While it may seem that serious spending on mobile advertising is always a year away, the dollars should finally start flowing in 2012. What’s different about 2012? Well, besides the fact that the U.S. has reached the crossover point in smartphone adoption, the buzz phrase that will drive mobile ad spending is “hyperlocal mobile,” or ads targeted to individuals in specific, relatively homogeneous locations.
But it’s more than a phrase: Aiming mobile ads at individuals targeted by hyperlocal info like zip codes, neighborhoods and GPS data, on a scale that’s useful for both local merchants and national advertisers that target locally, is finally viable. Couple that with the explosion of flash sales and daily deals and the rise of local mobile ad networks and exchanges like AT&T Interactive(s t), CityGrid, xAd and Nexage and it’s clear that we have reached the era of hyper local mobile. Which means publishers and developers can finally hit desired fill rates and eCPMs.
The chart below describes the hyperlocal mobile ecosystem. Consumers are embracing mobile and local, while local mobile ad networks and others in the ecosystem are enabling advertisers, both local and national. Finally, as audiences and capabilities grow, advertisers are stepping in to capitalize on the opportunity. That combination of forces will drive mobile ad spending.
That’s good news for publishers and mobile apps. HyLoMo implementation allows publishers to sell more mobile ads and at better rates. Marketers don’t mind, because their ads are more effective. After implementing in-app local ads, for example, Skout, a leading mobile social network for meeting new people, increased average eCPMs by 44 percent and fill rates by 37 percent, doubling ad revenue in three months. Topix, another AT&T Interactive customer, which is ranked among the top 10 online newspaper destinations by comScore, saw a 50 percent increase in eCPMs in its in-app ads.
Dealing with local advertisers
Consumers are increasingly using smartphones and mobile apps to decide what to do, where to dine, which stores to visit, and even where to meet up with friends. As a practical matter, they are more likely to consider businesses that are “nearby.” In most cases, a business’s trading area (a geographic area from which a business draws most of its customers) is described by the 80-20 rule, wherein 80 percent of business comes from the nearest 20 percent of individuals within a relatively short walking or driving distance. For mobile users especially, proximity matters.
Since smartphones are used when consumers are out making plans, deciding what to do and where to go next, individuals are more apt to notice and respond to ads from local merchants and service providers vs. national advertisers. While HyLoMo improves ad targeting for both national and local advertisers, proximity and immediacy translate into even greater advantages for local businesses.
Local businesses, of course, have limited expertise and even less experience with mobile advertising. Most need advice and assistance to devise campaigns — e.g., when and where to advertise, how to craft effective ads, etc. Recognizing this need, some local mobile ad networks employ sales consultants who work directly with local merchants and businesses, providing advice and assistance. These consultants play an important role and take much of the guesswork and effort out of the process, which is a critical requirement for small businesses. Solutions from companies such as PaperG also make the process of creating mock-ups of ads for a business much easier.
With the growing importance of local mobile ad networks, including YPSM Local Ad Network, xAd, JiWire and Verve, publishers and developers will need to evaluate and choose the partners that can best help them confirm the value, deploy solutions and integrate HyLoMo advertising into their strategies. Some of the criteria useful in evaluating and selecting local network partners are common to general mobile ad networks as well as local mobile ad networks. Common criteria include latency, ease of doing business, speed of payment and so on. For more insights on how to evaluate local mobile ad networks, as well as further case studies and forecasts, be sure to visit GigaOM Pro for our analysis in “The promise of hyperlocal: opportunities for publishers and developers” (subscription required).
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