Big Gains Forecast for Location-Targeted Mobile Ad Spend

April 10, 2014

BIAKelsey-Local-Media-Outlook-2013-2018-Apr2014US mobile ad spend is projected to grow from $7.2 billion last year to $30.3 billion in 2018, with a slight majority 52% – or $15.7 billion – of that eventual figure being location-targeted spending, according to a new forecast released by BIA/Kelsey. The projections represent a significant uptick from last year’s forecast, and the analysts see search accounting for the bulk of the location-targeted mobile ad spend at the end of the forecast period, with native social ads and display also playing a role. 

Of those, native social ad spending – defined as “visual and textual brand messaging that is merged into the organic feed-based interfaces of mobile social apps such as Facebook and Twitter” – will see the most rapid relative growth. BIA/Kelsey forecasts mobile native social ad spend to climb from $178 million last year to $499 million this year, before more than tripling to almost $3.5 billion in 2018.

Other formats will also see a surge in spending, but will remain on the fringes in terms of total spending. One of those is video, which BIA/Kelsey projects to grow more than sixfold between 2013 ($164 million) and 2018 (about $1 billion).

Location-targeted mobile search – with a projected spend total of almost $8 billion – will remain the largest single component of mobile ad spending in 2018, according to the forecast, itself growing rapidly from $1.8 billion last year to nearly $8 billion.

The analysts note that search lends itself more to localized ad targeting than other formats such as display, which can have more of a branding focus. As such, search will be a primary driver of the shift towards location-targeted mobile advertising, which is projected to grow from 40% share of the $7.2 billion mobile ad market last year to a majority 52% share of the $30.3 billion projected for 2018. That search is a primary driver shouldn’t be too much of a surprise: according to new survey data from Neustar’s Localeze and 15miles, nearly 4 in 5 mobile local searches end in a purchase.

Overall, BIA/Kelsey’s projected $15.5 billion in location-targeted mobile ad spending would represent roughly 1 in every $10 dollars spent on all local media in 2018.

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