New Features and Phones Drive Local Mobile Ad Growth

Last week in Albuquerque, NM, the Pelorus Group, which provides market research focused on the telco space, held its first-ever conference on local mobile search. The event focused on ideas and technologies companies are developing to move this advertising channel forward.

For the most part, the conference featured ideas that are bringing local advertising to mobile devices following the industry’s explosive growth in the wired Internet. With advances in connectivity and the types of devices entering the market, many companies are betting they can cash in on this new and mostly wide-open market.

If you consider the statistics, this makes a lot of sense. Consumers spend about 75 percent of their money at businesses within their own communities. According to JupiterResearch, 38 percent of searches today are commercial, and 24 percent of searches are both local and commercial. When we look at current local marketplace dynamics, it’s hard to argue that local mobile lacks a huge upside.

Local Mobile Moving to Ad-Driven Model

The lion’s share of money generated by mobile search comes directly from consumers. For example, consumers who call directory assistance are charged as much as $1.75 per call. There are companies working to turn this into an ad-supported model. Signs suggest they will succeed.

The local mobile market is huge and largely untapped. Less than 1 million businesses participate in paid search today, leaving about 6 million (85 percent) of the potential local search advertising market largely untouched. That’s even truer in the case of mobile search.

Yes, the local mobile market is still somewhat limited by the relatively small screens on most existing devices. However, there are signs this is being addressed, which will greatly benefit local mobile search. As more mobile devices such as the iPhone hit the market, many of the pieces for the perfect local mobile advertising storm will fall into place.

Big Local Mobile Opportunities

The companies currently providing online advertising solutions are in the best position to monetize the mobile space, though they haven’t gotten there yet.

The search engines and Internet yellow page (IYP) players are well positioned for a variety of reasons. First, they have relationships with national and local businesses. Equally important, they have consumer traffic and the ability to push content to mobile devices. This leverages both business and consumer relationships and, of course, strong brands.

There’s also potential for online vertical sites, which are leading the way in local search adverting, to assume a leadership position in the local mobile space. Sites that focus on a single industry, such as restaurants or automotive, or that service professional businesses are already experimenting with forms of local mobile advertising.

One company bringing this model to the mobile space is CellWand. It’s currently focused on two verticals: taxis and pizzas. Consumers text a specific code, either “#TAXI” for a taxi or “#PIZZA” for a pizza. As with online local advertising, certain categories are particularly attractive. That will ring true for the mobile space as well. Are we going to see a mad rush of people buying SMS (define) codes, as we’ve seen for verticals and geo-domain dot-coms? It seems likely.

New Users and Features to Expand Local Mobile Industry

Where are the opportunities for new players to make an impact in a market where there will undoubtedly be big growth over the next few years? I think it will come from new users who take advantage of new features and products.

A feature presented at the conference that really looked like pie in the sky was a mobile pointing-based application. A consumer with the required application installed on a mobile device could point it at a business location. The application would return relevant location-based content to the device.

I was more intrigued by the potential to point at a building and get information on my phone. This approach could be helpful in monetizing mobile search. A piece of the relevant content could be an ad or coupon for the local business at which you just pointed.

With only $32 million dollars currently spent annually on mobile search, there’s nowhere to go but up. Few industries are better poised for success or have so many ways to succeed. It’s just a matter of time before local mobile advertising takes its place as a standard element of interactive marketing strategy.

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