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During the last couple of years mobile advertising has adopted a fundamental strategy that the real estate industry always went by:  Location, Location, Location! User location has become the Holy Grail for mobile advertisers – knowing the exact location of our target audience gives us the ability to perform more targeted and more personalized advertising. In the mobile marketing sphere we call this Location Based Advertising (LBA).

LBA is seen as the most personal and direct marketing channel allowing us to reach users based on their personality, age, location and interest.  Demand for LBA has jumped by 170% over the last couple of years. In 2010, location-based advertising spend was $588 million (18.5%) of all mobile advertising, but according to Pyramid Research, by 2015, location-based advertising spend will be $6.2 billion. Location Based Advertising is perceived to generate 60% of all location-based revenue in three years.

As consumers become more comfortable with sharing their current location via their mobile devices, they are also looking for location based services that can facilitate their hunt for value added services to claim on the spot. And that’s where we come in. LBA enables behavioral targeting, leading to ad customization and personalization that enhance the relevancy to the customer, thus increasing the chances of completing a sales transaction.

 

But how many Location Based Advertising methods currently exist? There are three (3) different types:

  1. Messaging
    One of the more common approaches and methods to reach and advertise to consumers on their mobile device is through SMS messaging. These promotional campaigns can be implemented through either geofences in pre-defined areas or through brand specific broadcasts.
  2. Display
    Display advertising on mobile is the most common advertising tactic to consumers as it places a banner ad on their phone applications or mobile web pages they visit. That includes standard banner advertisements or rich media ad units where the application reads the user’s location and provides specific ads to reflect that information.
  3. Search
    Search advertising enables advertisers to promote brands and products when users directly search for specific information and provide them with ads and promotions related to the search keyword as well as their current location.

 

So the question is where do we see applications that provide this service? What markets and industries benefit from LBA? Most, if not all, markets can benefit from these solutions, with the retail industry leading the pack. In the long run, retailers can benefit from the location based advertising trend, with the automotive industry coming in at a close second.

Other industries that can benefit from this trend are:

  • Travel & Tourism
  • Restaurant / Food & Beverage
  • CPG/FMCG

 

But with every solution and opportunity, LBA faces certain hurdles. Privacy is the number one concern that holds back older consumers from location sharing. Another limitation, and perhaps the most important one, is that marketers have yet to understand how to maximize ROI from the personalization opportunities that LBA services provide. When marketers find answers to these two key obstacles and how to overcome them, LBA will gain more momentum and grow.

 

 

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