The frenzy has started as organisations jostle for a position in the mobile application hall of fame – ‘Local’ is shaping up to be one of the most hotly contested areas. What is it really going to take to make a mark and how ‘Local’ can you go?

The Apple strap-line resonates – “There is an App for that” – however creating an application does not mean a business will prevail. Many organisations seem to overlook the value part of the process – how are they going to deliver a sustainable model? Not one that relies heavily on investor generosity.

Who is going to ‘use’ the application and who is going to give you the ‘money’? Sounds obvious until you look to some of the fixed online giants – Facebook, Twitter and YouTube – who have huge usage, amazing associated price tags, but have yet to find a way to get anyone to give them real money. All now seek the revenue model –  a challenge as none want to upset the value chain that has given them their success. Making money would have been a far easier process if it had been defined from the outset.

In terms of ‘Local’ this should be obvious – consumers will use and businesses will give money. (If only life was that simple!)

Need for consumers

Setting distribution and marketing aside businesses need to focus on the offer. To get a consumer to use an application it has to offer something they actually want - utility is essential. Without utility a consumer will simply not come back. Analytics firm Flurry recently reported that on average a consumer uses a single mobile application an impressive 6.7 times a week, but also that over 70% of consumers stop using an application after just 60 days. Retention levels of around 30% are clearly not ideal when looking to build a sustainable business. This is especially true when you consider the application environment is becoming ever more crowded.

In a post recently I discussed how the outcome of the service interaction is so important – the consumer action is usually why they came. Recognising ‘what’ a consumer wants to do? is one of the most important components to deliver against. For Local the ‘what’ – call, book, buy, visit or simply provide information – is so important. A successful outcome will encourage a consumer to come back.

Context of ‘Local’

A critical mass of content is essential. A local service becomes useful when it has mass market appeal. Whether it is linked to a single street, district, town or city is largely irrelevant. A shopping guide needs all the stores, not just one or two, a Social guide all the bars and clubs. A core and consistent level of content is a must. Local information typically means a fixed location, building or business. The best historical players in this space are the Yellow Pages publishers as they have the basic details of all businesses – name, address and telephone number. Their challenge is that there are no attributes linked, reviews and comments, images – simply no life. 

It is possible to create or obtain core content, you just need to factor in cost and consistency. As this will form the basis of the Local offer it is important to get it right – otherwise consumers will simply not come back.

How ‘Local’ can you go?

Mobile and Local, two scenarios spring to mind – ‘where I am now’ or ‘where I am going to be’. A common mistake that many location based services make is to assume your current location is important – often it is not. Mobile is about ‘mobile’, it is about roaming. Understanding location is a key part in any service offering as it helps define what is relevant and what is not. This is far more challenging than many believe.

Local at a micro level means content – very rich content – which can be very challenging to deliver and scale. Local at a macro level – comprehensive content – can be challenging to deliver added value and differentiation. The credibility of a Local service will be judged on an area that a consumer is familiar - if positive trust will be instilled. To deliver a truly compelling and encompassing local service from scratch is likely to be a tall order for any organisation. Partnerships that add value and enhance the offer can and should play a valuable role. Whatever the offer, the service needs to evolve and do so in a timely manner to keep consumer interest and engagement. Strategy should reflect all these elements.

Show me the money

Once Usage has climbed to great heights attempts to deliver commercial value begin. It is unlikely that this will come from Users – they have become very reluctant to pay for anything in the digital environment – so businesses become a focal point. Commercial development needs to support delivering an actual return to a business, ideally with no impact on the application utility or usability.

Seeking money from businesses is a challenge and it is a very crowded market and a difficult one to gain a foothold in as there are very established players. Large businesses deal through agencies, small businesses don’t have the time. There are ways the key is to know how to use them for advantage.

First of Martin’s Inside track columns on mobile. Directly from leading online site mSearchgroove.

Local focused mobile advertising is shaping up to be more than a revenue opportunity. There is every indication that it will be one the few channels to buck the downward trend in advertising spend over the next few years. Where’s the money? Martin Wilson – MSG columnist and owner of Indigo 102, a strategic consultancy with a sharp focus on media and mobility – argues the winners will be the ones that keep it simple and make it valuable.

Mobile advertising continues to be a good news/bad news story. And your view seems to depend on the news you want to hear.

November was a stellar month for mobile advertising. Google paid an eye- watering $750 million to acquire 3-year old AdMob, a Silicon Valley-based leader in display and iPhone ad formats. Google is not one to waste money, so you can imagine what a huge opportunity mobile advertising really is (even if the rest of the industry is blinded to it) if a Web giant is willing to pay almost $1 billion for a company with mobile expertise. I wonder if we won’t look back in two years and say it was steal…

At the end spectrum, there are always industry pessimists who ask when mobile advertising will finally be big business. However, I must also note (with a grin) that many of these nay-sayers are large publishers (can’t name names) who are 1) amazed by the tremendous traffic to their mobile Web destinations and 2) clueless about how they might harness mobile advertising and monetise these eyeballs.

