Research firm BIA/Kelsey have projected location-targeted mobile advertising spend to increase from $9.8bn in 2015 to a whopping $29.5bn by 2020. That’s a 24.6% compound annual growth rate.
According to the firm’s latest US Local Advertising Forecast 2016, search continues to outperform other ad formats and holds the largest share of location-targeted ad spend across the forecasting period. However, its share is likely decreasing from 57% this year to 42% by 2020. BIA/Kelsey says it defines location-targeted mobile ads as those that are based on a user’s location or those that include proximity-relevant content to trigger local offline conversions.
Native social mobile advertising, such as Facebook news feed and Snapchat Stories, is on the rise, growing from 19.8% in 2016 to 28.1% in 2020. Instagram and LinkedIn have similar offers and continue their push into the area.
The research firm adds that native social’s rise will come at the expense of search and display.
US location-targeted mobile ad spend in 2020
Michael Boland, Chief Analyst and VP, Content, BIA/Kelsey, explains:
“Several market factors are currently bearing down on the mobile ad marketplace—from Google’s moves to adapt to an app-based world, to the media consumption habits of millennials. These and other influences will require advertisers, publishers, agencies and ad tech players to rapidly innovate.”
Other factors feeding native social’s expected rise include the use of ad blockers, which will benefit formats immune to blockers such as native social and sponsored content. However, the format itself is proving to perform well when compared to other mobile ad formats. The user experience is better because ads are auto-adopted to mobile device screens. In addition, Millennials and younger audiences are more receptive towards native social ads than traditional formats like banners. Ultimately, native social continues to evolve to include action buttons and multimedia.