Borrell Associates released a client memo June 11 with some astounding statistics around local and mobile advertising. I have a lot of respect for this group as I’ve been listening to and following Gordon Borrell’s analysis for many years and he tends to be quite accurate.
The key data point Borrell states is that last year, local advertisers spent $1.5 billion on mobile media. This year Borrell is forecasting it will be $3.2 billion. That is a whopping 105% year over year increase.
Aligned with that increase are supporting statistics like a) 37% of small and medium businesses (SMBs) who had not yet tried mobile advertising said they were likely to do so within the coming year. And even more impressive, b) a stunning 83% of those who had actually engaged in some sort of mobile campaign said they were likely to do so again.
Not covered in this memo, but very relevant to the facts, is the recognition of the primary activity that users conduct on their mobile devices: search. One could extrapolate then that local mobile advertising is finally coming of age and SMBs are buying. But to whom are they giving their precious ducats? From my vantage point I don’t think it is the old guard iYPs. While they’ve made some progress selling paid search to their constituents, the iYPs have other more core products they push. It’s not Google directly through AdWords Express or straight AdWords, either. Self-serve hasn’t expanded beyond the single-digit or very low double-digit percentages in the SMB sector.
My bet is that Local (and even more so, Local Mobile) advertising is exploding due to two factors. The first is the preponderance of National Locals finding vendors that can handle the creation and management of hundreds (if not thousands) of individual local campaigns, almost entirely in an automated fashion. And the second is the explosion of smaller, online only marketing services organizations that have found a niche, built or licensed easy-to-use and efficient technologies and then exploited it with abandon. Elements Local is an example of such a company. These companies have grown up lithe, nimble and with a very low cost basis. This combination allows them to offer compelling pricing and the ability to bend and contort themselves to fit the needs of the SMBs and Google/Bing/Yahoo! I continue to be impressed by these technology-based online marketing services companies that have figured out how to operate within this paradigm. I’d advise everyone to take notice as well.