Commentary

Companies Try To Capitalize On Mobile-Local Connection

Main-Street-Salinas

Few would debate the natural link between mobile technology and local information as people use their devices to learn more about nearby businesses or connect with other people on the go. So it's hardly surprising a trove of companies -- from Foursquare to WhitePages.com to AT&T -- are trying to capitalize on that connection with mobile efforts catering to consumers and small businesses alike.

In a keynote address at the IAB's "Mobile Marketplace" conference Monday, Heather Hopkins Freeland, CMO of Gilt City, the daily deals offshoot of Gilt Groupe, cited local as one of the four key elements of a mobile marketing operation, along with social, payments and m-commerce. "If you have customers, you're local," she explained.

A study last month by BIA/Kelsey forecast U.S. local mobile advertising will grow from $404 million in 2010 to $2.8 billion in 2015, fueled in part by growing access to self-serve tools for mobile advertising. The research firm also predicts locally targeted mobile ads will make up 70% of the projected $4 billion in mobile ad spending by 2015. That total includes local spending by national brands.

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But the high expectations for local mobile advertising should be considered in light of findings in the IAB study released yesterday on marketers' perceptions of mobile advertising. Specifically, it found locally focused companies are more cautious when it comes to adding mobile to the marketing mix than their national counterparts. Only 17% of local businesses, for instance, said mobile was a part of their ad strategy and integrated into broader media campaigns, compared to 63% of national brands.

"This could be because locally focused companies are more likely to be smaller in terms of revenues and resources and we know that companies in this category [can] be cautious with many still at the experimental phase," noted the report. They're also more likely to be wary of spending in an unproven medium, given current economic conditions and expected slowing of growth in the second half of 2011.

At the same time, smaller companies (those with less than $100 million in annual revenue) in the survey were as likely to be experimenting in mobile as to have a more advanced strategy. "It could be that small companies in this category have such high confidence in mobile that they have prioritized it and are seeking to gain a leading edge in mobile advertising before rivals move in," speculated the IAB study.

Still, many locally focused businesses have well under $100 million in revenue, and are likely to be slower to start spending on mobile advertising, especially when they can turn to free tools like Google Places or Yelp for basic online and mobile listings. For now at least, national brands may lead the way in "local" ad spending.

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