It's 2004 All Over Again: Mobile Spending to Double in 2013 | Street Fight

It’s 2004 All Over Again: Mobile Spending to Double in 2013

It’s 2004 All Over Again: Mobile Spending to Double in 2013

borrell-associates-logoAccording to a Borrell Associates client memo made available to Street Fight, local mobile advertising will double this year. That’s right; double. In some markets that number may translate into tens of thousands of dollars; in the largest, it’s $100 million or more.

The firm’s CEO, Gordon Borrell, told us via email that what’s happening with advertising at the local level is a repeat of a major 2004 shift in local ad spending and “nothing short of phenomenal.”

“Local businesses,” he added, “are buying mobile marketing at a faster rate than the huge uptick we saw for local online advertising in 2004, when household Internet access hit critical mass.” Those who remember 2004 will recall that Internet access had hit 50% of all households. They’ll also recall the skepticism with which traditional media companies viewed the news at the time. Few reacted as if it was real, while national pureplay web companies swooped in to take the lion’s share of that new spending, because even though their reach is global, their use is local.

“Even in the smallest of markets,” Borrell told us, “there’s some experimentation. It’s a little scary, particularly for traditional media managers who might easily be whipsawed.” Unless such companies have the systems and processes in place to handle the demand from advertisers, we could well be looking at a repeat of 2004.

Last year, mobile ads accounted for 8% of the $18.5 billion spent on local online advertising. This year’s growth will put its share at 13% of $24.3 billion, according to Borrell.

Mobile Spending to double this year

The client memo notes that local is becoming more important to the mobile advertising industry as a whole. The first adopters to any new medium tend to be national marketers, according to the report, but their local counterparts are quickly coming on board, accounting for 13% of all mobile spending in 2012 and 20% this year:

The forecast is supported by our ongoing surveys of SMBs, as well as updated data that we filter into our local market Compass reports, to which many of you subscribe…

A key data point we saw earlier this year showed that 37% of small and medium businesses (SMBs) who had not yet tried mobile advertising said they were likely to do so within the coming year. Moreover, a stunning 83% of those who had actually engaged in some sort of mobile campaign said they were likely to do so again.

Last year local advertisers spent $1.5 billion on mobile media; this year we’re forecasting it will be $3.2 billion. So while total mobile advertising is likely to increase about 34%, we’re expecting local to increase 105%. That’s similar to the rush to buy banners and local search advertising that we saw in 2004…

The client memo provides a list of Borrell’s 513 DMRs (Digital Marketing Regions) and notes that not all growth rates are the same:

Of the 513 markets, 108 are seeing mobile advertising expenditures double. Only six markets will see less than 50% growth. Every market has its own nuances and unique makeup. Underlying factors include population, the prevalence of mobile device ownership and use in that market, the makeup of business types in the market and the amount of people coming into and out of the market for tourism, business travel, etc.

For example, a small market whose economy is based around a local college may have a higher growth in mobile advertising due to the predominately younger group of tech-savvy students and influx/outflow of parents coming to visit. In another example, a big market may have lower growth due to a high number of lower-income households and very little tourism.

Local traditional media companies need to have ample offerings available in order to capitalize on this important shift in spending. Banner ads on mobile just don’t cut it, and I’ll have some insight on that in my regular column tomorrow, along with a suggestion on what will end up being the key money-maker in a mobile advertising universe.

TerryNaplesTerry Heaton is President of Reinvent21, a consulting company specializing in business reinvention for the 21st Century. He’s an internationally-recognized creative expert on all things web-related, especially as they relate to local media.

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