And let’s not forget the mood among traditional media players. Doom and gloom everywhere you look: newspapers, direct mail, TV, radio, yellow pages, outdoor, magazines and PC Internet.

In fact, the BIA Financial Network (BIA), parent of the Kelsey Group, forecast spend on these media to decline to $144.4 billion by 2013 from $155 billion last year.  But there are winners among the losers. With budgets under pressure and advertisers beginning to demand far more tangible results, traditional media – such as print – is likely to be hit far harder.

Marketers have long realised this trend and increasingly turn their attention to online and new media channels. Against this backdrop, online commands an ever-increasing share of spend. BIA has forecast the new media share globally to grow from around 9 percent today to over 22 percent by 2013. Moreover, a recent study from Pricewaterhouse Coopers (PwC) predicts by 2013 the new media share of advertising in the U.K. will be around 34 percent.

Clearly, the advertising market is going to shrink and see a substitution of spend. It’s a trend that squeezes traditional media and spells opportunity for companies that either play in new media or migrate value to their online assets. Thus, your chances of survival are a measure of your willingness to rethink your media business models and refocus your operating principles.

MOBILE MATTERS

The media futurist Jeffrey Cole points out that the biggest challenge companies face is their own reliance on traditional advertising models. “The problem [is] people often believe there is enough life left in the ‘old advertising model.’” While many companies are still waiting for traditional advertising techniques to deliver, Jeffrey is convinced that the “big breakthroughs will be digital advertising developed by those who grew up their entire life with digital media.”

If Jeffrey is correct, and I believe he is, then mobile – a personal medium digital natives regard as an extension of themselves – is where we will see the meaningful innovation and positive business results.

Indeed, mobile continues to be the bright spot in a raft of recent industry reports. Then market outlook is even more buoyant when it comes to advertising approaches that successfully combine location and promotion.

The Kelsey Group, a research firm specialised in location-based services, expects mobile local advertising revenue alone to reach more than $3.1 billion by 2013, up from just $160 million in 2008. Meanwhile, Gartner forecasts total spending on mobile advertising to grow to $7.5 billion in 2012, up from $530.2 million in 2008.

Connect the dots in these reports, and mobile advertising revenues could outstrip anything that has gone before, making mobile one of the fastest growing advertising channels of all time. A remarkable feat when you consider that the overall advertising industry (traditional and online) will continue its decline. No wonder Google was so keen to snap up AdMob and stake its turf.

WHY WILL MOBILE GROW

In a word, mobile is different. While other media may be limited to a time or context in our daily routines (print in the morning when we read the newspaper on the train and TV when we get home in the evening), mobile is a 24/7 channel directly to us.

Look at it this way and mobile ticks so many marketing boxes that you ignore it at your peril.

• Mobile is a life-line for the 18 to 30- year old demographic, a very attractive demographic to marketers and notoriously difficult to reach.
• Mobile is a personal device and rarely shared, making one-to-one marketing a real possibility.
• Mobile is present at the point of purchase, providing marketers a channel to influence people’s brand choice and encourage the all-important impulse buy.
• Mobile is measurable, allowing marketers insights into campaign performance and their ROI.

However, for most brands and media owners, mobile remains one of the great untapped channels.

WHO WILL “GET” IT?

Not everyone is blind to the tremendous opportunities at the intersection of local information and advertising approaches. In fact, there is a staggering number of players across the ecosystem jockeying for a lead position. At one end of the spectrum you have the search engines and platforms: Taptu, MCN, Google, Yahoo, and Microsoft, just to name a few. At the other end, you have dozens of directory publishers (Yell, Pagine Gialle, Pages Jaunes, etc.). And let’s not forget the social networks, media owners, verticals, handset manufacturers and mobile operators all lining up for a slice of the action.

The market is crowded. But, if companies continue with their current approaches, then a shake-out is imminent.

To be clear, only a handful of mobile players have what it takes to be highly successful. The barriers to entry, the complexities of the mobile channel and challenges of distribution and discovery make this a game for deep-pocketed players. But other companies have an equal chance (even if they don’t have equal budgets) if they use mobile in a smart and meaningful way to deliver real value to the consumer.

WHAT WILL MAKE A WINNER?

