Commentary

Mobile Ad Spend Is Going Local

The 76% growth in mobile ad spend ($12.5 billion) last year is not only piling high but also spreading deep and wide. According to BIA/Kelsey, the local mobile ad spend is set to accelerate quickly, with location-based ads just on smartphones attracting $6.7 billion this year, up from $4.3 billion last year.

This category will ramp up to hit $18.2 billion in 2019, representing a 28.9% compound annual growth rate (CAGR).

The share of local ad budgets going to mobile is still small, at 4.8%, but it will get a senior place at the table by 2019, grabbing an 11.5% share, BIA/Kelsey argues. This is significant, because it would make mobile local advertising the fourth-largest platform for all local media spend, right behind pure-play online (12.9%), TV (13.7%) and direct mail (23.6%).

BIA/Kelsey defines location-based mobile ads as units that carry location-specific copy or calls to action. It includes both national advertisers appealing to local markets and SMBs in the regions.

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No doubt a great deal of that local mobile spend will be coursing through programmatic platforms that will make it easier for local businesses and SMBs to access mobile platforms. Borrell released its prediction this week that 10% of programmatic ad spending will be for local display.

The company says it expects programmatic to account for 85% of banner advertising by 2020. It sees 48.1% of overall programmatic spending already going to local advertising this year, but the local share is expected  to reach 63.1% by 2020.

What will drive this movement of programmatic revenue into local markets? Foremost, the technology is becoming much more accessible, so that local retailers will be able to use it. Moreover, Borrell expects that programmatic deals will be attached to cross-media campaigns.

Most of all, the revenue swill rise because local targeting will be priced higher. As location becomes a a key targeting tactic, Borrell argues national (i.e. less targeted) display advertising will see CPM declines, while local rates will rise.   

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