For location-based mobile ads, hype exceeds interest

With millions of Americans carrying GPS-enabled smartphones around all day, mobile marketers dream of using their locations to serve them targeted ads. But recent studies show that consumers and advertisers aren’t yet ready for location-based advertising to take over our touchscreens.

Only one in five mobile ad campaigns used targeting by location in the second quarter of this year, according to a report from the Millenial Media ad network.

Almost as many ad campaigns (19 percent) used demographic targeting (by age and gender of the user, for example). A smaller share (6 percent) used behavioral targeting. A majority (55 percent) were not targeted and simply sought to raise broad awareness of the advertiser — commonly thought of as “branding” campaigns.

On the consumer side, only 14 percent of mobile device users favor receiving promotions based on their current location, according to a survey of 2,000 American adults using cellphones by mobile marketing firm Upstream.

Those results debunk some of the hype around location-based ads and services, Assaf Baciu, senior vice president of product management for Upstream, said in the company’s news release.

What do consumers want, if not location-based ads? Sixty percent of smartphone users said they prefer to receive ads personalized by their interests (such as sports, politics and cooking). Seventeen percent said they prefer time-based promotions such as daily deals.

“While location remains an important factor in delivering mobile ads, tailoring interactions via mobile to consumers’ ‘tastes and interests’ clearly presents much greater potential for driving higher response and conversion rates,” Baciu said.

The takeaway for news organizations building mobile apps and websites: It’s equally or more valuable to know that a given mobile user is an 18- to 24-year-old male who likes the Mets, politics and action movies than to know what part of Brooklyn he’s in right now.

Hope for the future

This doesn’t mean location-based advertising is a bust. The interest in all kinds of mobile ad targeting, including location-based, has grown from practically zero in the past couple years. It could develop into a stronger market in a couple more.

Just over half of mobile users are willing to share their device location in order to receive more relevant content, another recent study says. (Keep in mind that research was conducted by JiWire, a company that specializes in location advertising and has an interest in making it look like a strong market.)

The Millenial Media study also broke down ad trends by industry and found that advertisers in finance and restaurant industries were leading adopters of location-based targeting. Those industries also show the fastest mobile ad spending growth in 2011 (both up roughly 10 times over 2010).

So if banks and restaurants are key advertisers for your mobile product, location-based ads may be a strong part of the mix. Other industries with booming mobile ad spending include pharmaceuticals, automotive, entertainment and travel, according to the study. So make sure your mobile sales staff pays close attention to those clients.

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