Christian Louca

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Borrell Associates, which specializes in research covering local and online advertising, issued a new report this week called  “Main Street Goes Mobile” that examines the role that mobile media is projected to play in  local business marketing over the next five years.

Pointing to a business and consumer environment ready to embrace mobile advertising, Borrell cites statistics indicating that a full third of website readership already accesses information via mobile devices. Meanwhile, half of local businesses report plans to engage in mobile marketing.

These local marketers plan to commit roughly 20% of their budgets to this effort. Will they follow through? While mobile marketing (and hyperlocal efforts in general) can be turnkey in some respects, there are still costs to consider, along with the navigation of complex technologies and new business relationships.

The difficulties most local (and national) businesses encounter with online and mobile implementation have led directly to the rise of a media middleman — Groupon is a well-known example. Whereas traditional ad agencies and marketing firms handle creative and placement, taking fees directly from advertisers, many local advertisers are opting for promotions and other efforts that come without a clear price tag attached. Using the model embraced by many group deal sites, advertisers actually receive money from these middlemen (albeit much less than they would from traditional customer engagements) rather than doling it out.

Borrell projects that, by the end of 2011, 1/3 of all mobile phone users will have smartphones. Soon, mobile capabilities will be the price of entry for marketers. Advertisers are looking to firms like Groupon, LocalUp and GeoIQ to keep their advertising efforts streamlined, transparent, and supported on multichannel platforms.

We’re talking about real money here. Borrell projects that local online advertising will reach $18 billion by 2016, with local mobile couponing at $3 billion. While this growth is occurring at a rate much faster than the slow initial shift to online advertising, we need to remember that there is already what Borrell calls an “installed base”: advertisers and consumers comfortable with online marketing, for whom the addition of mobile is simply a shift within a familiar environment.

In an important divergence from ads of the past, “the medium is no longer the message,” according to the report.

Borrell asserts that “mobile is not a channel — it’s a [series of] platforms,” allowing real-time engagement with consumers. Within mobile usage lie options for email and paid search advertising. Both of these highly popular functions provide a fertile environment for mobile advertising. But advertisers are also examining text / SMS, downloaded apps (a key opportunity) and in-game environments. And not all these channels will grow at the same rate.

In an important divergence from ads of the past, “the medium is no longer the message,” according to the report. With content and channel decoupled, advertisers need to consider that communication can be delivered in a number of ways at a number of different moments in a consumer’s day, and need to plan their messaging accordingly. Even the way the industry measures and tracks marketing success will need to change, since we are going beyond eyeballs and “impressions” to assessing the distinct action a consumer takes (or doesn’t take).

The research firm notes that local radio companies have largely missed the boat when it comes to online marketing opportunities, leaving the spoils to companies like Pandora and Slacker. This is a useful observation, as local radio really does seem half-hearted about its online presence; it will be interesting to watch future activity in this space.

The report includes a number of insightful charts projecting revenue and growth rates for components within mobile advertising. While national ad spending continues to rise in some channels, it drops in others, and local ad spending is projected to rise across the board.

An especially interesting point is the blurred point of difference between promotions, which have traditionally been more B2B-focused, and advertising, historically a B2C effort. Driven by coupons and discounts / deals, mobile marketing is starting to move across each category of US promotional spending.

Coupons, discounts and deals have “evolved,” Borrell says, to a balance point where they are both easy to execute and appealing to consumers. Other, more complex promotions prove to be more challenging to implement. An example: proximity marketing is enjoying press exposure right now. Borrell projects that the nascent marketing structure will hit its stride about two years from now. For the moment, promotions involving geolocation and “fencing” are too complex, data-driven and expensive for all but large national advertisers to take on.

It would seem that there is a major creative opportunity for middlemen — or traditional ad and marketing firms — to help develop effective and simple creative to push through these new channels, allowing advertisers to retain their hands-off status. Gradually, however, the creative quality will be forced to improve, based on consumers’ heightened expectations and the risk otherwise of saturation.

Borrell’s report effectively illustrates the skyrocketing growth of mobile marketing and advertising, as well as clarifying the multiple channels that fall within our current definition of “mobile.” They do remind the reader, though, that this all exists within a much larger bucket of money still being spent by national advertisers on traditional marketing and advertising efforts. Mobile marketing is an infant: tiny, but loud, and getting louder.

Via: http://streetfightmag.com/2011/08/12/borrell-report-local-marketing/