Location-based advertising potentially profitable, says ABI

11 Dec 2008

According to ABI Research, Location-based advertising is gaining momentum as a new advertising medium.

While providing more targeted and efficient marketing tools for advertisers, location-based advertising represents an additional revenue source for vendors allowing them to offer free ad-funded navigation and LBS services that stimulate uptake and/or increase their profitability.

ABI Research director Dominique Bonte believes in a hype because of the huge relevance of location-based advertising.

"Too many LBS providers see advertising as the cornerstone of their business plans. The reality is a nascent industry with many barriers still to be removed: the lack of understanding of location-based mobility, a fragmented location ecosystem, immature click-to-locate and click-to-navigate direct response models, limited indoor location technology, and intrusiveness and privacy-related user acceptance issues", he adds.

According to Bonte startups such as social networking sites are advised to introduce location-based advertising gradually next to more traditional pricing schemes based on subscription fees or pay-per-use, or a combination of free ad-funded basic services with paid premium offers.
He considers transparent opt-in processes and advanced levels of customisation as the key success factors for location-based advertising, followed by the seamless integration of location into standard demographics and usage-related advertising targeting parameters.

While free ad-funded off-board navigation solutions are already on offer, ABI expects the bigger brands such as Google and Nokia to dominate this space in the future.
By enabling this new form of advertising and increasing awareness and understanding within the location and advertising, the Mobile Marketing Association and advertising agencies such as 1020 Inc with its Placecast service are key players.