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  • June 5, 2013 11:33 am

    Indoor Location can Capitalize on the $16B Mobile Ad Opportunity



    Mary Meeker of Kleiner Perkins Caufield and Byers delivered her now annual, and eagerly awaited, Internet Trends (2013 edition) presentation for the first time last week at the All Things D11 Conference in Ranchos Palos Verdes, California. Once again the report took a heavy look at mobile and the growing shift towards it. More specifically, it raised the issue of the growing discrepancy between the amount of time spent on mobile devices by consumers and the advertising dollars spent within the medium. 

    As she illustrated in the slide above, Internet advertising was up to $37B in 2012 and mobile advertising was up to $4B. However, unlike the radio, print and TV mediums there exists a gap with the Internet and mobile mediums when it comes to time spent by consumers and advertising dollars spent within them.

    U.S. consumers spent about 12 percent of their time on mobile devices, but the medium accounted for just three percent of total advertising spend in the U.S. for 2012. The Internet, meanwhile, accounted for 26 percent of time spent and 22 percent of ad spend.

    Meeker noted in the slide and her discussion that the discrepancies in the Internet and mobile mediums are a $20B opportunity. For instance, if mobile ad spend equaled time share on the medium (like it does for TV) it would be a $16B market. She also noted in her discussion that it’s moving in that direction with the early 2013 time-spent to ad ratio hovering closer to 4-1 versus the 10-1 ratio we saw in 2012. 

    So what role will indoor location play in helping companies capitalize on this opportunity?

    As Alex Newman, the head of Mobile EMEA for OMD International, recently noted, it really boils down to creating new mobile ad formats that capitalize on how consumers are using the medium. One major way in which consumers are viewing and using their mobile devices is as mobile shopping devices. Newman sees indoor location as the missing link towards utilizing mobile ads as “in-store shopping companions,” where “micro-targeting comes into existence.”

    Perhaps not surprisingly, retailers are also among the largest advertisers in the U.S. Gap, Home Depot, JC Penney Co., Kohl’s, Lowe’s, Macy’s, Sears, Target and Wal-Mart have all been regular inclusions in the annual 100 largest U.S. advertisers list. They’re also at the forefront of digital and mobile advertising. Target, Macy’s and Old Navy have already experimented using different types of indoor location technologies and location-based offers.

    As other retailers adopt similar omnichannel approaches there is little doubt that advertising dollar support will flow into the mobile channel, closing the gap between consumer time spent and advertising dollars spent within it. Total advertising spend within the U.S. is expected to increase to $171B in 2013. Utilizing technologies such as indoor location and indoor positioning, marketers (especially those within the retail space) should be in better position to effectively utilize what should be more than 12 percent of their advertising budgets for the year.