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Location-Based Advertising and Marketing - 2nd Edition

‘Location-Based Advertising and Marketing’ is the second consecutive report from Berg Insight analysing the latest developments on the locationtargeted advertising market worldwide.

This strategic research report from Berg Insight provides you with 200 pages of unique business intelligence including 5-year industry forecasts and expert commentary on which to base your business decisions.

This report will allow you to:

  • Identify tomorrow's most profitable LBA opportunities in the mobile space.
  • Understand the fundamentals of the ad-based mobile media revenue models.
  • Recognise the key enablers of growth in the LBAmarket.
  • Comprehend the relative importance of digital channels compared to other advertising media.
  • Learn about the experiences of LBA campaigns by top global brands.
  • Profit from valuable insights about LBA business models.

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 global value of the real-time mobile LBA market was € 526 million in 2012, representing 9.1 percent of the total mobile ad spend. Growing at a compound annual growth rate of 65.2 percent, the real-time LBA market is forecasted to be worth € 6.5 billion in 2017, corresponding to 32.8 percent of all mobile advertising and marketing. This means that location-based advertising and marketing will represent around 5 percent of digital advertising, or more than 1 percent of the total global ad spend for all media. Asia-Pacific is estimated to be the largest LBA market in 2017, 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. Local advertising is further a major market and LBA opens up the mobile channel for new advertisers such as local merchants. Big-box retailers can leverage LBA to combat both online and physical competitors. 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.

LBA revenue forecast, € million (Worldwide 2011-2017)

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 Telmap, Telenav and Waze, and operators such as AT&T, SFR and the new 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, Shopkick and SCVNGR. Other stakeholders include coupons and deals providers including Vouchercloud, Yowza!! And COUPIES, search solutions such as 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 Nexage, as well as major digital and telecom players such as Google, Apple and Facebook.

There are a number of key takeaways from the current trends in LBA. It has been established that 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, and rightly so as most campaigns do not require an accuracy of a few meters. Hyper-local LBA is nevertheless becoming more common. Location is furthermore only one of many valuable targeting variables and marketers must also strive to leverage other contextual and behavioural data. It is then crucial to ensure sound opt-in procedures and individual privacy measures for consumers. Marketing methods such as conquesting and combating of showrooming can further leverage location-based advertising. Current important high-volume LBA formats include mobile search and SMS campaigns. Berg Insight anticipates that geotargeting gradually will become ubiquitous and available across the entire mobile channel.

This report answers the following questions:

  • In what ways can location technology improve the relevancy of mobile advertising?
  • What are the experiences from mobile LBA campaigns so far?
  • How should mobile LBA be integrated in the marketing media mix?
  • Which categories of companies can leverage mobile locationbased advertising?
  • Which are the LBA specialists that stand out of the crowd?
  • How are mobile operators such as AT&T, Telefónica and SFR approaching LBA?
  • How are traditional mobile advertising players and major digital and telecom players positioning themselves in this market?
  • How well suited for LBA are different existing and future mobile media channels?
  • Which are the main drivers and barriers affecting the mobile LBA market?

Table of Contents

Table of Contents

List of Figures

Executive summary

1. Advertising and the mobile channel

  • 1.1. Advertising and digital media
    • 1.1.1. The marketing and advertising industry
    • 1.1.2. The Internet media channel
    • 1.1.3. The mobile media channel
  • 1.2. Mobile advertising and marketing
    • 1.2.1. The mobile handset as an advertising platform
    • 1.2.2. Advertising on the mobile handset
    • 1.2.3. The mobile advertising ecosystem
  • 1.3. Mobile media channels and formats
    • 1.3.1. Messaging
    • 1.3.2. Mobile web
    • 1.3.3. Mobile applications
  • 1.4. Mobile marketing industry overview
    • 1.4.1. Factors influencing the potential market value of mobile advertising
    • 1.4.2. Current state and future trends

