It will be no surprise to our readers that at Spreed we believe strongly in the promise of Location Based Advertising (LBA). We have talked about LBA in many of our previous posts and have built powerful  LBA features into our CleverAds mobile advertising platform.

For those unfamiliar with Location Based Advertising it is any form of advertising that targets users in a specific location and provides them with geographically-relevant ads. LBA has been around for quite some time now on the web, but typically targeting users only on the city or neighborhood level. However, with the rise of smart phones and smart phone applications, LBA becomes a lot more interesting. Almost all of the new smart phones possess GPS capabilities. This means that advertisers can now target people down to peoples exact location as they move around their respective cities.

We believe that LBA is going to be huge for the retail industry and we are already starting to see the returns as outlined in some of our previous posts. Although LBA has been around for some time, the companies really pushing this space forward are the Location Based Services (LBS), such as FourSquare and Gowalla. These services let you ‘check-in’ to specific locations and see who else is there and where your friends are. They are also useful for pushing location based deals and incentive programs. Gowalla, launched in 2007 and Foursquare launched in 2009 (according to Wikipedia). In the race to be the dominant service Foursquare is clearly winning –  Techcrunch recently reported that they are 5x larger and are growing 75% faster than Gowalla every day.

Location Based Services are exciting and have been gathering momentum over the past two years.   However we wanted to take this opportunity to point out the pros, cons and where we think they are moving in the next 6-12 months in regards to their potential for Location Based Advertising.

Pros

• These services are great at building brand loyalty. For example, if you are the person who ‘checks-in’ the most on FourSquare at a location, you become the mayor. Some stores offer free incentives to their current mayor. Also, there is a large opportunity to provide discounts to customers who ‘check-in’ a certain number of times. Think of this as an automated loyalty card program (i.e. Subway card).
• They pull nearby users in. For example, Foursquare is beginning to push deals via a banner on the application for specific stores or venues if you ‘check-in’ around their location.
• They let you know who is physically around you. I have been to many concerts and found out after the fact that friends were there. By using one of these LBS’s you can easily ‘check-in’ and find out who else is there (in real time).
• They are great for Word-of-Mouth marketing. Users can add tips to locations. If you login to a location close by to a location where a friend has left a ‘tip’, you receive the WOM advise via a push notification.

Cons

• People value privacy. I have been hearing from a growing number of people that they do not want everyone knowing where they are all the time. I think we are going to see this trend increase as time goes on. People are already worried about their privacy, but Location Based Services just up the ante on open information.
• People are beginning to experience serious ‘check-in fatigue’. Every time you go to a location, you have to manually check-in. If you are only using Foursquare, it still gets tiresome; However, if you are using multiple LBS applications, it becomes out-right annoying.
• There is very little utility for advertisers. Other than the location based deals that pop up every once in a while on Foursquare, there is very little value added to brands by these tools. People can provide you tips when you check in to a location, but there is no call to action, no directions to get to this location and definitely no ‘download a coupon’ option for this location tool.

If LBS apps are going to survive and become successful business ventures, they will need to address these cons. There is an interesting article in  today’s Mobile Marketing Watch about a new LBS app called GroupTabs. GroupTabs is set to launch in a few weeks and is a cross between FourSquare and Groupon. If you do not know about Groupon yet, they push local deals to subscribers daily. Grouptabs plans to push people deals from around their current location as they ‘check-in’. These deals will add a lot of value to the LBS chain and definitely provide utility for both the advertiser and the end user — which solves one of the major problems of the current tools.

The second article that inspired this post is based on ‘check-in fatigue’ and can be found here. In this article Saad Fazil of VenturBeat states that, “Auto checkins can become useful if, for example, I specify Starbucks as one of my favorite spots and am automatically checked in whenever I am there — thus making it easier for the company to offer discounts based on number of checkins.” I wasn’t too sure about auto check-in’s at first as people are already leaving these services because they do not want people to know where they are all the time. However, if you can specify what your favorite stores/locations are and have the tool automatically check you in when you enter the location, those problems cease to become a deterrent.

Now imagine if we mashed up the above two concepts and created an LBS application that allowed you to chose your favorite stores. Whenever you entered the store, you would be pushed a relevant coupon or promotional deal either for the store or for a relevant purchase. This would get rid of the ‘check-in’ fatigue, would in most cases solve users issues around privacy as these are not private location and would supply a great deal of value to the end user. This is the future of Location Based Services and where we would like to see this space going in the future in order to drive the Location Based Advertising Industry.

Only time will tell, but we think GroupTabs is on to a great idea and we whole heartedly support their efforts. If they can adopt the automated check-in system, we think they have  winner. At Spreed we are looking to push location based deals when people open up their newspaper app around one of the papers retail advertiser locations. The pop up would include directions to the location and a coupon for use on their next purchase. As end-users, newspaper publishers and advertisers, what do you think of this opportunity and Location Based Services in general? Let us know!

