Geo-targeted or location based mobile advertising has been touted for several years now. A number of companies are betting that this is the year that geo-targeted ads become a significant component of the digital advertising market. For some types of businesses, location based mobile ads makes good sense. What about yours?
Will 2010 be different and the beginning of real growth in mobile geo-targeting advertising? Market share numbers are on its side. Smartphone market share is growing very quickly according to Forrester Research, with a steady increase over the past three years - 
- 7% in 2007
- 11% in 2008
- 17% in 2009
According to comScore, the U.S. smartphone market stood at about 42.7 million people on average from November 2009 to January 2010, an 18-percent increase over the average from August to October 2009. Look for that trend to continue as more and more subscribers decide to use their mobile phones for more than just calls.
While we are used to receiving geo-targeted ads on our computers, mobile location-based advertising is different. Instead of metro targeting based on our IP address location, mobile geo-targeting is based on our current real time location that is determined by GPS or cell tower information. That means that the area targeted for this kind of advertising could be a mall, a city square block or several blocks that surround the business advertising in this way.
Mobile location based advertising is all part of the effort of advertising networks to make ads more relevant to the person viewing the ad. Current location becomes one more factor along with past user behaviors, demographics and user preferences to serve timely and relevant advertising to technology users. All of which raises privacy concerns to many consumers. You can view my post on privacy concerns and the regulations taking effect this year: Online Behavioral Tracking Regulations
Here’s one example of how such advertising could work: Based on your preferences, past surfing and buying history, demographics, etc., you could be targeted for a text message ad when you are in the neighborhood of a certain business. The ad would feature a promotion. The promotion would be for those receiving the mobile ad to attempt to generate more traffic and sales for the business. For example, if you are a known coffee drinker/Starbucks customer, you might be targeted for a promotional discount if you are within a certain number of blocks of a Starbucks using this medium.
Based on the regulations being implemented, third party networks will require the user to “opt-in” to receive mobile text advertising messages. User preferences will also be solicited as part of that “opt-in” process to receive geo-targeted ads.
While first party advertisers (who are exempt from the new regulations) could use the technology to reach their customers in the neighborhood with text advertising messages, I believe that they will be very cautious in doing so because text messaging could involve charges for the customers who don’t have an unlimited text messaging plan.
However, that doesn’t stop location-based ads from appearing on your phone when you are using a certain mobile app. Mobile app advertising can also be geo-targeted and it doesn’t have the same intrusion perception that a text-based ad would have to consumers receiving them.
The mobile advertising market is expected to grow dramatically in the coming years. Both Google and Apple have positioned themselves to take advantage of its growth. In fact, Google was recently issued a broad patent for “determining and/or using location information in an ad system” by the U.S. Patent Office.
It is another volley in the mobile advertising war now taking place between Google and Apple. You can find my two previous posts discussing the Apple versus Google mobile advertising saga here:
Whether 2010 is the year of geo-targeted mobile advertising or not, it is clear that the power of geo-ready mobile technology coupled with extremely relevant messages should prove to be a powerful marketing strategy. It is only a matter of time until it is a significant marketing medium. Just ask Google. They submitted their patent application way back in September 2003 for location-based mobile advertising!
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