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Location-Based Advertising and Marketing - 3rd Edition

  • April 2014
  • -
  • Berg Insight AB
  • -
  • 190 pages

Executive summary

The mobile channel is gradually strengthening its position in the marketing media mix as smartphones are becoming ubiquitous and drive mobile media usage. One of the key developments in mobile advertising is the increasing integration of location-sensitivity, which releases the full potential of the mobile channel. A notable divide can be made between static and real-time location-based advertising (LBA). Targeting by static variables involves using information which is part of user profiles such as place of residence and work. Real-time location targeting instead uses location information which is gathered when an ad is delivered to a mobile user. Such LBA campaigns leverage the same type of technologies to determine user location as other location-based services (LBS).

Common methods include GPS, Cell-ID and Wi-Fi positioning which are all based on real-time information. Targeting by location in combination with other contextual and behavioural segmentation greatly enhances the relevance of mobile advertising. It has been demonstrated that locationtargeted ads generate considerably higher returns than conventional mobile advertising. The associated eCPM and CTR levels are several times higher. Berg Insight estimates that the total value of the real-time mobile LBA market worldwide was € 1.2 billion in 2013, representing 14.5 percent of the total mobile ad spend. Growing at a compound annual growth rate of 54.0 percent, the real-time LBA market is forecasted to be worth € 10.7 billion in 2018, corresponding to 38.6 percent of all mobile advertising and marketing. This means that location-based advertising and marketing will represent around 7 percent of digital advertising, or 2 percent of the total global ad spend for all media. Asia-Pacific is estimated to be the largest LBA market in 2018, followed by North America and Europe.

Key drivers for LBA include the growing adoption of both outdoor and indoor location technologies, as well as the increasing consumer acceptance of LBS in general. The market is favoured by the recent entry of a number of major enterprise players. Big-box retailers can leverage LBA to combat both online and physical competitors. LBA further opens up the mobile channel for new advertisers such as local merchants. The fact that LBA has higher performance has moreover translated into premium rates. The main barriers to adoption are related to the inherently limited reach of LBA which acts as a mental hurdle for advertisers. Education of advertisers and new methods for campaign performance evaluation are thus called for. Privacy issues can further not be ignored, but can be beneficially handled by privacy control options beyond simple opt-in mechanisms. The demand for geo-targeting remains comparably limited, but is bound to increase given the proven results such campaigns generate. The quality of location data is moreover expected to gradually improve.

The LBA value chain is still forming and there are a large number of players involved in the ecosystem. The industry remains fragmented and far from mature. Many different companies are involved, ranging from LBA specialists such as Verve, Placecast and xAd, to LBS players including Intersec, Telenav and Waze, and operators such as AT&T, SFR and the UK joint venture Weve. There is furthermore an abundance of location-aware applications and media which serve geo-targeted ads, with examples such as Foursquare and Shopkick. Other stakeholders include coupons and deals providers including Yowza!! and COUPIES, search solutions such as YP, Hibu and Yelp, and proximity marketing providers like Proxama, NeoMedia and Scanbuy. A number of traditional mobile advertising players are also active in the LBA space, for example Millennial Media, Madvertise and Smaato, as well as major digital and telecom players such as Google, Facebook and Apple. The latter is together with a range of other players pushing for BLE beacon adoption which is expected to take off this year.

There are a number of key takeaways from the current trends in LBA. Geo-targeting improves the performance of mobile marketing and greater shares of ad budgets are devoted to LBA. High-precision real-time geo-targeting is still sparsely used but is expected to get a boost in the near term. Best practices for LBA furthermore include the use of sound opt-in procedures and individual privacy measures, as well as ensuring that location data is combined with additional contextual and behavioural data to increase relevance. Current important highvolume LBA formats include mobile search and SMS campaigns. New developments moreover include real-world retargeting and mobile attribution solutions. The latter can prove the effectiveness of LBA by quantifying the impact on in-store visits and purchases. Berg Insight anticipates that geo-targeting gradually will become ubiquitous and available across the entire mobile channel.

