Businesses set to spend £1.17 billion on location based ads by 2015

Location-based advertising is still in its infancy, but according to a new study from ABI Research, businesses are primed to spend $1.8 billion (£1.17 billion) on it in 2015 as part of their overall mobile marketing budgets.

“It’s still early days and there’s no single ‘right’ approach to location-based advertising,” says practice director Neil Strother. “This remains a very fragmented market that is full of experimentation.”

Nonetheless, the options are becoming more clearly defined. Location-based ads are enabled by three sets of technologies: GPS, Wifi, and Cell-ID (location determined relative to mobile phone transmitters.) The most successful campaigns use a mix of some or all of these, depending on the product or service, the region, the consumers, and the location accuracy required.

New location-based services are springing up, catering to mobile shoppers. Some are “check-in” services such as Loopt, Gowalla, Foursquare, and Facebook with its Places, for consumers who are willing to “self-identify.” Others, such as Shopkick, use an iPhone app to reward shoppers just for visiting certain stores.

But do people really want to be tracked? “Some might be put off by the ‘Big Brother’ aspects of this,” says Strother, “but it’s really about the value-exchange: if you care about getting discounts or being rewarded for shopping, is the value-exchange high enough so that you’ll accept having your whereabouts known to these companies in return for the benefits?”

How should a retailer begin? Strother lays out a step-by-step guide for the would-be location-based advertiser in the report. The main points:

  • Establish your marketing goals, as with any other marketing campaign
  • Analyze your customers’ mobile and location habits and develop your location approach
  • Choose location partner(s) and determine the best technologies for your brand
  • Execute your geo-targeted campaign, measure the results, and refine

For more on the location based search report see ABI Research’s “Location-Based Marketing” report which examines the current dynamics of the mobile location-based advertising market: drivers, inhibitors, key players and forecasts.