Study: Spending on Location-Based Ads Will Reach $1.8B in 2015
In the real estate industry, the mantra “Location, location, location” looms large. Pretty soon, that refrain may be much more commonplace in the advertising world.
A new study by technology research firm ABI Research predicts that businesses worldwide will spend $1.8 billion on location-based advertising—think Foursquare and Facebook Places—in 2015 as a slice of their mobile marketing budgets. That’s up from the $42.8 million projected for 2010.
It’s still early in the location-based game, and there’s no “right approach” to location-based advertising, said Neil Strother, practice director at ABI Research. “This remains a very fragmented market that is full of experimentation,” he said.
Among major advertisers that have experimented with location-based campaigns are McDonald’s, Pepsi, H&M, Chili’s and Starbucks.
Location-based services like Foursquare, Facebook Places, Loopt, Gowalla and MyTown cater to mobile shoppers and others who want to “check in” and let folks know where they are, ABI Research pointed out. Other services, like Shopkick, employ an iPhone app to reward shoppers for patronizing certain stores.
“The ability to geo-target advertising messages to mobile consumers continues to advance, especially as check-in services … gain momentum and build small but influential audiences,” ABI Research said.
Loopt has more than 4 million registered users; MyTown, about 2.5 million; Foursquare, more than 2 million; and Gowalla, more than 300,000.
Although those numbers may look impressive, a study released in July by Forrester Research Inc. indicated that only 4 percent of U.S. adults had tinkered with location-based apps like Foursquare and Gowalla. More than three-fourths of location-based app users are men.
Forrester analyst Melissa Parrish recommended that “bold, male-targeted marketers” begin testing location-based ads, “but that most marketers should wait until they can get a bigger bang for their buck, when adoption rates increase and established players emerge from the fray.”
As VentureBeat reported, one of those location-based players will be Google. Earlier this year, the mother of all search engines secured a patent for location-based advertising.
Social media blogger David Breshears insisted that the Forrester study shouldn’t deter mobile marketers from exploring location-based advertising.
“Instead of urging caution, Forrester should be championing early adoption and encouraging businesses to nurture a technology that can make their dreams of proximity marketing come true,” Breshears said. “They [Forrester analysts] should be warning businesses not to remain on the sidelines, and advising them to take an active hand in the direction of this burgeoning market.”