An observation from Berg Insight Analyst Rickard Andersson.
The 2011 Mobile World Congress (MWC) in Barcelona featured more than 1,400 exhibitors and the number of visitors exceeded 60,000. The amount of participating actors engaged in mobile advertising was naturally substantial, given the increase in use of this channel for marketing brands in recent times. Among the many types of mobile advertising channels and formats available, variants incorporating location-sensitivity were especially prominent, indicating that this may be bound to become the next big thing within mobile ads.
LBA has a natural place in today’s mobile ecosystem
Location-based advertising (LBA) is still in its infancy, though gaining traction across markets at an impressive pace. The amount of location-based services is increasing rapidly, and given the decisions of major actors including Nokia and Google to offer such services for free, there is an apparent need for revenue streams aside from traditional subscription-based arrangements. LBA is a natural extension of these services, enabling users to receive offers which are truly relevant given their current position. Companies active in this field of business include players of various sizes from several parts of the value chain, for example Telmap, Navteq, CloudMade, Telenav and TCS, as well as TomTom, Garmin and German start-up Madvertise, claiming during the congress to serve 140 million hyper local ads per month. One trend for the future seems to be increased focus on solutions for pedestrians – moving on foot as opposed to by car presents possibilities for higher levels of interaction with mobile devices.
Certain issues can prove troublesome and need high-level attention
Though LBA has a promising future, the concept comes with its own set of challenges. The MWC featured a presentation and panel discussion on the topic of privacy in relation to delivering personalised advertising, with panellists from Google, Groupon, the American Association of Advertising Agencies (4As), Telefónica and Alcatel-Lucent. Location-sensitivity was pinpointed as the main differentiator between online and mobile, and while this characteristic brings exciting possibilities, the privacy concerns are apparent. A development towards “Do-Not-Track” laws risks impeding the ecosystem for mobile advertising, though sound opt-in procedures can be a self-regulating alternative. Roaming charges is a further concern, since location-based services can be especially useful when visiting foreign countries. The importance of location in relation to advertising was however underlined, not the least by the claim that 30 percent of all Google searches include a local element.