• by Gavin O'Malley  @mp_gavin, May 20, 2012

With broad implication for publishers and advertising pushing into the mobile space, new research suggests that “local mobile advertising” remains a highly relative term.

Indeed, while localization is the most popular of the targeting options offered by mobile ad networks, the “dirty secret” is that most can’t deliver local impressions more focused than the Designated Market Area (DMA) or city level.

That’s according to a new report from Opus Research advisory service Internet2Go.

“Even when they say they can target ZIP codes or claim to offer [latitudinal-longitudinal] targeting, they generally cannot fulfill,” according to Greg Sterling, senior analyst at Internet2Go.

Publishers and networks often use a city “centroid” and call that “lat-long” targeting, yet only about 5% to 10% of mobile display impressions carry a lat-long today, according to xAd and ThinkNear. The assumption by many, however, is that all mobile networks can equally geotarget and give marketers the kind of local precision that matches the phone’s GPS capabilities, according to Sterling.

“In other words, because the phone can tell what’s nearby and pinpoint user location, marketers assume they can equally access that level of geographic precision for their mobile ad campaigns,” he explains. Yet most of what mobile marketers actually get is no better than the mobile equivalent of desktop IP targeting, which can be very imprecise.

City or metro-level targeting may be perfectly fine for many campaigns, yet more locally specific targeting -- and the higher response rates it brings -- is generally only available through ad networks that specialize in local advertising.

The inability to target in ways that mirror the phone’s “hyper-local” capabilities is a function of several variables and “plumbing issues.” These include uncertainty about how to best address consumer privacy and the challenges of passing location between entities in the mobile “value chain” -- something that is quickly evolving, but is far from fully developed.

As the data from various sources indicate, a high proportion of smartphone-influenced activity and buying behavior is offline. “It thus makes sense that users respond better to localized ads; they are seen as more ‘relevant,’” added Sterling. “Yet most marketers are not fully recognizing this or rising to the opportunity.”

While the overall traffic coming from mobile devices is still modest -- roughly 12% to 15% of total traffic -- there are numerous indications that people are more engaged with mobile than other media.

Indeed, U.S. adults spend more time with their mobile phones than with print magazines and newspapers combined, according to recent eMarketer findings.

In addition, Flurry Analytics showed earlier this year that people are now spending more time in mobile apps than on the traditional PC Internet.