I keep reading very aggressive projections about local-mobile advertising from BIA and others. Rather than grounded in reality today, these forecasts are built on a set of “optimistic” but simple assumptions about how the market will inevitably develop.
For example, the assumption is that national ad dollars from brands and retailers that sell locally will pour into mobile and that their mobile ads will necessarily be geotargeted or localized. And while all forecasts must make assumptions about the future, my belief is that many of the assumptions being made about mobile are crude at best or simply incorrect.
I’m a big proponent of location-based marketing and have written extensively about how geotargeted ads and ads with localized creative outperform conventional or “generic” national advertising. There’s no question about consumer demand for local information. The question is whether and how advertisers can match or exploit that demand.
Local Mobile Display in It Infancy
There remains a great deal of friction and many challenges to overcome before these big local-mobile forecasts can come true. There are also several “unexpected” things that may change the direction of the marketplace. I go into a few of those things below.
In truth the majority of the localized mobile advertising today is happening in search. The platform is mature, the demand and the tools are there. The value is obvious to all involved. That’s why Google is making the most money in mobile advertising today. (Facebook is also going to make a lot of money in mobile, some of which will be localized.) By contrast, local-mobile display is in its infancy.
There are two mobile ad networks generating and syndicating a large percentage of the local display inventory that you’re likely to encounter: xAd and YP. CityGrid is out there and so are Verve, LSN, Telenav/ThinkNear and a couple of others. Marchex is there too with pay-per-call; however much of that is driving mobile callers to national call centers.
Among the major ad networks Millennial, JumpTap and AdMob (Google) all offer local targeting. Often that targeting doesn’t extend beyond state or DMA-level precision. The emerging exchanges and RTB platforms all offer location as part of a laundry list of targeting capabilities. Indeed, location is likely to simply become one of many targeting variables on most networks and exchanges.
There really isn’t all that much happening on the local display side that qualifies as more than experimentation outside of YP and xAd. YP (and CityGrid) mostly take SMB listings and convert them into template-based display ads, often without the active participation of the local business owner. By contrast, xAd is working with national marketers that sell locally.
Scale and Location, Location As Audience
One major problem with mobile display in general, which extends to local-mobile display, is that the quality of the ad creative is dismal. Another problem on the SMB end is that local business owners have almost no capacity to think about local-mobile marketing beyond having a mobile website or app. That’s why the YP model will prevail for a long time to come: mobile simply becomes one more point of distribution and source of leads, clicks or calls.
Google AdWords Express similarly distributes ads across PC and mobile without differentiating. That can work but it can also waste clicks and budgets — especially if the copy isn’t right.
Most national businesses are interested in scale and audiences, not lat-long. In fact, most national marketers don’t really know what to do with location, especially lat-long. That’s almost useless to them because it seems the opposite of scale. In fact, the industry would do well to now banish the term “hyper local mobile marketing.” It’s not meaningful to SMBs and it won’t unlock major ad dollars from nationals.
One of the developments that’s likely to upend the simple assumptions driving the many forecasts is the effort to translate location into audience. Location has to be sold to brands and nationals as audience. Companies such as xAd, JiWire, Skyhook Wireless, Placed, Factual, Sense Networks and PlaceIQ all to varying degrees are using location as a proxy for demographics or audiences.
Location becomes the methodology to identify and target audiences. Location is not an end in itself but a means to an end. This is the language that brands understand. This is also a way to “reconcile” local targeting with national scale. But then do national ads that use location profiles and technology to find “soccer moms” count as “local ads”? From a marketing and efficacy standpoint it doesn’t matter; from a forecasting and “accounting” standpoint it does.
It may turn out that this “location as audience” (LAA) approach dominantes the way that nationals interact with localized ad targeting and the way the networks sell location to brands and nationals.
Marketing but Not Advertising
In contrast to much of what I said about brands/nationals not understanding location, many do “get” geofencing around stores as a way to reach potential customers. Placecast has had success with this. Urban Airship is also doing lots of interesting things around location-based in-app notifications. This may be one of the major ways location is explicitly used by brands/nationals and thought about in reaching local customers and prospects.
One of the points to make about these sorts of geofencing programs, however, is that they typically don’t qualify as “advertising.” Very often the notification or geofenced alert goes out as an SMS or an in-app notification (REI or Macy’s tells me there’s a sale at my local store). There’s no media buy in most of these cases. Call it “marketing,” but don’t call it “advertising.” That has obvious forecasting ramifications as well.
My belief is that a meaningful chunk of the localized marketing by retailers and others will happen in the form of alerts or notifications. And this will operate largely outside of the the realm of “advertising.”
Location on the Landing Page
Another point that I’ve already made several times here and on Internet2go is that the way location may be utilized by national marketers is in the form of store or dealer locators on landing pages. Here’s a practical case-in-point: car company introduces a new model; the ad creative and copy are national (e.g., see the new Toyota Avalon); one or two clicks down is a dealer locator asking the user to input a location or find “current location.” The treatment of location in this case is almost perfunctory, and certainly an afterthought.
This will be the form of “location targeting” that lots of national mobile display advertising use in the immediate and perhaps medium-term future. I call this “lazy location.”
It’s simple for the agency and the marketer and they get some version of location without the challenges of local customization. There’s also an arguable benefit to being lazy in this case: even though they lose potential leads, making users work to find locations ensures that calls and clicks are more qualified.
But is a national car ad with “find a dealer” link two clicks down a “local” ad? Again, it doesn’t matter from a real-world point of view. The question for the agency and advertiser is whether the ad works (which raises other questions). But again it does matter from a forecasting perspective.
And in the End . . .
This has been a long and rambling post so I’ll make the points above again more succinctly:
- Aided by a range of mature tools, paid-search will be the channel where local-mobile ad targeting plays out most directly in the immediate term. This is where the revenues are now concentrated and will be for the near future
- SMB advertisers will not be buying mobile ads (in any volume); mobile will simply be another point of distribution by sales channels catering to the SMB market, largely using automation
- National advertisers will by audiences (LAA), use geofenced notifications or alerts and employ dealer/store finders on the mobile landing pages of national campaigns. These approaches to location are either simply unanticipated or not accounted for in most current forecasts
All of this also begs the question: how do we define a local ad? Does the ad simply need to be geotargeted in some way regardless of the copy? Does the ad need to explicitly recognize location in the copy. Does the requirement or likelihood of offline fulfillment make the ad local regardless of targeting and ad copy?
Consumers care about local information and see localized ads as more relevant. Marketers however are struggling to reach these consumers with the right messages at scale. But the idea that mobile advertising will simply resemble the desktop is wrong. There’s a lot more friction, complexity and nuance to the local-mobile discussion than is recognized by the forecasts that I’ve seen.
I didn’t even get into the impact of tablets, location privacy issues, on-site mobile marketing (e.g., QR codes) and different business models (CPC vs. CPA) on any of this either. These are other wrinkles worthy of further discussion.
OK, how much of what I’ve said do you agree with or disagree with?