Local media analyst firm BIA/Kelsey forecasts U.S. mobile local advertising revenue will grow from $1.2 billion in 2012 to $9.1 billion in 2017, experiencing a compound annual growth rate (CAGR) of 49.3 percent.
“Though inventory growth currently outpaces advertiser demand, we believe the latter will begin to accelerate,” said Michael Boland, senior analyst and director of content at BIA/Kelsey. The outcome of such acceleration will be increased over all mobile ad spending along with increased mobile ad rates, including CPMs and CPCs.
Defined as advertising that is targeted based on a user’s location, local mobile ads represented 38 percent of the $3.2 billion national mobile ad revenue for 2012. BIA/Kelsey predicts national ad revenues will grow to $16.8 billion in 2017 with mobile local ad growth representing 54 percent of overall growth.
The projected numbers include ads in mobile search, display, video and commercial SMS. The largest share of mobile local ads belongs to mobile search, due in part to the high correlation between mobile search and local user intent. According to BIA/Kelsey, mobile display ads have less localization because of the branding and reach-driven objectives that are inherent in display campaigns.
One driving force for this dramatic growth includes large brand advertisers adapting campaigns to the improved capabilities of mobile devices, taking advantage of the effective, abundant and currently undervalued mobile local ad inventory. Other factors include mobile advertising moving down market to SMBs, premiums resulting from location-targeted ads that will compound ad volume growth, and innovation among ad networks and ad tech providers.