Wednesday, December 22, 2010

When Will Mobile Providers Move Big into Location-Based Advertising?

Location-based mobile apps are shaping up to be a major channel for local advertising, for some obvious reasons. Mobile devices are sensors that can alert advertisers to a potential customer's proximity.

That means proximity (maybe a better way of describing the value than "location") creates a new channel for local advertising revenues around which a proximity marketing business can be built.

Local advertising is a $133 billion revenue stream in the United States. You would expect Yellow Page companies, Facebook and Google to pitch mobile "proximity advertising" services.

But, at some point, mobile service providers are going to make a play as well. By definition, mobile providers know where their users are. All 293 million of them, or about 93 percent of the U.S. population. Though there are significant challenges to scale at the level of designing rich media campaigns using specific smartphone features, virtually all 293 million mobiles can receive text messages.

So it would make sense for carriers to create and sell proximity advertising with reach of 293 million potential customers. That sort of thing requires new levels of cooperation between the major carriers, though. Some believe they won't be able to work together. But the carrot of a universal ad platform built on proximity, available to 93 percent of all U.S. residents, has to be appealing. Isis, the mobile payments venture launched by AT&T, Verizon Wireless and T-Mobile USA, is one example.

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