OPINION: The key to mobile advertising and m-commerce? Location

Motti Kushnir, CMO of Telmap, explains why location will be central to the success of these money-making mobile services.

The smartphone revolution is promising huge changes in the way that marketers communicate with end users. And because mobile is unique in its ability to understand where a consumer is, it's location technologies that are emerging as the marketer's key channel for mobile comms.

Specifically, there are two main options available: location-based advertising and location-based commerce.

* Location-Based Advertising

Advertisers and marketers are looking for a means to differentiate their campaigns on mobile - and localisation offers it by allowing them to truly pinpoint their target audience in real-time and manage their campaigns on-the-fly. 

Advertising ROI is expected to surge as a result, and this is why increasing numbers of brands are embracing the local factor. In fact, Pyramid Research predicts that location-based advertising will reach a market size of $6.2 billion and account for nearly 35 per cent of total mobile advertising revenue by 2015. 

For now, this form of advertising is primarily comprised of banners, branded widgets, branded points of interest on-map and sponsored search results. 

But in the future it will evolve towards an emphasis on an ad's ability to literally “drive” or “walk” a user through the front door of an advertising business’s location.

This will have major implications for the revenue model around mobile ads, which is currently based on CPM with little emphasis on Cost-Per-Action (CPA). 

We at Telmap are noticing that advertisers are becoming more and more aware of the location component’s power to drive a user to the retail location.  As such, CPA is on the rise and we expect advertisers will continue to pay more and more for CPAs that get their target audience to a specific location.

* Location-Based Commerce

This includes all types of location-enabled commercial offerings such as coupons, vouchers, bookings and premium in-app content. 

With consumers increasingly price conscious, these services have obvious potential. And for merchants, they offer the added bonus of increasing sales, moving excess inventory, creating awareness and driving traffic during low volume times.  Using location-based commerce to deliver special offers based on account location, timing and context significantly increases the chances of achieving these business goals. 

Telmap is already pushing such concepts. In a project with OPTUS, the Australian operator, users were able to purchase access to electronic vouchers that offer discounts for thousands of Australian restaurants. They could then search for offers in their vicinity, read reviews and even complete the booking and get turn-by turn navigation instructions to the restaurant, all from within the app.

Click through rates have been considerably above the industry average.

Overall, smartphones are changing the way consumers think and behave.  Historically, businesses presumed that people do their bookings and collect coupons well in advance of the event.

Smartphones change this, enabling genuine on-the-go activity. 

We at Telmap believe that location-based commerce is a game-changer for mobile monetisation, and will become the best practice for helping consumers make smart day-to-day purchasing decisions.

* Motti Kushnir is CMO of Telmap

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