Mid-Year Analysis: The 5 Biggest Trends Driving Mobile, Local Media

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We’ve just passed the half-year mark and the mobile local space continues to move rapidly. Following the predictions published here in January (some of which have already come true), it’s now time to revisit the biggest trends driving mobile and local media.

These are happening all around us and were most recently explored at both the Street Fight Summit West, and BIA/Kelsey’s Mobile Local Media SF which I programmed and ran. Below are five trends distilled from both shows and from examining all the action in the space this year.

1. Mobile Ad Revenues Take Off
A forecast I recently put together predicts U.S. mobile ad spending will go from 1.7 billion last year to about 7.7 billion in 2015 (affirmed recently by the the IAB). This is partly due to evolving mobile usage patterns and smartphone penetration. The latter just passed 50 percent of all U.S. mobile subscribers according to Nielsen.

There are also some interesting dynamics unfolding with the economics of mobile ad rates. Mobile usage is outpacing advertiser demand, so you see greater supply of ad inventory than ad spend. So ad rates such as CPMs and CPCs are going down. We believe that trend will continue, but will normalize at a certain point over the next couple of years as advertiser demand picks up.

2. Local Dominates Mobile
Breaking down the top-line mobile ad revenues mentioned above, the dollars going toward location targeted ads will be a major driver. They will go from just under half of mobile ad spend to almost two-thirds by 2016.

This will result foremost from usage: Google reports that 40 percent of mobile searches have local intent, and that compares with only 20 percent of desktop searches.

Advertisers are slowly coming around to that reality and building campaigns that are more geo-centric. Premium ad rates will meanwhile develop based on the higher performance of location targeted mobile ads, which we’re already seeing.

3. Mobile Ads Come Into Their Own
That leads directly into the third trend. We see data from xAd and others that mobile local ad performance (both search and display) outshines non-location-targeted advertising. Mobile search CTRs for example are about 8 percent for location targeted mobile ads.

But more important than the click is what is happening after the click. This is what we like to call “secondary actions,” which are things like phone calls and local directions. Specifically, after the 8 percent CTR, 36 percent of those clicks are resulting these secondary actions including placing calls or generating directions to a business. These tangible actions resonate with merchants with a clearer sense of ROI.

Going further down that road, we’ll see lots of development around transactions and payments because that really closes the loop on a discernible ROI, and conversions tracked all the way down to the cash register.

4. Mobile Shopping & Payments Close the Loop
The “showrooming” phenomenon discussed a few columns back is forcing lots of retailers to be innovative with mobile apps that help them maintain ownership of their customers.

EBay is an example of a company doing this right, bringing together lots of acquired companies and feature sets to be present throughout the stages of the purchase funnel (or as Walt Doyle calls it, the “Purchase Pretzel”), including PayPal transactions.

One battleground will be providing tools for businesses to better track purchase behavior as a foundation for loyalty programs. This lets them iterate on what’s working and not working, in terms of transparency of what’s making the cash register ring.

Meanwhile, we’re seeing lots of competing standards such as card linked offers; NFC; barcode-driven solutions like LevelUp and Starbucks Card Mobile; and SMB-geared solutions like Square.

5: Native Content Wins the Day
Speaking of barcode scanners, the next trend is the evolving mind-set to build things “mobile first.” In other words, utilize the unique aspects of the native form factor rather than porting over desktop models.

Facebook’s mobile sponsored stories is a good example because units are organically generated and integrated with the news feed. Tesco Homeplus’ virtual store is another favorite.

Other winners will be build on what I like to call the eyes and ears of the device. Audible input (i.e., voice search) and visual search (i.e., augmented reality, barcode scanning, etc.) will be where lots of innovation lies.

Google’s Project Glass will be one to watch closely for all these reasons. It accelerates the post-pc era to build on not just phones but the broader possibilities of mobility. That translates to biometric technologies, in-auto installations, and wearable tech. Hand it to Google for getting the idea out there to kickstart the ecosystem of third party developers who will build the applications and data sets required to make the whole thing work.

There are lots more trends driving the mobile and local media sectors which we’ll continue to explore here: And there will be no shortage of fodder: Based on the sheer velocity of all of the above trends, we’ll see many more develop in the second half of 2012 and further.

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 others.

Mike Boland has been a tech & media analyst for the past two decades, specifically covering mobile, local, and emerging technologies. He has written for Street Fight since 2011. More can be seen at Localogy.com