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Executive summary The mobile channel is getting established as an integral part of the marketing media mix, a process which is eased by the booming smartphone adoption and increasing mobile media consumption. 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 specific 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 location-based advertising programs and 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 return than conventional mobile advertising, and the associated eCPM levels are several times higher. Berg Insight estimates that the total global value of the real-time mobile LBA market was € 192 million in 2011, representing 5.0 percent of the total mobile ad spend. Growing at a compound annual growth rate of 90.9 percent, the real-time LBA market is forecasted to be worth € 4.9 billion in 2016, corresponding to 28.3 percent of all mobile advertising and marketing. This means that location-based advertising and marketing will represent more than 4 percent of digital advertising, or 1 percent of the total global ad spend for all media. Asia-Pacific is estimated to be the largest LBA market in 2016, followed by Europe and North America. Key drivers for LBA include the growing attach rates of location technologies in handsets, 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 merchants.The fact that location targeting has higher performance has moreover induced premium rates for publishers and developers. 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 hyper-local targeting of ads is so far limited among advertisers, but is bound to increase given the considerable impact such campaigns generate. The LBA value chain is still forming and there are a large number of players involved in the ecosystem. The industry is fragmented and has not yet reached maturity. Many different companies are involved, ranging from LBA specialists such as Placecast, xAd and LEMON Mobile, to operators including SFR, AT&T and O2, and LBS players such as Telmap, TeleNav and Waze. There is furthermore an abundance of location-aware applications and media which serve geo-targeted ads, with examples such as WHERE, Loopt and Shopkick. Included in the marketplace are moreover coupons and deals providers including Yowza!!, GeoAd and COUPIES, search solutions such as Poynt and Qype, and proximity marketing providers like Qwikker, Proximus Mobility 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 Nokia. There are a number of key takeaways from the latest developments in LBA. It has been established that location-targeting improves the effectiveness of mobile marketing campaigns, and greater shares of ad budgets are devoted to LBA among marketers. It is however crucial to ensure sound opt-in procedures and individual privacy measures for consumers. Location is further only one of many components in successful targeting, and marketers must also strive to leverage other contextual and behavioural information. Highprecision real-time geotargeting is today sparsely used, and rightly so as most campaigns do not require targeting with an accuracy of a few meters. Hyper-local campaigns are nevertheless becoming more common. Current important high-volume LBA formats include mobile search and SMS campaigns. Berg Insight however anticipates that geotargeting gradually will become ubiquitous and available across the entire mobile channel.
Table of Contents Table of Contents. iList of Figures.. vi
Executive summary1
1 Advertising and the mobile channel 3 1.1 Advertising and digital media ..31.1.1 The marketing and advertising industry.3
1.1.2 The Internet media channel .6
1.1.3 The mobile media channel7
1.2 Mobile advertising and marketing ..10
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 15
1.3 Mobile media channels and formats .16
1.3.1 Messaging..16
1.3.2 Mobile web advertisement .20
1.3.3 Mobile applications 25
1.4 Mobile marketing industry overview..30
1.4.1 Factors influencing the potential market value of mobile advertising..31
1.4.2 Current state and future trends 32
2 Mobile location technologies and services ..33 2.1 Mobile network location architectures and platforms ..332.1.1 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 location platforms..37
2.2 Mobile location technologies and methods ..38
2.2.1 Cell-ID38
2.2.2 Enhanced Cell-ID 40
2.2.3 RF Pattern Matching..40
2.2.4 E-OTD, OTDOA and U-TDOA40
2.2.5 GNSS: GPS, GLONASS, Galileo and Compass .41
2.2.6 Bluetooth, NFC and Wi-Fi positioning..42
2.2.7 Hybrid, mixed mode and indoor location technologies..43
2.2.8 Theoretical limitations of positioning technologies44
2.3 Overview of mobile location-based services .45
2.3.1 Mapping and navigation..46
2.3.2 Local search and information48
2.3.3 Social networking and entertainment ..49
2.3.4 Recreation and fitness..50
2.3.5 Tracking services 51
3 Mobile location-based advertising and marketing 53 3.1 Definitions and variants of LBA.533.1.1 Static versus real-time location-targeting54
3.1.2 Push and pull LBA..55
3.1.3 LBA formats56
3.2 Market receptiveness.60
3.2.1 Advertiser adoption 60
3.2.2 Outcomes of different LBA strategies ..61
