For the better (or worse) part of the decade, claims of mobile marketing's imminent tipping point have filled the blogosphere and tech conference circuits. The "year of mobile" has perpetually been on the horizon, proving time and time again to only be a desert mirage.
Now we're closer than ever, but the market is understandably cautious of bold claims about mobile search and location-based services. The amount of crying wolf the market has endured has given it a more scrutinizing eye (probably a good thing).
For the most part, the analyst community has agreed that the oft-cited scenario of walking by a Starbucks and getting hit with a mobile ad isn't going to happen. The mobile industry and its followers have settled on the more realistic concept of pull-based mobile marketing and mobile local search applications.
Where are we Now?
To define the opportunity for mobile search marketing, a good starting point is to look at consumption. The mobile Web is made up of about 54 million users in the U.S. -- about 20 percent of mobile subscribers. The Kelsey Group's U.S. Mobile Local Media Forecast projects that to grow to 95 million by 2013.
Changing device standards are bringing mobile search into the mainstream. You know the story: the iPhone has set the bar for hardware standards, and clones have entered the market to compete on price.
Meanwhile, carriers, sensing the increased demand for more mobile data consumption, are subsidizing devices to drive long-term data subscriptions. Prices for the new batch of coveted smart phones are settling around $200, making the mobile Web a mass market opportunity for the first time.
The key point is that local will be a big beneficiary of the resulting search volume growth. For the past few years, the percentage of online searches that have local intent has been a bone of contention in search marketing circles. Recent forecast data from The Kelsey Group says it's around 11 percent.
Whatever the percentage is, it's going to be higher on the mobile device. This comes with the premise that the portability and location-awareness of the mobile device is highly conducive to local search and local commercial intent. Google thinks so too.
"Local search on the mobile device indexes higher than the desktop by about two to three times," said Diana Pouliot, Google mobile ad sales director.
Mobile Money Making
Given these usage realities, how will they be monetized?
Like the online world, we'll see lots of ad formats that mirror advertisers' goals to get clicks, calls, branding, or conversions. Several new forms of mobile marketing will follow the evolving ways users are engaging search applications -- particularly at the local level.
The fact that the phone gets you closer to the point of purchase, for example, opens up lots of opportunity for CPA-based campaigns. This can involve data feeds from the likes of Krillion and NearbyNow, which tap into retail inventory systems that indicate local product availability and prices.
These types of searches see high levels of engagement from users, and drive qualified traffic (of the analog variety) to local stores, said NearbyNow CEO Scott Dunlap during the Kelsey Group's Marketplaces conference earlier this week.
Mobile shopping tools, such as NearbyNow's Lucky iPhone App, can also close a gap between the online and physical worlds that traditionally has been a source of uncertainty in local search marketing campaign measurement.
"We're seeing lots of interest from small advertisers that want to drive people into their stores," Dunlap said.
Local Mobile: By the Numbers
Stepping back to a market level, this translates to opportunities for mobile search marketing. But it won't come without the well-known challenge of reaching the fragmented universe of SMBs. This will be a barrier to wide-scale mobile local marketing, the same way it has been with online search.
As discussed in "Replicating the Web: Will Google Dominate Mobile Search?" Google is trying to make it easier by bundling mobile marketing right into AdWords. We'll also see it packaged in with other forms of local advertising delivered to SMBs by yellow pages, newspapers, and local search marketing firms like WebVisible and Marchex.
Though these delivery models still need to solidify, one thing is clear: the mobile ad format that will be in demand at the local level will increasingly be search. Though SMS is currently the largest mobile marketing category, continued smart phone penetration will cause search to eclipse the levels of engagement and scale currently seen by display and SMS.
Drilling down, the fastest-growing segment will be the local search -- due partly to the premiums that will be placed on geographically targeted mobile advertising. By 2013, it will represent the majority stake of overall mobile search advertising revenues, according to Kelsey.
Once it crosses 50 percent of mobile ad revenues, maybe we can safely say we've reached the "year of mobile" -- or at least the year of local mobile.
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