According to a new research report from the analyst firm Berg Insight, the total value of the global real-time mobile location-based advertising and marketing (LBA) market will grow from €526 million in 2012 at a compound annual growth rate (CAGR) of 65 percent to €6.5 billion in 2017. This will then correspond to 32.8 percent of all mobile advertising and marketing. This means that location-based advertising and marketing will represent around 5 percent of digital advertising, or more than 1 percent of the total global ad spend for all media. SMS, mobile search and coupons are today important high-volume LBA formats.
The ability to precisely target prospective customers using real-time location is currently one of the most promising additions to the advertising toolbox, Berg Insight said. “Key drivers for LBA include the growing adoption of both outdoor and indoor location technologies, as well as the increasing consumer acceptance of location-based services in general,” said Rickard Andersson, Telecom Analyst, Berg Insight. Location targeting in combination with other contextual and behavioral segmentation greatly enhances the relevance of mobile advertising. “Major brands are so far the main spenders, but LBA has also opened the mobile channel for small local merchants. Local businesses can extend their marketing initiatives with mobile components such as location-sensitive coupons using online self-services, while big box retailers leverage enterprise LBA solutions for conquesting and to combat showrooming,” Andersson said.
The LBA value chain is still forming and there are a large number of players involved in the ecosystem, Berg Insight said. Since the value chain is fragmented and the industry has not yet reached maturity, many different roles are involved. Companies range from LBA specialists such as Verve, Placecast and xAd, to LBS players including Telmap, Telenav and Waze, and operators such as AT&T, SFR and the new UK joint venture Weve.
There is, furthermore, an abundance of location-aware applications and media that serve geo-targeted ads, with examples such as Foursquare, Shopkick and SCVNGR. Other stakeholders include coupons and deals providers including Vouchercloud, Yowza!! and COUPIES, search solutions such as Yell and Yelp, and proximity marketing providers like Proxama, NeoMedia and Scanbuy. A number of traditional mobile advertising players are also active in the LBA space, for example Millennial Media, Madvertise and Nexage, as well as major digital and telecom players such as Google, Apple and Facebook.
FairSearch.org has filed a complaint with the European Commission laying out what it sees as Google’s anti-competitive strategy to dominate the mobile marketplace and cement its control over consumer Internet data for online advertising as usage shifts to mobile.
The complaint says Google uses deceptive conduct to lockout competition in mobile. Google’s Android is the dominant smartphone operating system, running in 70 percent of units shipped at the end of 2012, according to Strategy Analytics. Google also dominates mobile search advertising with 96 percent of the market, according to eMarketer.
“Google is using its Android mobile operating system as a Trojan Horse to deceive partners, monopolize the mobile marketplace, and control consumer data,” said Thomas Vinje, counsel to the FairSearch coalition. “We are asking the commission to move quickly and decisively to protect competition and innovation in this critical market. Failure to act will only embolden Google to repeat its desktop abuses of dominance as consumers increasingly turn to a mobile platform dominated by Google’s Android operating system.”
FairSearch is an international coalition of 17 specialized search and technology companies whose members include Expedia, Microsoft, Nokia, Oracle, and TripAdvisor.
Google achieved its dominance in the smartphone operating system market by giving Android to device-makers for “free.” Android phone makers who want to include must-have Google apps such as Maps, YouTube, or Play are required to pre-load an entire suite of Google mobile services and to give them prominent default placement on the phone, the complaint says. This disadvantages other providers, charges FairSearch, and puts Google’s Android in control of consumer data on a majority of smartphones shipped today.
The FairSearch complaint comes at a time when users are increasingly switching from desktop to mobile platforms. Mobile Internet usage is expected to overtake desktop usage as soon as 2014, according to MindCommerce.
The European Commission is already considering how to remedy concerns that Google may be abusing its dominance in desktop search advertising, in particular Google’s search bias that favors its own services in search results.