2. Mobile location technologies and services

  • 2.1. Mobile network location architectures and platforms
    • 2.1.1. Location architecture for GSM/UMTS networks
    • 2.1.2. Location architecture for LTE networks
    • 2.1.3. Control Plane and User Plane location platforms
    • 2.1.4. Handset client and probe-based location platforms
  • 2.2. Mobile location technologies and methods
    • 2.2.1. Cell-ID
    • 2.2.2. Enhanced Cell-ID
    • 2.2.3. RF Pattern Matching
    • 2.2.4. E-OTD, OTDOA and U-TDOA
    • 2.2.5. GNSS: GPS, GLONASS, Galileo and Compass
    • 2.2.6. Bluetooth and Wi-Fi positioning
    • 2.2.7. Hybrid, mixed mode and indoor location technologies
    • 2.2.8. Comparison of location technologies
  • 2.3. Overview of mobile location-based services
    • 2.3.1. Mapping and navigation
    • 2.3.2. Local search and information
    • 2.3.3. Social networking and entertainment
    • 2.3.4. Recreation and fitness
    • 2.3.5. Family and people locator services
    • 2.3.6. Mobile resource management

3. Mobile location-based advertising and marketing

  • 3.1. Definitions and variants of LBA
    • 3.1.1. Static versus real-time location targeting
    • 3.1.2. Push and pull LBA
    • 3.1.3. LBA formats
  • 3.2. Market receptiveness
    • 3.2.1. Adoption patterns among brands and merchants
    • 3.2.2. Outcomes of different LBA strategies
    • 3.2.3. Consumer attitudes
    • 3.2.4. Privacy concerns
  • 3.3. Case studies
    • 3.3.1. PlaceIQ and Medialets deliver location-aware rich media ads for Meguiar
    • 3.3.2. Kiehl's leverages Placecast's technology to drive store visits
    • 3.3.3. Coffee shops in event area promoted in The Weather Channel apps
    • 3.3.4. Days Inn advertises locally in Poynt application
    • 3.3.5. In-app advertising promotes eco-friendly BMW car events
    • 3.3.6. LBS application Gettings promoted using Madvertise's LBA solution
    • 3.3.7. Sherlock Holmes movie marketed using Bluetooth solution from BLIP
    • 3.3.8. French Leboncoin monetises inventory using Admoove's LBA network
    • 3.3.9. MINI's location-based reality game generates a PR value of € 1.2 million
    • 3.3.10. L'Oréal and Superdrug leverage O2 More's geo-targeted SMS program
    • 3.3.11. Angry Birds campaigns mix real-world and digital components
    • 3.3.12. Young people encouraged to vote through NFC-enabled OOH campaign
    • 3.3.13. P&G's Charmin eases public restroom finding with SitOrSquat app

4. Market forecasts and trends

  • 4.1. LBA industry analysis
    • 4.1.1. Classification of LBA offerings
    • 4.1.2. LBA specialists
    • 4.1.3. Mobile operators
    • 4.1.4. LBS and navigation providers
    • 4.1.5. Location-aware applications and media
    • 4.1.6. Mobile coupons and deals providers
    • 4.1.7. Mobile search providers
    • 4.1.8. Proximity marketing providers
    • 4.1.9. Traditional mobile advertising players
    • 4.1.10. Major digital and telecom players
    • 4.1.11. Industry associations
    • 4.1.12. Mergers and acquisitions
  • 4.2. LBA landscape trends
    • 4.2.1. Drivers for success
    • 4.2.2. Barriers to adoption
    • 4.2.3. Overcoming the barriers
    • 4.3. Market forecasts
    • 4.3.1. Total, digital and mobile advertising market value forecasts
    • 4.3.2. LBA market value forecast
  • 4.4. Final conclusions
    • 4.4.1. Location filtering improves the effectiveness of mobile marketing campaigns
    • 4.4.2. Steadily increasing shares of ad budgets devoted to LBA
    • 4.4.3. Real-time hyper-local geo-targeting is sparsely used
    • 4.4.4. Location is only one of many valuable targeting variables
    • 4.4.5. Mobile search and SMS campaigns are important high-volume LBA formats
    • 4.4.6. LBA offers new possibilities for all categories of advertisers
    • 4.4.7. Location targeting will eventually become ubiquitous

