With all the talk about the economy, it seems that these days the focus is about moving marketing dollars from traditional media to online media.  No doubt, this is a good strategy for some industries.  After all, online media is measurable and allows for more granular targeting than other media.  However, it’s important to keep our eyes on the horizon and what’s on the horizon is Mobile.

Recently, the Kelsey Group held a great webinar called, “The Mobile Local Opportunity” which addresses the recent developments of this space and what to look for in the future.  This online presentation covered many things including mobile usage and ad revenue but its focus was on Local Search.  Just like the Internet, Mobile is measurable and has very granular targeting capabilities.  In addition, it allows businesses to get closer to consumers and relay messages to them more often.  With 62% of consumers turning to the Internet first when looking for local business information, it’s important to watch for Local Search opportunities in the Mobile world as well.  With this blog entry, I’ll cover the important parts of this webinar and hopefully give you a good idea of what to watch for.

First, where is the media now?  Well, it is projected that in 2009 mobile ad revenue will reach $330 million.  This revenue breaks down to: 63% from SMS (text messaging), 24% from Search, and 13% from Display ads.  It is projected that by 2013, revenue will reach $3.1 billion which is an increase in CAGR of 81.2%.  The breakdown for this projection is: 9% from SMS, 73% from Search, and 18% from Display ads.  Again just like the Internet, Search will become an important factor in how businesses relay their messages to consumers.  But, what are the reasons behind these projections?

Today, about 80% of Mobile phones in use are basic, which means that the top forms of marketing to these consumers are SMS and Directory Assistance.  On the other hand, about 19% of Mobile users have a Smartphone and 54.5 million use the Mobile Web.  About half of consumers using a mobile phone said that they are ‘very likely’ or ‘somewhat likely’ to purchase a new Smartphone within the next two years.  It is projected that by 2013, 95 million users, or 32% of mobile subscribers will use the Mobile Web.  As Smartphones become smarter and more consumers find value in these devices, Mobile marketing will become more important for businesses.  Out of all Mobile devices, the iPhone probably has had the greatest effect on this media the most so far.  The phone has set the bar for design and has influenced Mobile phone manufacturers to create copycats, with Mobile apps, including Google Android, Palm, Nokia, and BlackBerry.  This revolution in the Mobile space has even reached consumers with lower-income (check out “Increased iPhone Demand Among Lower-Income Demographic”) confirming that consumers of all income levels want these devices.

The main appeal of these Smartphones is the constant access to information wherever consumers go.  In fact, almost one-third of Mobile phone users now have a separate plan for Internet access.  Almost 40% of mobile users report that they access the Internet from their Mobile device.  This access provides users with great information.  The Kelsey Group reports that in the past 6 months, 15.6% of users have searched the Internet on their Mobile devices for local products or services and 14.3% have searched for products or services outside their local area.  Some types of businesses these users have searched for include:

• Restaurants/Bars – 43.4%
• Movies/Recreation – 37.0%
• Retail Stores – 35.3%
• Banks/ATMs – 32.4%
• Hotels/Lodging – 27.2%

As Mobile users’ demand for information increases, the so-called “Mobile apps” will become more important.  More of these apps will also include the Local Search element as consumers will demand information about businesses based on where they are physically located at any one time.     Already, 15% of iPhone apps are local.  Some of these local apps include UrbanSpoon, YellowPages, and Citysearch.  Today, Local consists of 27.8% of the Mobile search volume.  By 2013, that number will increase to 35.1%.  Diana Pouliot, the Mobile Ad Sales Director at Google already sees this trend, “Local Search on the mobile device indexes higher than the desktop by about two to three times”.

Some of the tactics used to reach these consumers are similar to what’s used for Online including CPA (mobile coupons, product reservations), banner ads, Mobile SEO & SEM, Pay-per-call, Voice search, and SMS.  Engagement on Mobile is also good.  Average display click-through rates are 2% (on the Verizon network) compared to online which is 0.25%.  Market research firm GfK reports (U.S. and U.K.) good Mobile engagement:

• Mobile ad recall rates – 33% (41% for iPhone users)
• Response rates among recalled ads – 33% (50% for iPhone users)
• Purchase or store visit after seeing Mobile ad – 14% (25% for iPhone users)

What marketers should glean from this data is that Mobile will be a force to reckon with.  It’s important that businesses know what the potential is for this media and how to implement their marketing efforts in order to reach their customers the best.