Table Of Contents

Location-Based Advertising and Marketing - 3rd Edition
Table of Contents  
List of Figures vii 
Executive summary 1 
1  Advertising and the mobile channel 3 
1.1  Advertising and digital media 3 
1.1.1  The marketing and advertising industry 3 
1.1.2  The Internet media channel 6 
1.1.3  The mobile media channel 7 
1.2  Mobile advertising and marketing 11 
1.2.1  The mobile handset as an advertising platform 11 
1.2.2  Advertising on the mobile handset 13 
1.2.3  The mobile advertising ecosystem 16 
1.3  Mobile media channels and formats 16 
1.3.1  Messaging 16 
1.3.2  Mobile web 21 
1.3.3  Mobile applications 26 
1.4  Mobile marketing industry overview 31 
1.4.1  Factors influencing the potential market value of mobile advertising . 32 
1.4.2  Current state and future trends 32 
2  Mobile location technologies and services 33 
2.1  Mobile network location architectures and platforms 33 
2.1.1  Location architecture for GSM/UMTS networks 34 
2.1.2  Location architecture for LTE networks 35 
2.1.3  Control Plane and User Plane location platforms 36 
2.1.4  Probe-based and handset client-based location platforms 37 
2.2  Mobile location technologies and methods 38 
2.2.1  Cell-ID 38 
2.2.2  Enhanced Cell-ID 40 
2.2.3  RF Pattern Matching 40 
2.2.4  OTDOA and U-TDOA 40 
2.2.5  GNSS: GPS, GLONASS, Galileo and Compass/BeiDou 2 41 
2.2.6  Bluetooth and Wi-Fi positioning 43 
2.2.7  Hybrid and mixed mode location technologies 44 
2.2.8  Comparison of location technologies 45 
2.3  Overview of mobile location-based services 48 
2.3.1  Mapping and navigation 49 
2.3.2  Local search and information 50 
2.3.3  Social networking and entertainment 51 
2.3.4  Recreation and fitness 52 
2.3.5  People locator services 53 
3  Mobile location-based advertising and marketing 55 
3.1  Definitions and variants of LBA 55 
3.1.1  Static versus real-time location targeting 55 
3.1.2  Push and pull LBA 58 
3.1.3  LBA formats 59 
3.2  Market receptiveness 63 
3.2.1  Adoption patterns among brands and merchants 64 
3.2.2  Outcomes of different LBA strategies 65 
3.2.3  Consumer attitudes 68 
3.2.4  Privacy concerns 70 
3.3  Case studies 71 
3.3.1  Philips introduces retail marketing solution using light-based communication . 72 
3.3.2  Proxama's NFC technology is used to market Guinness stout 72 
3.3.3  iBeacons leveraged by publisher to grant magazine access at select locations73 
3.3.4  Tesco markets FIFA 13 game with innovative LBA campaign . 73 
3.3.5  Thinknear helps Benadryl to target allergy sufferers through 73 
3.3.6  Disney markets video game platform via NFC-enabled OOH posters .. 74 
3.3.7  Plot Projects enables location-based notifications for apps 74 
3.3.8  Placecast teams with HARMAN to enable in-car LBA 75 
3.3.9  Meat Pack launches HiJack campaign to attract customers from competitors . 75 
3.3.10  xAd's LBA technology used by Calvin Klein to drive awareness and traffic 76 
3.3.11  TAPTAP introduces a location-based mobile ad platform for retail clients 76 
3.3.12  McDonald's drives sales with LBA campaign powered by Todacell 77 
3.3.13  Heinz uses QR codes to create engagement and support causes 77 
4  Market forecasts and trends 79 
4.1  LBA industry analysis 79 
4.1.1  Classification of LBA offerings 79 
4.1.2  LBA specialists 80 
4.1.3  Mobile operators 81 
4.1.4  LBS and navigation providers 82 
