• by Mark Walsh  @markfwal, February 6, 2013

Targeting ads by location has proven a strong selling point for mobile advertising. Mobile ad exchange Nexage last month reported targeted impressions more than doubled in 2012, driven in part by 30% per month growth in location-powered impressions.
 
As a firm that specializes in location-based advertising networks, Verve Mobile is also benefiting from interest in the category. Verve provides mobile ad management and publishing tools for over 3,500 local publishers, NBC-owned TV stations, Hearst Newspapers and the Associated Press. It serves more than 6 billion impressions and reaches 108 million uniques a month.

In an analysis of more than 2,500 mostly location-based campaigns it ran last year, Verve highlighted some of the key trends and metrics that emerged: Geo-aware ads use real-time location to deliver specific messages based on a user’s proximity to a store or other site.

Other ads are triggered by geo-fencing around a retail location. Marketers use ads leveraging location data coupled with third-party demographic or transactional data to determine audience “clusters” by geographic area.
 
Targeting by designated marketing areas (DMAs) is still the most common form of location-based advertising in mobile, with 30% of Verve campaigns using this method. Geo-fencing was a close second, with 27% of campaigns adopting this strategy, followed by audience-data targeting, 24%, and geo-aware ads, 14%. Ads delivered by city or zip accounted for the rest.
 
Overall, Verve says location-based ads had twice the engagement rate of other types of ads.
 
Restaurants and retailers led the way in geo-aware and geo-fenced advertising, seeking to drive consumers to specific nearby locations. Given that 2012 was an election year, political advertisers ran the highest proportion of campaigns that combined location with other audience data, at 29%.
 
In terms of performance, geo-aware ads rated highest -- with a 1% click-through rate -- with geo-fenced ads, nearly at 1%, and ads targeted by city, at about 0.9%. Ads using third-party data were found to be the least effective, with click rates of about 0.5%. That’s still well above rates for traditional online banners, but considering that ads with higher levels of data targeting are usually more costly, the results are not impressive.

Premium local inventory drove the highest click-through rates at 1.2%, compared to 0.8% for premium national inventory, and about 0.2% for exchange-based inventory.