Location-Based Ads a Goldmine, Says Survey – 50% of Users Take Action

Although the privacy issues surrounding Facebook’s new, opt-out only data sharing policies are making people uncomfortable, one area where folks are apparently happy to have their private data shared is on their mobile phones. And by private data, we mean exact GPS coordinates. Coordinates that are shared with software developers, ad networks and location-based service providers in return for free location-based mobile applications and geo-targeted ads.

In fact, one in four U.S. adults use mobile location-based services, according to a survey put out by the Mobile Marketing Association (MMA) last week. And nearly half of those users are responding to the included location-based ads.

Location-Based Ads See Nearly 50% Engagement Rates, Says MMA

In partnership with Luth Research, MMA surveyed 1,000 U.S. adult consumers from a demographically representative sample and found that, as of mid-March, 91% of the respondents have a cellphone and 26% of that group has used a “map, navigation or some other mobile phone service that automatically determines your current location,” reads the MMA release on this data.

Perhaps more surprising is the level of engagement between these location-based service users and the geo-targeted ads. Nearly half of those who noticed ads while using a location-based service took some action.

Think about that for a minute and let it sink in.

For comparison purposes, a banner ad on the Web getting a 2% click-though rate (CTR) is considered fairly successful, but most campaigns now receive just 0.2%-0.3% CTRs.

That may not be a true apples-to-apples comparison, though. Location-based mobile ads don’t necessarily have CTRs – they can be anything from standard Web banners to creative interactive video displays that respond as you move the phone around, such as was the case with the Dockers ad – the world’s first “shakable” ad.

In fact, all forms of mobile ads do well. SMS ads saw 37% engagement, and ads seen while mobile Web browsing saw 28% engagement, notes the survey.

A few other interesting findings:

  • 10% of cellphone owners use location-based mobile services at least once per week
  • 63% of iPhone owners use location-based mobile services at least once per week
  • Adults ages 25-34 are frequent users of location services, with 22% using them at least once a week.
  • Consumers are interested in allowing their phone to automatically share their location in exchange for perks, such as free use of mobile applications and mobile coupons.

Location-Based Ads Outside the U.S.

While this data is certainly compelling, this trend may not extrapolate outside the U.S..U.S. For example, in Finland, McDonald’s recently participated in a location-based pilot campaign powered by Navteq LocationPoint Advertising that only received a 7% CTR. (A number that sounded incredible until this new survey data came out.) The campaign delivered ads to users of the Nokia Ovi Maps application, but not all smartphone platforms.

Still, McDonald’s deemed the pilot program a success. “The amazing thing about location-based advertising,” said Chris Rothey, VP of market development and advertising at Navteq, “is that it allows merchants to extend their storefront virtually to the surrounding areas and dramatically increase point-of-sale influence.”

It seems consumers agree: location-based ads are amazing. So amazing that people are actually using them.

Image by chokola

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