Location Based Advertisement is knocking the door

Well in the past I have talked about location based services as mobile killer app . Adding to that, there is lot of interest being shown in what is called “Location based advertisement”. Om has a nice article about Location Based Advertisement . Apparently, with inbuilt GPS mobile devices growing day by day, location based services are going to catch faster than any other application. According to ABI research, “GPS-Enabled Mobile Devices", Shipments of GPS-enabled mobile phones will generate over $50 billion in revenues in 2008, rising to $100 billion in 2012.

So what is Location Based Advertisement? How does this technology help Handset Manufacturers, Content Provider and Advertisement Agencies? Sharing context sensitive information based on user’s location is called Location Based Advertisement. Context sensitive information could be anything from restaurant discount coupons to discount sales in a shopping malls etc. For e.g.: You are walking down the street where start bucks is located, you are a coffee freak, your mobile phone receives an SMS message with a discount coupon of 1 dollars for your favorite latte; This is what is going to be the future of marketing. “Welcome to the world of Location Based Advertisement”. The wheel's evolution has started. For advertisement agencies, this concept brings in a new paradigm shift to their existing advertisement channels. The interesting aspect of Location Based advertisement is that it brings in new advertisement and marketing channels due to the combination of location and mobility. For content provider, a new channel to share their content based on location. And for the handset vendors, new innovative platform to support advertisement based on in-built GPS. All that said it’s the users that will decide the fate of this technology and not the advertisers or the technology by itself.

A study from IDC reveals that Consumers are very receptive to ad-supported local search. Also, despite perceived resistance among consumers and service providers, mobile consumers are receptive to mobile advertising. I’m not really surprised by the outcome of this study from IDC. According to eMarketer, Mobile ad spending will reach almost 3.5 billion , major share of this going to “direct response ads”. This segment is where Location Based Advertisement has great value. According to Google’s CEO Eric Schmidt,

“Location based advertising, which is the most talked about aspect of mobile advertising as of now, has the potential to make mobile advertising far more powerful and effective than what it is right now”

If you look at all the bigger players in the industry, one thing that everyone is scurrying about is supporting some kind of mobile location based services. Be it Google, Yahoo, Nokia or Microsoft; All of them have their money rolling in this hot arena.

CBS partnered with loopt to launch its Location Based Mobile Ads. However, the ads don’t pop up as an SMS message; instead these ads shall be shown in two of their Web Sites that are tailored for mobile devices (CBS Mobile News and CBS Mobile Sports). I don’t buy this BS idea, I mean it doesn’t make sense for the user to go and check CBS website when they reach an important destination. I guess while trying to address the privacy and spamming issues, they are missing the key value addition. But, overall it’s a very positive step for Location Based Advertisement.

All that said, since the concept is at its infant stage, there are still some potential challenges that needs to be fixed before we can see mass acceptance of Location Based Advertisement. I guess OPT in advertisement is one of the better strategies to avoid SMS spamming. Worthy of note here is that there are already some operators (Virgin Mobile) and startups (Blyk, Talkster, Pudding media etc) that are providing free SMS and voice calls based on advertisement.