Geo-Targeted Display Ads Set for Growth

The market for geo-targeted display ads is poised for aggressive growth over the next few years, from $897 million in 2008 to more than $1.9 billion in 2013, according to digital media consulting firm BIA/Kelsey.

Geo-targeted ads — banners that are presented only to people logging on from a particular region, or that appear different depending on the location of the user — currently represent only about 10.2 percent of display ad units, according to BAI/Kelsey, which is based in Los Angeles.

But that share will increase to 15 percent by 2013, the firm says, as advertisers look for cheap alternatives to search ads and publishers and ad networks look for creative ways to unload a glut of display inventory.

“Resellers like AT&T and the Yahoo Newspaper Consortium…are going to start to sell these geotargeted display products because the search CPCs are really high,” said Matt Booth, SVP and program director at BIA/Kelsey. “If you’re a reseller, you’re buying a search click for $2 and you can get 1,000 impressions for 45 cents, the economics are in favor of shifting to this market.”

The most fertile market for geo-targeted ads will likely be smaller and mid-size businesses, Booth said, because they tend to be more focused on local advertising and because search advertising is “more complex than what they are used to.” But ads that can appeal to consumers based on location hold appeal for national advertisers as well, such as an airline running specials on flights departing from a particular city.

On the publishing side, the sites with the highest prevalence of geo-targeted ad units tend to be social networks and portals, Booth said. “There’s just a ton of banner inventory that’s just not getting used,” he said. “People are just finding new ways to utilize it.”