The winners will be the companies that have much more than content (such as local listings, for example). It will be those players that have the capabilities mix to deliver mobile consumers a contextual, relevant and tailored offering. This presupposes the know-how to deliver to the device capabilities, provide consumers the features they expect, enhance location information, support social and viral distribution and add value through marketing and advertising.

It may sound simple, but why are so many companies still getting it wrong?

In my view, they lack focus and an understanding of the mobile channel.

In contrast, companies succeeding in mobile are those players that have recognised the gaps in their knowledge of new media and brought in professionals that do. (Even better if these professionals are themselves digital natives with an instinctive grasp of mobile and its impact on every aspect of our daily lives.)

Leading digital agencies such as AKQA and Ogilvy, and progressive media owners including the BBC and Sky have long had dedicated mobile teams in place. Now other companies are following their lead, dedicating more resources to mobile or buying in skills as they need them (either because they believe in the true potential of mobile or because they have been pushed into mobile by brands who understand how important it is to engage with consumers on their personal device).

If you doubt that mobile demands experts with a different skills set, then consider the real reason Google acquired AdMob: it’s easier (and cheaper) to buy skilled people than make the investments and risk missing the mobile advertising opportunity altogether.

While many agencies and media companies have a long way to go (and a lot to lose), it is encouraging to see so many brands moving full-steam into mobile and reaping real benefits. The list of successful campaigns is impressive: Guinness with its ‘Passport to greatness’ campaign, British Airways with its ‘Mobile check-in’, HSBC with its ‘Business banking’, Sky with its ‘Remote record’, the BBC with ‘BBC mobile’ and the New York Times with their NY Times iPhone app. It is interesting to note that all these companies have dedicated teams or experienced agencies that understand usability and what makes mobile different. Even if these brands appear to experiment or treat mobile as a separate business, they are serious about mobile’s position as part of the digital marketing mix.

WHERE ARE THE LOCAL CONTENT OWNERS?

Brands are leading (not all – but we have more solid case studies than last year), agencies are learning and everyone else is at least talking.

So, where are the director publishers? They are the only players with content and vast experience in traditional advertising who have yet to make the most out of their digital assets. They should have a natural edge over their competitors, but, as I pointed out in my last column for MSG, they are leaving money on the table.

Indeed, directory publishers are best placed to deliver compelling local mobile services and – importantly – commercialise them through advertising. After all, they have existing customers and a powerful sales force to sell advertising products.

It appears that directory publishers are so focused on the business challenge that they can’t see the opportunity mobile represents. This, unfortunately, leave the  door wide open to Google & Co, companies that “get” mobile and understand the value of listings.

WHAT DO THEY NEED?

To close this gap directory publishers must stop thinking of mobile as a technology and understand it is a utility. The mobile device has evolved into a multifunctional tool. It is our social organiser, our information resource, our boredom filler. Basically, it supports our lives. Directory publishers have content that is a perfect fit provided they also plug it into the equation to simply or enhance our daily routine.

Directory publishers must also acknowledge that mobile comes with a whole set of new rules. Granted, the industry has yet to figure out these rules, but borrowing ideas and approaches from traditional media will not work. A good starting point is to answer three core questions: how are you going to approach mobile?; why is your offer relevant?; and what do you expect a consumer to do?

My takeaway: As a marketing medium mobile is only set to grow in value. Providers that get the basics right and forge partnerships that allow them to unlock the potential of mobile, monetise their digital assets and deliver features that add value to our lives will be well-equipped to compete against rivals and win.

Editor’s note: Martin’s next column will focus on what companies (specifically, local media and directory publishers) should do to deliver contextually relevant mobile advertising based on location.

Martin Wilson has been involved in digital media for over 14 years, during which time he gained a wealth of experience in the fixed line and mobile Internet. In January 2008, Martin established Indigo 102, an independent consultancy, to assist organisations (including leading advertising agencies, directory publishers, media owners and online service providers) take their brands – and value propositions – mobile. In this role Martin has supported the development and launch of six mass market mobile services across three continents. You can contact Martin directly (martin@indigo102.com) and follow on Twitter (@indigo102).

In-Brief: Local focused mobile advertising will present significant revenue opportunity and will be one the few channels to buck the downward trend in advertising spend over the next few years. In looking to reap rewards the single biggest challenge will be about providing an offer that is simple, accessible and delivers value to the consumer.

There is so much doom and gloom about local advertising – across newspapers, direct mail, TV, radio, yellow pages, outdoor, magazines and fixed online collectively forecast by BIA Financial Network (BIA), parent of the Kelsey Group, to decline to $144.4 billion by 2013 from $155 billion last year. Despite this the decline is clearly not going to be consistent across the full range of media. With budgets under pressure and advertisers beginning to demand far more tangible results, traditional media as we know it is likely to be hit far harder.

