Drilling Down on 2012 Mobile Predictions

As my colleague Charles Laughlin mentioned, we just published our predictions for the coming year in local media. These were cross-disciplinary, bringing together the top 10 predictions across BIA/Kelsey’s coverage areas (mobile, online, video, print, social, commerce).

To expand on those, below is the “director’s cut” for the predictions I’ve made specifically for mobile. Some are more pragmatic (Ad revenue projection), while others are a bit more conceptual (the ‘internet of things”). Either way, they’re thought out and we tell it like we see it.

Your push back or support is encouraged in the comments section or email me any time to engage throughout the year (mbolandATbiakelsey.com). These themes will also be central to our upcoming Leading in Local conference, March 18-20 in Boston, and a free webinar we’re running tomorrow.

1. U.S. Mobile Ad Revenues Surpass $4 Billion
U.S. mobile ad revenues will reach $4.2 billion, a 36 percent increase over 2012. The portion of this attributed to localized campaigns will be about 2.1 billion (50%). Growth in mobile local ad spending will be driven by continued momentum in advertiser evolution to localize campaigns, due to users’ mobile local intent (i.e., 50% of mobile searches are local). Premiums on higher-performing mobile ads will also drive this local share shift. Mobile local leaders such as Yelp and Foursquare will monetize their mobile products in more direct and substantive ways. Mobile optimized websites will reach 5% SMB penetration (currently 2 %).

2. Mobile Ads Come Into Their Own
Erstwhile plummeting mobile ad rates will even out and rebound in some cases. This will be most pronounced in search, pay per call, and other ad formats that align high consumer intent and measurable ROI for advertisers. These factors will boost advertiser demand and performance-driven ad rates. Native advertising will be a resounding battle cry for mobile innovation. Calls-to-action will improve within display ads, including localized actions that track offline conversions. Search will meanwhile grow due to its pull-based, high intent driven nature — accounting for $1.9 billion in mobile ad spending in 2013 (45% of total U.S. mobile ad spend).

3. Mobile Makes or Breaks Facebook’s Future
Facebook’s mobile revenues (currently 14% of total revs) will reach 25%. This could surpass $1 billion in mobile revenues, driven by sponsored stories and other forms of native advertising it launches or continues to grow (i.e., app download ads). Worldwide Facebook mobile users will meanwhile reach 1 billion in 2013 (currently at 600M). As for local, Facebook will integrate sponsored stories, graph search, and its recently launched ‘Nearby’ feature to bring social native advertising to more of a local level. Local suggestions built from Nearby and locally oriented graph search will create monetizable inventory for SMB-based advertising within the news feed. Facebook’s innovations here will have much influence on the marketplace’s continued adaptation and education with mobile ads and native formats.

4. Mobile Payments & Shopping Divide the Winners & Losers
Mobile payments will continue to be caught in an experimental phase throughout 2013, with many competing standards. NFC won’t get off the ground, nor will QR codes. Retailers will embrace point of sale systems that don’t add more moving parts and allow them to better track purchase behavior and facilitate loyalty programs in a tangible way. Square will continue to grow for these reasons, and because it doesn’t require a change in consumer behavior (credit card swipe). Paypal will also grow as a function of its retail partners, POS integration, and consumer education through existing reach, trust, and brand equity. Retailers that fight showrooming head on with their own point solutions will win over those that ignore the phenomenon or attempt to fight it through heavy handed means (banning smartphones or legal recourse). iTunes will be a sleeping giant for physical world purchases, via iOS based mobile hardware.

5. Mobile Ties Together the ‘Internet of Things’
Mobile’s true opportunities move beyond the smartphone. Programs like Kickstarter will democratize the development of mobile hardware — much like the app economy has democratized mobile software. Myriad mobile devices will become the remote control to the physical world, enabling the emerging phenomenon of the ‘internet of things’ (interlinked physical items). Examples include home automation (Nest), health (Jawbone UP), in-auto (Pandora and Google integrations), and biometric or wearable hardware (Google Glass). Local content and directional advertising ties in where local services have clear alignment with these use cases (i.e., home or health diagnostics).

More to come on all of these as they develop…