5. Company profiles and strategies

  • 5.1. LBA specialists
    • 5.1.1. AdMoove
    • 5.1.2. CityGrid Media
    • 5.1.3. LEMON Mobile
    • 5.1.4. Placecast
    • 5.1.5. Verve Mobile
    • 5.1.6. WHERE/PayPal Media Network
    • 5.1.7. xAd
    • 5.1.8. Xtify
    • 5.1.9. YOOSE
  • 5.2. Mobile operators
    • 5.2.1. AT&T Mobility
    • 5.2.2. Orange Group
    • 5.2.3. SFR
    • 5.2.4. Telefónica Group
    • 5.2.5. Verizon Wireless
    • 5.2.6. Weve - mobile operator joint venture in the UK
  • 5.3. LBS and navigation providers
    • 5.3.1. Appello Systems
    • 5.3.2. Intersec
    • 5.3.3. Telenav
    • 5.3.4. Telenity
    • 5.3.5. Telmap
    • 5.3.6. TomTom
    • 5.3.7. Waze
  • 5.4. Location-aware applications and media
    • 5.4.1. Badoo
    • 5.4.2. Foursquare
    • 5.4.3. Gbanga
    • 5.4.4. SCVNGR/LevelUp
    • 5.4.5. Shopkick
  • 5.5. Mobile coupons and deals providers
    • 5.5.1. COUPIES
    • 5.5.2. Groupon
    • 5.5.3. Vouchercloud
    • 5.5.4. YourbanDeals
    • 5.5.5. Yowza!!
  • 5.6. Mobile search providers
    • 5.6.1. Hibu
    • 5.6.2. Mobile Commerce
    • 5.6.3. Poynt
    • 5.6.4. Yelp and Qype
  • 5.7. Proximity marketing providers
    • 5.7.1. NeoMedia
    • 5.7.2. Proxama
    • 5.7.3. Proximus Mobility
    • 5.7.4. Qwikker
    • 5.7.5. Scanbuy
  • 5.8. Traditional mobile advertising players
    • 5.8.1. InMobi
    • 5.8.2. Jumptap
    • 5.8.3. Madvertise
    • 5.8.4. Millennial Media
    • 5.8.5. Nexage
    • 5.8.6. Sofialys
  • 5.9. Major digital and telecom players
    • 5.9.1. Apple
    • 5.9.2. Facebook
    • 5.9.3. Google
    • 5.9.4. Microsoft
    • 5.9.5. Nokia
    • 5.9.6. Yahoo!


List of Figures

  • Figure 1.1: Global advertisement expenditure by media (World 2011)
  • Figure 1.2: Top 20 advertisers (World 2010)
  • Figure 1.3: Online advertisement expenditure by region (World 2011)
  • Figure 1.4: Mobile subscriptions by region (World Q2-2012)
  • Figure 1.5: Stakeholders in the mobile marketing value chain
  • Figure 1.6: SMS ads - number of receivers and response rates (EU5 July 2011)
  • Figure 2.1: Location architecture overview
  • Figure 2.2: Cellular frequency reuse pattern
  • Figure 2.3: Cell-ID location methods
  • Figure 2.4: Performance and limiting factors for network-based location technologies
  • Figure 2.5: Performance and limiting factors for hybrid location technologies
  • Figure 2.6: Examples of LBS apps and services by active users (World 2012)
  • Figure 3.1: Examples of location granularities suitable for LBA
  • Figure 4.1: Categorisation of LBA players
  • Figure 4.2: Acquisitions in the LBA ecosystem (2011-2013)
  • Figure 4.3: Total, digital and mobile ad revenues by region (World 2011-2017)
  • Figure 4.4: LBA revenues and forecasts by region (World 2011-2017)
  • Figure 5.1: Overview of LBA industry players
  • Figure 5.2: European operator offerings powered by Appello Systems (December 2012)
  • Figure 5.3: North American operator offerings powered by Telenav (December 2012)
  • Figure 5.4: Waze user interface showing expanded business detail
  • Figure 5.5: SCVNGR LevelUp offering and FTUB white-label payment solution
  • Figure 5.6: YourbanDeals user interface
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