Even more good news regarding the mobile advertising industry so far in 2010. It seems that all the hype (whether deserved or not) surrounding the iPad has translated into some very early successes for newspapers like Gannett’s USA Today. The Washington Post is reporting that USA Today sold a $50 CPM for its inaugural advertiser on the iPad, Courtyard Marriott. That comes to $0.05 per impression, compared to less than $0.01 per impression for USA Today’s Web site. Such pricing suggests the iPad may prove to be a lucrative new source of revenue for newspaper and magazine publishers.

MediaPost News has a great post on the subject at the link below

‘USA Today’ Gets $50 iPad CPMs

Mobile ad networks have typically charged $10 to $20 CPMs for advertisers looking to reach consumers via ordinary mobile phones. Premium prices range $30 to $40 for mobile video and for particularly desirable cohorts, like iPhone and smartphone owners, super premiums of $50 for popular publications, in the case of USA Today.

WaPo reported that one mobile marketing company, Mobext U.S., said publishers are charging two to four times their typical online rates, — generally under $10.

We need to apologize for the lack of posts in the past month, but as you can tell by the title, things have really been picking up. BuzzCity, a global advertising network that releases a quarterly advertising index, reported that mobile advertising grew by 38% globally in Q1 of 2010. As a personal anecdote, we can  report that Spreed’s clients  have been bombarded in Q1 by advertisers interested in reaching their respective mobile audience.

CEO of BuzzCity, KF Lai, stated that “This double digit growth is also seen beyond the top 20 markets reported on in the study. America saw a 54 percent increase of ads served over the three months in Q1 of 2010,” he said. “This sharp increase in growth, globally and in the U.S., can be attributed to the mobile-centric agencies who are delivering more constant and structured investments in the mobile medium.”

We must note here that these numbers reflect mobile banner advertising and not SMS or mobile search advertising. Banner advertising which is currently the heart and soul of mobile application advertising has traditionally been a fraction of its other two, much more mature siblings.

It is exciting to see the Canadian numbers grow by 68%, considering that Spreed’s headquarters are in Canada and a number of a marquee clients also are run out of the great white north. Canada is still only ranked number 5 in the World for mobile advertising spending. However, this is the first year we have made the top list and all of these figures are proof that mobile is a viable channel. Those media organizations who supported the wait and see strategy in regards to their mobile strategy should definitely take these numbers to heart.

Mobile advertising is still just a fraction of mainstream digital or broadcast advertising. However, page views and overall app and mobile web usage are increasing at a rapid rate. It is important to start on a mobile strategy at some point in 2010 if your organization wants to lock down users and start building up statistics in order to attract these advertisers.

Please see the chart below for exact numbers and rankings.

Happy Monday morning everyone. I hope you all had a great weekend. I know everyone is busy getting ready for the week ahead, so instead of giving you a few long posts I have decided to share some of my weekend reading with you.

Mobile ad campaigns 5 times more effective than online: InsightExpress study

“Far from being a one-trick pony, mobile is effective in rich environments like mobile video, minimal environments like SMS and the area in between covered by mobile display,” she said. “Add to this the findings that all verticals are seeing mobile impacts greater than online campaigns and the arguments for not adding mobile to a media plan fall away.”

NBC details aggressive mobile initiatives for 2010 Olympics

Through partnerships with several carrier networks and brands such as Coca-Cola, NBC Universal is bringing its 2010 Vancouver Winter Olympic Games to the mobile medium.

NBC has launched several new mobile initiatives and rebranded its other wireless properties to promote the sporting event. The entertainment giant’s coverage of the Olympic Games spans its various television networks and content channels to bring as much programming and interaction to consumers.

Mobile Marketer’s Mobile Outlook 2010

It is quite clear from recent market activity – Google buying AdMob and Apple absorbing Quattro Wireless, Apple iPad and Google Nexus One launches, eBay’s record $500 million in mobile commerce last year – that mobile is no longer considered a niche medium.

An interesting post came up on Mobile Marketing Watch yesterday about the resurgence of application sponsorships. The post cites an article written by Steve Smith of MediaPost. I will let Steve do the heavy lifting, but in summary the article states that not every brand translates well into a mobile application. If you do not have an idea for a mobile app that adds value to your brand, don’t just build something for the hell of it! You will spend big money on an app that hardly ever gets downloaded and even if it does the retention rates will probably be so low that it does not justify the costs. Instead, find an existing mobile media application  - i.e. a newspaper app – whose retention rates are usually through the roof (74% after 30 days) and pay for a run of app sponsorship. You will be able to, at a fraction of the time and cost, leverage the eye balls that someone else has been able to retain and still embed actionable functionality that will give you all the benefits of having your own app. If you have any questions on what I mean about embedding actionable functionality please contact me. A number of the ad units that Spreed is helping to build can be considered apps within apps (actionable functionality) and when grouped together with the sponsorship costs are much less expensive and will provide much more bang for your buck! Here is the article from MediaPost:

The Lost Art of Sponsorship

Now that a bit of the fervor over branded apps has died down, it has become clearer to a lot of marketers that not every brand translates easily into the kind of utility consumers really want on their phone. Some publishers tell me that they are getting a lot of interest from marketers who want to be sole sponsor of new branded media apps. Instead of buying up a new audience for their branded app, they prefer to align with a tool and a media source brand that has already built an audience.