Meanwhile, in April, six European data protection authorities began coordinating efforts to force Google to comply with European Union privacy laws they say Google violated by consolidating its privacy policies. Google paid a record fine to the U.S. Federal Trade Commission in August 2012 to settle charges it gave misleading privacy promises to Safari Internet browser users.
“European consumers deserve a rigorous investigation of Google’s mobile practices, and real protections against further abuses by Google,” said Vinje. “Given Google’s track record of ignoring the law, mobile Internet users should be very concerned.”
Location-powered mobile advertising company Verve Mobile announced today it has closed its Series C financing led by Nokia Growth Partners, a global growth stage venture firm focused on mobile technology, services and media with participation from new investor Qualcomm Incorporated, acting through its venture investment group, Qualcomm Ventures (QCOM), and Series B lead investor BlueRun Ventures.
The capital will be used to further develop and expand Verve’s proprietary mobile location-based advertising and publishing products and to grow its marketing and sales capabilities.
“Verve’s focus is combining big data, location-based services (LBS) and ad technologies to make mobile advertising work better for advertisers and publishers,” said Tom MacIsaac, Verve Mobile CEO. “Nokia and Qualcomm are global leaders in mobile technology innovation and have important insights, assets, initiatives and relationships that can help Verve maintain its lead in location powered mobile advertising.”
John Gardner of Nokia Growth Partners has joined Verve’s Board in connection with the financing, and Quinn Li of Qualcomm Ventures has become a Board Observer.
Verve Mobile’s customers are national-brand advertisers who want to engage consumers on their mobile devices with location-aware, data-driven and highly targeted marketing, the company said. Verve has offices in New York, Washington D.C. and San Diego, California.
Intersec, which provides software for mobile and integrated operators, has signed a global partnership agreement with Alcatel-Lucent for the creation of a geo-marketing service that will enable mobile operators to connect brands and retailers to consumers via mobile devices, based on their permission, preferences and location, to drive in-store traffic.
Intersec’s IGLOO collects and aggregates “anonymised” network data (circuit switch, packet switch, Wi-Fi, indoor location) in real time to provide proximity detection of all opt-in subscribers at a defined moment of the day. Alcatel-Lucent’s Optism then gathers and analyzes the location data to provide customers with relevant offers to drive in-store traffic. The companies say the cross-operator solution will enable multiple brands and retailers in several countries to deliver walk-in rewards, location-based targeted coupons and deals and post shopping surveys. Optism is deployed in 10 markets.
“In order to expand to geo-based offers and coupons, we were looking for a device-agnostic solution that was able to aggregate all of the location data that the network was seeing, both passive and active sources, both for in-store as outdoor proximity campaigns,” said Thomas Labarthe of Alcatel-Lucent. “By integrating Intersec IGLOO into Optism, brands and retailers can leverage all the existing Optism tools to define their campaigns including location as qualification criteria.”
The month of October and now into November was filled with several conferences, but not a lot of location news. A few news snippets, while not blockbusters, were important. One was Waze’s decision to offer its own location-based advertising. Another was a milestone for Ford, which said its Sync information system is now in five million vehicles. On an end-of-an-era note, of which there have been quite a few in the last two years, Sprint has decided to drop the Nextel name. Nextel was one of the innovative companies in the late 1990s and early 2000s, placing location capability into mobile phones and jump-starting an industry.
Waze recently said it is offering a global location-based advertising platform that will be directed to its 30 million users. Waze, founded in 2009 in Israel, says smartphone users can try the service for free — the profit for them is ad revenue from local and large brands.
GPS World’s LBS Insider recently reported that Tim Cook, Apple’s chief executive, actually endorsed Waze as an alternative to its own mapping service after users were experiencing problems with it. Waze, which is offering the advertisements in the United States, said it saw a jump in downloads after the announcement.
Some industry analysts say it may be a mistake for Waze to swim in the deep end of the pool to compete with such mobile advertising giants as Google.
Waze raised a total of $67 million from investor Kleiner Perkins and Hong Kong investor Li Ka-shing. They cite big partners such as Circle K, Dunkin’ Donuts, MACS, Kum & Go, Wyndham Hotels, Jamba Juice, and P&G.
