entertainment. We’ll see most local media players embrace this trend by launching products that support the use case (i.e. Yelp’s video capture feature). This content will also feed into existing local ad strategies such as content marketing, SEO or landing page content. For example, paid tiers of merchant offerings will include things like monitoring, highlighting and distributing user generated multimedia.
Given the escalating share of local search happening via mobile, formats will evolve beyond desktop-oriented list views, towards native design standards. These will be more visually oriented and card-based a la Tinder, and will become more common across local apps (see Weotta). Swiping will outperform scrolling and tapping as a natural gesture, thus increasing the user inputs by which to build user profiles and sentiment analysis. Correspondingly, content delivery will be more programmatic and push oriented, accelerating the local discovery paradigm that continues to displace search. Google Now will be the search giant’s largest (and erstwhile under-recognized) effort to live in this new mobile world.
Michael Boland is chief analyst and VP of content at BIA/Kelsey. Previously, he was a tech journalist for Forbes, Red Herring, Business 2.0, and other outlets.