The value of location in mobile advertising will become commoditized. To maintain location premiums companies need to begin adopting locationanalytics as soon as possible. This is where the value and differentiation can be maintained in location based advertising.
Initial trial results for location based advertising are proving incredibly successful. Companies like Telmap, Navteq, Placecast and Loc-aid are all reporting far better CTRs than standard mobile ads, with the added benefit of providing trackable and enviable CPAs. Everything is pointing towards a bright future, with advertisers happy to pay a premium for location based advertising with a measureable return on investment.
The current market is still exploring the myriad of ways to implement location; however, the focus is largely on targeting opt-in users through geofencing of local stores, etc. This will localize the advertising, which has a certain value, but there is a strong chance that it may not be personally relevant. Geofencing is a very powerful tool but it can also be extremely expensive to implement, without very clever algorithms and rules in place, which can greatly affect the RoI for advertisers.
The real power of location based advertising will come by building in a variety of other social, geographic, physical, social and emotional indicators to filter the advert being served to the specific user. The best way to easily combine these factors and target them to individuals in a non-intrusive, anonymous way is through location analytics.
Location analytics can take many shapes. PlaceIQ is building up an analytical model of individual places/blocks of cities, which can then be used to infer information on the type of person in that area at a particular time and day can give advertisers feedback. Companies like Sense Networks are taking a slightly different approach, building up anonymous profiles of individuals, which are then carefully grouped into useful advertising demographics. In both cases the level of detail that can be extracted is amazing. Skyhook wireless is using its huge source of over 500 million location requests each day, to identify social and commercial trends, which can then be used to support new applications and advertising.
Outside of the start-ups every major player in the industry is getting involved, including Google, Apple, microsoft, Facebook, Nokia, RiM andnetwork carriers.What is evident is that this will become an inherent part of targetted mobile advertising. In North America alone, ABI Research forecasts that locatio analytics will representalmost $3Billion in 2016, or 85% of total LBA revenue.