Palo Alto-based Waze is probably best known for its driving directions based on user input. The company says that its users spend an average of more than 7 hours in their vehicles a month.
The company, in order not to annoy users, is minimizing the number of pins on a map advertisement. According to published reports, the company said its advertisements will include coupons.
From the Waze blog: “We don’t want to bombard you, so you’ll never see too many businesses crowded on the map at once. Instead, the algorithm that powers Waze Ads aims to bring you a helpful selection of the various retailers around you on your daily drive.”
Waze is also making advertising inroads in Europe. It recently announced a partnership with Lumata, an Italy-based mobile marketing company. The deal allows Lumata to have a an exclusive right for advertising on Waze’s app in Italy, according to published reports.
Waze announced in June that car models will soon integrate the company’s mapping software. The company’s iOS and Android app’s users contribute road data while they drive, share accident reports, police speed traps, traffic jams and other data.
Five Million Sync Units in Five Years…
Ford and Microsoft’s Sync infotainment system has been installed in five million Ford and Lincoln vehicles. The unit, which was rolled out at the 2007 Consumer Electronics Show in Las Vegas, was one of the first products to allow smartphones to work with car components.
Sync was innovative in that it bundled turn-by-turn navigation, hands-free calling, text message reading, and other features. Earlier aftermarket products, such as Clarion’s AutoPC, were busts — but perhaps five-to-seven years too early for the market.
Ford jazzed up Sync with touchscreens and voice recognition since it rolled out its first model, which only used push buttons. It integrated other features such as audio, air conditioning/climate control, and navigation. Soon the newer version, MyFord Touch, offered video streaming, music, and a voice-activated climate control system.
Ford announced earlier this year that it was working with State Farm to add all Sync-equipped vehicles to the insurance giant’s Drive Safe & Save approved vehicles. A customer, through a voluntary sign up, can run a Vehicle Health Report that sends information to State Farm. Potential insurance savings for a customer could be 40 percent.
Ford is working with several industry companies, including Pandora and TeleNav Scout, through its AppLink program, which was globally offered earlier this year.
In other LBS news:
Sprint’s recent decision to drop the Nextel name was the end of an era, but not a surprise. It was Nextel, before its 2005 merger with Sprint, that truly innovated consumer and enterprise applications and markets on the mobile handset. In the wake of Japan’s Softbank purchase of 70 percent of Sprint, the Nextel part of the Sprint name will go away in mid-2013. The new name will be Sprint Corp. The Nextel brand was known for its iDEN technology and network, which is gradually being shut down by Sprint.
The recent U.S. presidential election had an LBS story. Foursquare had an app that had the goal of encouraging users to vote. The “I Voted” app allowed users to find their local polling station on Election Day and check in to show they cast a vote. Foursquare, trying to show that it offers more than “check-in” capability, recently announced a rating system for businesses. It is not clear whether the service, with 25 million users, is going after companies such as TripAdvisor and Yelp for a share of the evaluation/services market.
Samsung Electronics’ Galaxy S III managed to knock Apple’s iPhone 4S off the pedestal as the world’s most popular smartphone, in terms of sales, in the third quarter, said Strategy Analytics. Samsung sold around 18 million S III phones during the quarter, compared to Apple’s 16.2 million iPhone 4S units. The Galaxy S features a large touchscreen and GPS for location-based services.
TeleNav has announced that it has acquired Local Merchant Services, Inc., d.b.a. ThinkNear, a privately held hyper-local mobile advertising company in Los Angeles, California, for consideration of $22.5 million, consisting of approximately $18.5 million in cash, plus restricted stock and assumed options. The acquisition, which closed on October 10, added ThinkNear’s team of 12 employees, including its two co-founders, to Telenav’s mobile local advertising group. Telenav will combine ThinkNear’s targeting technology with the existing Telenav Drive-To Advertising solution to create a new mobile local advertising platform called Scout Advertising.
