Marketers to spend $1.8B on location-based advertising in 2015: study

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Marketers will spend $1.8 billion on location-based advertising in 2015, a huge increase from the $42.8 million expected to be spent this year, according to ABI Research.

“For a number of companies, especially ones with physical stores, the value in knowing a prospect's location is the opportunity to drive that person to a store, and thus increase foot traffic,” said Neil Strother, research analyst at ABI Research, adding that the industry is now “seeing the first shoots” of location-based advertising being commercialized. “Once in store, the retailer has a high probability of converting that visit into a sale, which is the ultimate objective.”

Marketers' options in the location-based advertising space are also becoming more clearly defined. For instance, mobile shoppers have “check-in” services available to them through platforms such as Loopt, Gowalla, Foursquare and now Facebook with its “Places” page for consumers who opt in and “self-identify.”

The company conducted its research in July and August among location-based mobile vendors.

“There is a value exchange between marketers and consumers that goes along with location-based advertising,” said Strother. The consumer is asked to share his location via phone in exchange for something of value from the marketer, which could be information about a nearby store, a coupon or a special offer, he explained.

The report indicated that analyzing customers' mobile and location habits is a good strategy for marketers taking on location-based advertising. Companies should also determine which platforms are best for a particular brand, the report said.

The study also noted that a combination of GPS, Wi-Fi and Cell-D — the three technologies that enable location-based ads — will contribute to the most successful campaigns, depending on the product, service, region, consumers and location accuracy required.

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