U.S. Mobile Local Ad Revenue Will Reach $5.8 Billion by 2016

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Mobile local ad revenue in the U.S. will grow by 54 percent by 2016, according to a new study by local media advisor company BIA/Kelsey.

BIA/Kelsey projects that mobile will account for over three percent of local ad revenues by 2016. The mark would represent an increase from the 0.6 percent market share represented by mobile local ad revenue in 2011.

The company says that mobile local ad spending will outpace mobile national ad spending by 2016. BIA/Kelsey projects that local mobile ad spending will account for 58 percent of total ad spending in four years. The company expects mobile ad spending to reach $9.92 billion by 2016.

According to the company's figures, mobile ad spending was only at $2.7 billion for this year. In 2012, $1.2 billion was spent on mobile local ads and $1.5 billion was spent on national mobile ads.

Michael Boland, program director of mobile local media for BIA/Kelsey, says the growth of mobile local media has a lot to do with the penetration of smartphones in the U.S. marketplace. He also points to Facebook's recent mobile push as a possible growth motivator.

"Growth drivers include smartphone penetration, location data, ad targeting innovation and advertiser evolution to utilize these factors for higher-performing mobile local ad campaigns," said Boland.

"New mobile ad formats will also drive demand including Facebook's quickly evolving options like sponsored stories and app install ads. Currently accounting for 14 percent of Facebook's revenues and quickly growing."

Boland's theory is backed up by a recent YP study, which found that four out of 10 consumers use local search. According the study, a large group of users also use local search at least three times a week.

BIA/Kelsey says that mobile local ads offer marketers better relevance, immediacy, and consumer-buying intent. However, the company reports that mobile ad spending has seen slow adoption rates because of the steep mobile marketing learning curve. A major factor in the firm's projections is that marketers will master the learning curve and mobile marketing products will get easier to use over time.

To come up with its figures, BIA/Kelsey took interviews and reports from local ad firms like YP.com. The company than vetted its figures against the aggregate revenues of high earners in the mobile advertising market.