Analyst firm Berg Insight has just released a report that predicts location-based advertising will grow to 10.7 billion euro by 2018.
It currently stands at 1.2 billion so that implies an annual compound growth rate of 54%.
This growth is phenomenal and I believe that companies that start riding the wave now will be the ones best positioned to benefit the most.
The current figure of 1.2 billion euro might sound a lot but in a global context isn’t.
According to an article in AdvertisingAge global advertising spend in 2013 was $500 billion.
The growth in location-based advertising will be made possible by the continuing growth in the number of smartphone devices.
Cisco predicts smartphones will make up 38.5% of all devices by 2018.
The reason I say current location-based advertising is yet to be a force to contend with in the advertising market is the current lack of impact in real-life.
I will give you a couple of examples.
I live in a suburb of Melbourne, Australia. Not exactly the centre of the world but not in the sticks either.
Here are two screenshots from my mobile.
The first one is from Foursquare, the mainstream social network most based on location.
As you can see the nearest special is 8 km away. I was hoping for something much closer.
The second screenshot shows the offers from Facebook. They are all US-based, a continent away.
What this shows is that, indeed, the location-based advertising market is in its infancy and that by mastering it early on you can beat the competition.
As a consumer what would I like?
With all due respect, I am not particularly interested in a promotion for a casino in Las Vegas when I am walking the streets of Melbourne.
I would like an advertisement that at 11:30 am alerts me that a particular Vietnamese take-away is offering a special ‘early-bird’ deal to customers that are within 500 metres of its outlet and arrive there before 12 0’clock.
The technology is already or nearly here.
I have a smartphone glued to my hand.
You, the advertiser, can and will use social media platforms like Facebook and Foursquare to create an ad/promo/offer that runs at certain time and targeted at a specific demographic in a specific location.
By 2018 it will be an everyday occurrence.
Advertisers that have invested time in 2014 to understand how it works and how to make it work for their business will be the now in a position to profit.
Here’s a video from Foursquare that explains the concept of advertising on its platform.
Do you plan to use location-based advertising?