ThinkNear states that it helps advertisers reach consumers within 100 meters of any location. ThinkNear’s targeting technology enables situational targeting, which reportedly takes into account where consumers are, what they are doing, and what is happening around them.
“Real-time location is a nuanced and difficult problem and we have spent almost two years working on the technology to do it right,” said Eli Portnoy, CEO and co-founder of ThinkNear who will be joining the Scout Advertising team. “We have built technology to target mobile consumers based on true location and real-time context across billions of monthly impressions.”
“Most mobile ad networks struggle with targeting because they are trying to apply online technologies in the mobile space,” said Dariusz Paczuski, vice president of products, marketing, and monetization at Telenav. “This is frustrating for brick and mortar advertisers because, although the growth in mobile Internet use is astounding, the ROI for mobile has been difficult to measure. We now solve that problem by driving more customers at scale with hyper-local targeting and measurable results.”
“We are extremely excited to combine ThinkNear’s technology and expertise with our own to provide an even more comprehensive solution for advertisers to reach and drive more customers,” stated Paczuski. “This is a platform built from the ground up to leverage the mobile experience. We will help advertisers reach the right people while deploying the right mobile measurement tools. We expect this to change the game for advertisers. We are 100 percent focused on providing them with a clear and remarkable ROI on their mobile advertising spend. The proof will be the increase in customers driving to their front door.”
Flurry has announced Flurry Ad Analytics, an analytics-powered service for mobile app marketers to measure the effectiveness of traffic acquisition campaigns across ad networks. The service enables app marketers to track the quality, follow-on behavior, and return on investment of traffic sourced from campaigns across major mobile ad networks including Apple iAd, Google Admob, Millenial Media, InMobi, Jumptap, and Flurry AppCircle.
“Flurry estimates that during 2012 app marketers will spend over one billion dollars worldwide on app traffic acquisition without the ability to measure user quality, assign attribution or easily determine ROI,” said Simon Khalaf, Flurry president and chief executive. “Flurry Ad Analytics empowers app marketers to change the way they think about acquisition and focus on quality not just quantity.”
The Weather Channel Companies announced they will partner with hyperlocal data company PlaceIQ to provide advertisers with new audience targeting that can deliver highly contextually relevant ads to consumers. With 30 million monthly mobile users, The Weather Channel can offer hyperlocal audience targeting at scale. This targeting is now available on The Weather Channel iPhone App and will be rolling out on The Weather Channel Android App in July and all mobile platforms later this year.
PlaceIQ extracts intelligence from large amounts of place, social, and mobile location-based data to create hyperlocal, targetable audience profiles informed by time of day as well as location, giving advertisers the power to connect with consumers. These anonymous audience profiles can provide powerful targeting opportunities for advertisers. For example, financial services clients can target ads to mobile phones in areas with a high propensity for business travelers, such as airports during peak commuting hours, or in areas with a high concentration of hotels in the morning or evening that score high for business travelers. An ad on The Weather Channel app can be served during lunch on mobile phones on certain blocks populated with office workers, or served targeting late-night diners in an area that has a high concentration of nightlife and social activity.
"Consumers expect to receive the most accurate local weather news and information when they use The Weather Channel mobile products, which gives us the opportunity — and our advertisers the advantage — to deliver messages highly targeted to their location that will feel completely organic to their user experience," said Patrick McCormack, vice president, mobile sales and strategy, The Weather Channel Companies. "We feel strongly that our premium content and ability to target a specific mobile audience provides an unparalleled ad solution to our advertising clients."
"The combination of PlaceIQ's hyperlocal audience targeting, with The Weather Channel's tremendous reach and ability to transform hyperlocal impressions into specific audiences, is an extremely powerful one. The combination of weather, location and audience creates a set of offerings we think represent true innovation in mobile advertising, and we're extremely excited to partner with The Weather Channel to deliver this to market," said Duncan McCall, CEO and co-founder, PlaceIQ.
The product is launching with a number of high profile advertisers, including Chevy Silverado,Frito-Lay, and the Ram Truck brand, among others.
