Properly monetizing mobile advertising is indeed the holy grail of the current shift to the consumption of content via smartphones and tablets. Whereas in the past (and even to this day), advertisers will localize content based on IP address, browser language settings and other readily available information; this information is but scratching the surface of the potential for mobile advertising.
Studies like those from BI Intelligence show that users are over 40% more likely to click through a mobile banner ad when they are 2 miles or less from the business that is being advertised. Early entrants into the Local/Mobile game were check-in services like FourSquare, along with Facebook, Yelp, Google and Groupon.
Location Based Advertising: The Chicken and the Egg
The fundamental problem with all of these platforms and services is simple -- they are all closed platforms with much of their local advertising leveraged only on the platform's official applications. A user is much more likely to allow their social media services or trusted applications like Yelp to leverage their location because they see true value like connecting with friends, earning badges and discounts and discovering businesses in new areas.
One of the great privacy features of modern mobile platforms is that a user must authorize individual websites and applications to obtain and leverage location data. This creates a problem for traditional advertisers who wish to break into location-based services.
Whereas one may be content to allow Facebook or Yelp to use their location, why would they willingly give “Banner Ad Provider Ltd” access to their location? What is the incentive? If the user refuses to give their location to the advertiser, then all of the benefits of location-based marketing are null and void.
This paradox is the classic “chicken and the egg” scenario. What we have in fact started to see is that advertisers will accept location data from the parent application/website as part of the parameters to generate a dynamic ad. This paradigm clearly appears to be the start, but what will continue to compel users to share their location data with different providers? If there are clear benefits such as discounts on goods or great recommendations on places to shop and eat, then users will continue to be more and more comfortable with sharing contextual information, especially location.
Where is the Incentive?
Another key factor to increased comfort with sharing context is age. A report issued by Pew Internet in May regarding teens and social media reports that 16% of teens 12-17 in the US share their location on Facebook posts. This is clearly showing us that the next generation of adults sees sharing information such as location. Sharing of cellphone numbers in social media profiles was also on the rise since Pew last did this study in 2006 to 20% of all those surveyed, up from 2006's two percent.
Things still tend to revolve back to the incentives and the closed platforms. Large players such as Amazon, Apple, Facebook, Google and Microsoft are already on the long road to success with location-based services as they tend to be the keepers of so much contextual user data already. Google has of course embraced location and its recent Maps upgrade as previously mentioned is clearly indicative of this path forward.
Without people to share their locations and other context, then advertisers will have no one to directly target with advertising. Without advertisers to buy in, then websites and application developers will have a bunch of generic ads instead of very targeted messaging.
Ideally at the end of the day, if I want to attract more business to my retail widget store, then I want users who search for widgets while they are located within two miles of my business to see my listing first and foremost. If the user is on an app that buyers of widgets tend to use, I want their app to provide a banner ad or notification that my widget store is nearby and they should stop in (along with a coupon or offer to incentivize).
The whole mobile advertising paradigm seems pretty straightforward, but as Facebook can tell you, it is very easy to discuss and map out, yet very difficult to properly execute as things stand now.
Title image courtesy of Risto Viita (Shutterstock)
Editor's Note: To read more of Dan's mobile ponderings, see his Mobile in 2015: Delivering Superior Experiences