3.2.3 Consumer attitudes 63
3.2.4 Privacy concerns.65
3.3 Case studies ..66
3.3.1 The North Face drives foot traffic with LBA program delivered by Placecast..67
3.3.2 Operator Zain Kuwait enters the LBA space with AdZone platform .67
3.3.3 SPH a pioneer in location-based advertising in Singapore ..68
3.3.4 LBA solution from NAVTEQ delivers impressive results for McDonald's68
3.3.5 VW engage in Wi-Fi-based marketing through JiWire .69
3.3.6 Boloco taps SCVNGR to encourage repeat visits..69
3.3.7 Expedia creates award winning location-based mobile website using HTML5 .70
3.3.8 McDonald's engages customers in billboard games ..70
3.3.9 MINI's location-based reality game attracts thousands of players 71
3.3.10 Rovio introduces a location-dimension to the Angry Birds game .71
3.3.11 QderoPateo and Kommunity Kiosk enable Bluetooth marketing at hotels ..72
3.3.12 Movie theatre chain partners with ChaCha to promote Twilight premiere 72
4 Market forecasts and trends .73 4.1 LBA industry analysis 734.1.1 Classification of LBA offerings..73
4.1.2 LBA specialists .74
4.1.3 Mobile operators .75
4.1.4 LBS and navigation providers ..76
4.1.5 Location-aware applications and media .76
4.1.6 Mobile coupons and deals providers77
4.1.7 Mobile search providers..77
4.1.8 Proximity marketing providers .78
4.1.9 Traditional mobile advertising players .79
4.1.10 Major digital and telecom players ..79
4.1.11 Mergers and acquisitions80
4.2 LBA landscape trends ..82
4.2.1 Drivers for success.82
4.2.2 Barriers to adoption84
4.2.3 Overcoming the barriers .85
4.3 Market forecasts ..86
4.3.1 Total, digital and mobile advertising market value forecasts86
4.3.2 LBA market value forecast .88
4.4 Final conclusions.90
4.4.1 Location filtering improves the effectiveness of mobile marketing campaigns ..90
4.4.2 Greater shares of ad budgets devoted to LBA among marketers.91
4.4.3 Location is but one of many valuable opt-in variables.91
4.4.4 High-precision real-time geotargeting is sparsely used .91
4.4.5 Mobile search and SMS campaigns are important high-volume LBA formats92
4.4.6 Location-targeting will eventually become ubiquitous.92
5 Company profiles and strategies93 5.1 LBA specialists..945.1.1 AdMoove .94
5.1.2 Chalkboard.95
5.1.3 CityGrid Media..97
5.1.4 LEMON Mobile .98
5.1.5 Placecast ..100
5.1.6 xAd ..101
5.1.7 Xtify..102
5.1.8 YOOSE ..104
5.2 Mobile operators105
5.2.1 AT&T Mobility .105
5.2.2 Orange Group 108
5.2.3 SFR..110
5.2.4 Telefónica Group..112
5.3 LBS and navigation providers 113
5.3.1 Appello Systems ..114
5.3.2 Intersec..115
5.3.3 TeleNav..117
5.3.4 Telmap119
5.3.5 TomTom120
5.3.6 Waze Mobile122
5.4 Location-aware applications and media ..124
5.4.1 Foursquare ..124
5.4.2 Loopt ..126
5.4.3 Shopkick127
5.4.4 WHERE..129
5.5 Mobile coupons and deals providers .130
5.5.1 COUPIES..130
5.5.2 GeoAd 132
5.5.3 Groupon 133
5.5.4 ThinkNear .135
5.5.5 Yowza!!..136
5.6 Mobile search providers 137
5.6.1 Mobile Commerce137
5.6.2 Poynt ..139
5.6.3 Qype140
5.6.4 Yell Group.142
5.7 Proximity marketing providers143
5.7.1 BLIP Systems .143
5.7.2 Proximus Mobility .145
5.7.3 Qwikker .146
5.7.4 Scanbuy 148
5.8 Traditional mobile advertising players149
5.8.1 InMobi.149
5.8.2 Jumptap 151
5.8.3 Madvertise 152
5.8.4 Millennial Media.154
5.8.5 Nexage ..155
5.8.6 Sofialys ..156
5.9 Major digital and telecom players 158
5.9.1 Apple ..158
5.9.2 Facebook .160
5.9.3 Google162
5.9.4 Microsoft164
5.9.5 Nokia ..165
5.9.6 Yahoo! 167
Glossary .171
List of Figures Figure 1.1: Global advertisement expenditure by media (World 2010)..4Figure 1.2: Top 20 advertisers (World 2010) 5
Figure 1.3: Online advertisement expenditure by region (World 2010) .7
Figure 1.4: Mobile subscriptions by region (World Q4-2010) .8
Figure 1.5: Stakeholders in the mobile marketing value chain 16
Figure 1.6: SMS ads – number of receivers and response rates (EU5 September 2010) .17
Figure 2.1: Location architecture overview.34
Figure 2.2: Cellular frequency reuse pattern .38
Figure 2.3: Cell-ID location methods .39
Figure 2.4: Performance and limiting factors for key positioning technologies ..45
Figure 2.5: Navigation app and service providers by active users (World Q3-2011)47
Figure 3.1: Examples of location accuracies suitable for LBA .53
Figure 4.1: Categorisation of LBA players ..74
Figure 4.2: Acquisitions in the LBA ecosystem (2009–2012) 81
Figure 4.3: Total, digital and mobile ad revenues by region (World 2010–2016) ..87
Figure 4.4: LBA revenues and forecasts by region (World 2010–2016)..89
Figure 5.1: Overview of LBA industry players93
Figure 5.2: European operator offerings powered by Appello Systems (October 2011).115
Figure 5.3: North American operator offerings powered by TeleNav (September 2011) 118
Figure 5.4: Waze user interface and example of location marker and expanded ad.123
Figure 5.5: Loopt user interface, Qs and Groupon Now! deals notifications .126
Figure 5.6: Groupon map UI on iPhone 134
Figure 5.7: Screenshots from Qype for iPhone and Android .141
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Industry Analysis and InsightsNicolas Bombourg
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