September 30, 2010, 4:37 PM

Mobile local ads are projected to hit $2.02 billion in 2014

Location-based ads will heat up as more marketers go digital, BIA/Kelsey says.

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 Location-based services are a hot topic in mobile commerce. They are being used in marketing to ping customers near a store with a text message, or reward customers with points for “checking in” at a store with their smartphones via mobile apps. They also are being used to pinpoint advertisements to shoppers on the go.

U.S. mobile local advertising revenue will increase nearly tenfold from $213 million in 2009 to $2.02 billion in 2014, according to a newly released update to BIA/Kelsey’s U.S. Local Media Forecast (2009-2014). BIA/Kelsey, a media research and consulting firm, defines mobile local advertising as advertising that is targeted based on a user’s location and/or advertising that is locally actionable.

For large and small advertisers alike, location-targeted ads will command premiums over non-local advertising because of higher immediacy, consumer buying intent and conversions, the firm says.

“We expect advertisers will be drawn to mobile marketing as the overall market shifts to digital ad platforms,” says Neal Polachek, president of BIA/Kelsey. “A lack of traffic to fulfill quotas on geotargeted ads will likely accelerate mobile web site and app development by publishers.”

Geotargeted ads are ones that are displayed on PC web sites based on the geographical location of a consumer’s Internet Protocol, or IP, address.

Big media players and technology providers will have a hand in the growth of mobile local advertising, the firm adds.

“As we’ve seen in the online space over the past decade, tools will be introduced to democratize and localize the mobile ad buying process,” says Michael Boland, senior analyst and program director of BIA/Kelsey’s mobile local media practice. “Google has already begun to bundle mobile ad placements within its pervasive AdWords search marketing platform.”

BIA/Kelsey cites smartphone penetration, mobile web usage and related increases in ad inventory as additional mobile ad growth drivers.

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