Location-Based Mobile Ad Spend to Quadruple by 2015

Spending on location-based mobile ads in the U.S. will grow four-fold over the next five years, eventually accounting for 70 percent of mobile ad spend, according to forecasts by local media consultancy.

The firm predicted advertisers will invest a total of $690 million on local mobile ads this year, reaching $2.84 billion by 2015. Meanwhile, overall spending on the channel will attract a total of $1.6 billion in 2011, rising to $4.05 in the same period, the firm expects.

Growth in the mobile ad space will be predominantly driven by the continued proliferation of smartphones as well as the emergence of self-service ad platforms, BIA/Kelsey suggested, aided by a focus on digital media from local media companies and the continued growth of location-aware technologies.

“Ad volume growth will be compounded by premiums placed on location-targeted ads,” the report said, citing the increased performance of location-based ads versus those targeted by other means. “This performance is a function of higher relevance, immediacy and consumer buying intent, which are more prevalent in mobile than many other print and digital media,” it explained.

Despite the promise and potential of location-based advertising, however, regulators remain concerned about the potential privacy implications of the practice. Last month the U.S. Senate Committee on Commerce, Science, and Transportation held a subcommittee hearing titled “consumer privacy and protection in the mobile marketplace,” and invited representatives from Google, Apple, and Facebook to testify alongside David Vladeck, director of the Bureau of Consumer Protection of the Federal Trade Commission.

Meanwhile in Europe, the European Commission’s Article 29 Working Party – a collection of data authorities from across the EU responsible for promoting pan European privacy practices – issued an opinion classifying location data from smartphones as “personal data,” the collection of which it suggested is only legal following consumers’ “prior informed consent.”

WPP-owned media agency GroupM also issued its own mobile privacy guidelines yesterday, which encouraged ad providers to offer users an easy opt-out for targeted advertising, and to limit the amount of data collected for advertising purposes.