Personalisation, not location, key to mobile ad success

Mobile advertisers need to target their ads at users’ interests, rather than their location, if they want to boost the value of mobile ads to consumers, according to a report by Luth Research for mobile marketing firm Upstream. In a survey of more than 2,000 US adults, 59% of feature phone owners said they preferred personalised ads, versus the 18% who prefer ads based on timing, such as a lunchtime deal sent at midday. Lifestyle-based advertising attracts 16% of users, while only 8% said they found location-based advertising most effective. Among those with smartphones, the majority said they preferred personalised ads at 60%, while 17% prefer those based on timing, 10% on lifestyle and 14% on location. The figures suggest that, despite the hype surrounding location services such as Foursquare and Facebook Places, and their potential boost to mobile ad campaigns, it remains a niche service among consumers.

Mobile advertising is expected to see significant growth over the next few years, with recent Gartner stats pegging global revenues to hit USD20.6bn in 2015, 12 times the USD1.6bn generated last year. That growth is expected to occur as consumer adoption of more advanced mobile devices, including smartphones and tablets, continues to rise, alongside increasing marketer confidence in the possibilities of mobile and targeted advertising. Many analysts have previously suggested that it is location that has led to the tipping point in mobile advertising, with the ability to offer ads and deals based on where a consumer is likely to drive up revenues in the coming years. However, the Luth research suggests that location is of less interest to consumers than previously thought.

“Comparing the importance of personalisation versus location in receiving mobile ads is especially interesting, given the hype around location-based players such as Foursquare, Gowalla, Yelp, Facebook Places or even Google+ with its Latitude check-ins,” says SVP of product management at Upstream, Assaf Baciu. “While location remains an important factor in delivering mobile ads, tailoring interactions via mobile to consumers’ ‘tastes and interests’ clearly represents much greater potential for driving higher response and conversion rates.”

The report also finds that consumers are most interested in receiving ads about content for their mobile device, followed by movies and entertainment ads, such as tickets, offers from their network operator and consumer goods. Among smartphone owners, mobile coupons are the top “channel of influence”, with users most likely to interact with ads in this format, followed by opt-in text message, an email, an ad on a mobile website and ads that appear during internet searches.

The figures suggest that firms such as Groupon and LivingSocial, rather than Foursquare or Gowalla, could be best positioned to take advantage of the shift to mobile, if they can offer timely deals based on users’ interests. Both the daily deals firms have recently upped their focus on mobile, with Groupon launching ‘Groupon Now’, daily service that enables businesses to run offers at specific times of day via a revamped mobile app. Groupon says it expects half of its sales to come from mobile within two years. However, with Groupon also building location into its mobile offering, it appears that the biggest winners will be marketers that can target deals at consumers based on their interests and location.

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