4.1.5  Location-aware applications and media 83 
4.1.6  Mobile coupons and deals providers 84 
4.1.7  Mobile search providers 84 
4.1.8  Proximity marketing providers 85 
4.1.9  Traditional mobile advertising players 86 
4.1.10  Major digital and telecom players 87 
4.1.11  Industry associations 87 
4.1.12  Mergers and acquisitions 89 
4.2  LBA landscape trends 91 
4.2.1  Drivers for success 91 
4.2.2  Barriers to adoption 94 
4.2.3  Overcoming the barriers 96 
4.3  Market forecasts 98 
4.3.1  Total, digital and mobile advertising market value forecasts 98 
4.3.2  LBA market value forecast 101 
4.4  Final conclusions 103 
4.4.1  Location filtering improves the effectiveness of mobile marketing campaigns 103 
4.4.2  Steadily increasing shares of ad budgets devoted to LBA 104 
4.4.3  LBA offers new possibilities for all categories of advertisers 104 
4.4.4  Real-time hyper-local targeting is expected to get a boost in the near term 104 
4.4.5  Best practices include sound opt-ins and combining location with other data 105 
4.4.6  Mobile search and SMS campaigns are important high-volume LBA formats . 105 
4.4.7  Real-world retargeting and other innovations push the boundaries of LBA ..... 106 
4.4.8  Mobile attribution promises to quantify the impact of LBA 106 
4.4.9  Location targeting will eventually become ubiquitous 107 
5  Company profiles and strategies 109 
5.1  LBA specialists 110 
5.1.1  AdMoove 110 
5.1.2  CityGrid Media 111 
5.1.3  JiWire 113 
5.1.4  LEMON Mobile 113 
5.1.5  PayPal Media Network 115 
5.1.6  Placecast 116 
5.1.7  PlaceIQ 118 
5.1.8  Verve Mobile 119 
5.1.9  xAd 121 
5.1.10  Xtify (IBM) 122 
5.1.11  YOOSE 124 
5.2  Mobile operators 125 
5.2.1  ATandT Mobility 126 
5.2.2  Orange Group 128 
5.2.3  SFR 129 
5.2.4  Verizon Wireless 130 
5.2.5  Weve 132 
5.3  LBS and navigation providers 133 
5.3.1  Intersec 133 
5.3.2  mxData 135 
5.3.3  Sensewhere 136 
5.3.4  Telenav 137 
5.3.5  Telenity 139 
5.3.6  TomTom 141 
5.3.7  Waze 142 
5.4  Location-aware applications and media 144 
5.4.1  Foursquare 144
5.4.2  Gbanga 146 
5.4.3  SCVNGR/LevelUp 147 
5.4.4  Shopkick 149 
5.5  Mobile coupons and deals providers 151 
5.5.1  COUPIES 151 
5.5.2  Groupon 152 
5.5.3  Vouchercloud 153 
5.5.4  Yowza!! (Spindle) 154 
5.6  Mobile search providers 155 
5.6.1  Hibu 156 
5.6.2  Mobile Commerce 157 
5.6.3  Poynt (Sprylogics) 158 
5.6.4  Yelp 159 
5.6.5  YP 160 
5.7  Proximity marketing providers 161 
5.7.1  NeoMedia 162 
5.7.2  Proxama 162 
5.7.3  Proximus Mobility (MobileBits) 164 
5.7.4  Scanbuy 166 
5.8  Traditional mobile advertising players 167 
5.8.1  InMobi 167 
5.8.2  Madvertise 169 
5.8.3  Millennial Media 169 
5.8.4  Nexage 171 
5.8.5  Smaato 173 
5.8.6  Sofialys 174 
5.9  Major digital and telecom players 175 
5.9.1  Apple 175 
5.9.2  Facebook 177 
5.9.3  Google 179 
5.9.4  Microsoft 181 
5.9.5  Yahoo! 182 
Glossary 185 

List of Figures
Figure 1.1: Global advertising expenditure by media (Worldwide 2012) 4 
Figure 1.2: Top 20 advertisers (Worldwide 2010) 5 
Figure 1.3: Online advertising expenditure by region (Worldwide 2012) 7 
Figure 1.4: Mobile subscriptions and handset sales by region (Worldwide Q2-2013) . 8 
Figure 1.5: Stakeholders in the mobile marketing value chain 15 
Figure 2.1: Location architecture overview 34 

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