Local Advertising’s Online Future

Something is happening very quickly with local businesses, and even national brands, trying to stay engaged and market to their local customer base. Fewer consumers are listening! Think about these interesting stats for a minute:

  • Television viewers are down (NY Times)
  • Americans are tuning out of traditional broadcast radio, and into digital audio services like Pandora. Almost 40% of Americans listen to audio on digital services according to a Pew Research study.
  • Newspaper circulation has declined 30% since 1990 (Pew Research)

Local advertising, which is predominantly TV, radio, and print advertising, seems to be deteriorating. Billions of advertising dollars are being shifted away from traditional channels to online local advertising. As soon as local advertisers started focusing their attention on the growing online audience, consumers have already shifted their attention once again to a new medium: mobile. In the “Future of Digital” study released from Henry Blodget and Alex Cocotas, they reported some interesting insights:

  • Smartphone sales blew past PC sales
  • Mobile internet connections now exceed “fixed” connections (i.e. PCs, laptops)
  • Display ad growth (i.e. banners ads) is flattening
  • Mobile users do everything they did online and MORE
  • As mobile use increases, usage of all other forms of media (i.e. TV) DECREASES
  • BUT mobile ad spending is still a tiny fraction of overall digital ad spending
  • While 10% of consumers’ time is spent on mobile, this channel only represents 1% of mobile ad spend

Despite more consumers spending more time on mobile, mobile ad revenues have “failed to launch”. But what do local advertisers really know about mobile advertising and how are they using mobile advertising differently than online advertising? According to a Velti and Forrester Consulting study, they’re using the same tactics for both online and mobile. This could be the reason mobile ad revenues have “failed to launch”.

How could a typical online ad, rich with multimedia, present well going from a fifteen-inch screen down to a four-inch miniature version? Mobile advertising requires different strategies than online advertising, just as traditional advertising requires different strategies.

Our patented technology provides local advertisers multiple channels to market to their customers’ mobile device via social channels, such as Twitter or Facebook, and SMS text messaging. Compared to email read rates (a typical “online” marketing tactic) of around 12%, SMS text messaging is widely recognized as garnering read rates upwards of 90%! More importantly, SMS text messages are typically read within 15 minutes of receipt opening up a whole new capability to marketers – “now” marketing. For example, if a business is having a slow afternoon they can achieve immediate results by sending an SMS offer to their customers, versus an e-mail of social post that will have lower read rates and take sometimes days for consumers to read. A large Quick Serve Restaurant (QSR) customer of ours has seen conversion rates to offers sent via text messaging as high as 66%, which is practically unheard of with legacy online tactics such as email or banner ads.

Other new mobile marketing services such as Yelp (NYSE: YELP) and Four Square bring a uniquely “mobile” approach to marketing, with particular focus on local advertisers. According to Business Week, Yelp has acquired approximately 19,000 paying local advertisers to date. With Yelp’s revenues north of $100M and not yet achieving profitability, the market has been highly enthusiastic about Yelp with a market cap of more than $1B as of the date of this blog post. Equally, support for Four Square seems just as high as the Wall Street Journal reports an estimated $760M valuation for Four Square’s most recent financing. Obviously a fantastic multiple with 2012 revenues estimated at only $2M this year.

We believe the next big thing in mobile advertising will look radically different than traditional online advertising. We believe it looks a lot like Mobivity’s marketing technology and we’re delighted to have more than 5,000 local advertiser locations helping us realize that vision!


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Mr. Becker has been building technology startups for more than 15 years and is the visionary behind Mobivity’s award-winning, patented mobile marketing platform.

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