US mobile local advertising revenues will grow from $1.2 billion in 2012 to $9.1 billion in 2017—at a compound annual growth rate (CAGR) of 49.3%—according to the US Local Media Forecast (2012-2017), issued by BIA/Kelsey, an adviser to companies in the local media industry.
Mobile search is forecast to be the dominant ad format, growing to $5.7 billion in 2017. The forecast comprises advertising placed in mobile search, display, and video, and commercial SMS.
Below, additional details from BIA/Kelsey's US Local Media Forecast (2012-2017).
Mobile US local advertising is forecast to increase from 0.9% of local media ad revenues in 2012 to 6.1% in 2017:
The projected mobile local ad revenues are a subset of total US mobile ad spending, which is forecast to grow from $3.2 billion in 2012 to $16.8 billion in 2017.
Accordingly, locally targeted mobile ads, which constituted 38% of overall US mobile ad spending in 2012, are expected to grow to account for 54% in 2017:
Mobile Local Media Forecast by Format
Search advertising now accounts for the largest share of mobile local media ad spend, followed by display and SMS. The BIA/Kelsey forecast includes a breakdown of mobile local ad spending by format, as follows:
- Display (display advertising applied to app and mobile Web inventory) will grow from $379 million in 2012 to $2.7 billion in 2017.
- Search (text advertising applied to search queries on mobile devices) will grow from $704 million in 2012 to $5.7 billion in 2017.
- SMS (commercial SMS messaging) will grow from $101 million in 2012 to $162 million in 2017.
- Video (rich media ad units distributed within app and mobile web inventory) will grow from $38 million in 2012 to $515 million in 2017.
Search's dominant share indexes higher within the localized segment than within the broader of US mobile ad revenue total because of the high correlation between mobile search and local user intent, BIA/Kelsey said.
Conversely, there is a lower percentage of localization within the display category, because of the branding (as opposed to direct response) and reach-driven objectives inherent in display campaigns (e.g., in-app ads).
Drivers of Localized Share of Mobile
Several factors will drive the "localized" share of US mobile ad revenues, according to BIA/Kelsey, including the following:
- Large brand advertisers will increasingly adapt their campaign objectives to the capabilities of the mobile device due to effective, abundant, and currently undervalued mobile local ad inventory.
- Mobile advertising will move down market to the SMB segment through a combination of self-serve tools and local media direct sales channels.
- Premiums that develop for location-targeted ads will compound ad volume growth.
- Innovation will increase among ad networks and ad tech providers (e.g., Enhanced Campaigns).
"Though inventory growth currently outpaces advertiser demand, we believe the latter will begin to accelerate," said Michael Boland, senior analyst and director of content, BIA/Kelsey. "This will not only increase overall mobile ad spend, but mobile ad rates such as CPMs and CPCs, which are currently lower than desktop equivalents due to inventory oversupply."
About the data: BIA/Kelsey's Annual US Local Media Forecast (2012-2017) draws from multiple sources, including proprietary data; company, industry, and country information in the public domain; and discussions with clients and nonclients about the direction and pace of development in the local media marketplace.
BIA/Kelsey defines the local media advertising marketplace as those media that provide local audiences to all types of advertisers. Mobile local advertising is defined as advertising that is targeted based on a user's location.
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