As consumers continue to turn to online services, traditional media will become more and more redundant as an influence in the purchasing decision. Marketers have long realised this trend and increasingly turn their attention to online and new media channels. Online commands an ever increasing share of spend. BIA has forecast the new media share globally to grow from around 9% today to over 22% by 2013. A recent study from Pricewaterhouse Coopers (PwC) predicts by 2013 the new media share of advertising in the UK will be around 34%.

So the advertising market is going to shrink and see a substitution of spend. Not exactly positive until you consider where a significant amount of spend is today – traditional media. The opportunity exists for the traditional players to migrate value to their online assets. The changing environment demands a significant rethink of the traditional media business models and operating principles to potentially even survive.

The media futurist Jeffrey Cole suggested that a key challenge is the reliance on traditional advertising models, “The problem I see is that these people often believe that there is enough life left in the ‘old advertising model”. Cole went on to say “I really believe we are still waiting for ‘indigenous’ advertising techniques. I think the big breakthroughs will be digital advertising developed by those who grew up their entire life with digital media – hence the word indigenous.”

Mobile I believe will be a very different story, and one of the few channels to see significant organic growth. It is already being driven by leaders who are not bound by legacy thinking, business models and operations. They recognise the old models will not bear fruit, a new approach is required and the potential rewards mean it is worth it.

In terms of numbers, the Kelsey Group recently reported they expect mobile local advertising revenue to reach more than $3.1 billion by 2013, up from just $160 million in 2008. In May this year the Internet Advertising Bureau (IAB) reported UK mobile advertising spend for the first time in 2008 mobile advertising was £28.6 million. In isolation these figures today do not sound particularly impressive, and the 2013 figure potentially unrealistic, until compared to the fixed online environment. In 1998 the IAB reported UK internet advertising spend of £19.4 million, just 10 years later spend has grown to over £3.35 billion.

The Kelsey Group forecast for mobile advertising means it could outstrip anything that has gone before, making the mobile channel one of the fastest growing advertising channels of all time. A remarkable feat when the overall advertising industry will be in decline.

Why is mobile so different? Consider the audience. In nearly every country in Europe and around the world mobile has mass penetration – a large audience to target.

Mobile ticks so many marketing boxes.

Some of the most prolific mobile users are aged between 18 and 30 years old – a very attractive demographic to marketers and notoriously difficult to reach. A mobile is a very personal device and is rarely shared – making one-to-one marketing a real possibility. Consumption of mobile services continues to see rapid growth – people are open to consume new content. Mobile activity is often needs driven and action focused – consistently close to the point of purchase. At every level activity and audience actions are measurable – return is very transparent.

For these very reasons I view mobile as one of the great untapped channels for brands and media owners alike. This is not revolutionary but potentially controversial when I consider those who I believe are likely to win out and why.

Who are likely to be the key players? There are a number of players that are vying for position in the mobile local space. At one end of the spectrum you have the search engines, Taptu, MCN, Google, Yahoo etc. at the other the directory publishers, Yell and Pagine Gialle, Pages Jaunes etc. In addition there are the social networks, media owners, verticals, handset manufacturers and mobile operators who all too want a slice of the action. The market is already crowded with get rich expectants and the race for signing deals to support distribution and gather content firmly on.

For most, if the current approaches are maintained I believe that we will see just a handful of mobile players becoming highly successful. The barriers, complexities of the channel and challenges of distribution and discovery play into the hands of some of the established deep pocketed players. This balance does not have to be the case, when you consider the real opportunity will be created by organisations that use the technology and channel in a smart and meaningful way to deliver real value to the consumer.

Who are going to be the winners? The winners will be those not simply with content but those who can recognise and deliver a contextual, relevant tailored offering to a mobile consumer. It will be the ones that ‘get mobile’; those that deliver to the device capabilities, present the expected features, use location well, support social and viral capabilities, add value through marketing and advertising. Sounds simple but why are so many still getting it wrong?

In short, lack of focus and understanding of the channel. Those who are delivering good results have largely franchised mobile away from their traditional business and brought in those with ‘indigenous’ experience. For some time leading digital agencies such as AKQA and Ogilvy and progressive media owners like the BBC and Sky have had dedicated mobile teams. Others are now following their lead with dedicated resources as they either realise the true potential of mobile or are pushed by their clients to engage.

Some of these have used the mobile channel to great effect. Brands like Guinness with their ‘Passport to greatness’ campaign, British Airways with their ‘Mobile check-in’, HSBC with their ‘Business banking’, Sky with their ‘Remote record’, BBC with ‘BBC mobile’ and New York Times with their ‘NY Times’ iPhone app all show they get mobile and the mobile consumer. All have dedicated teams or experienced agencies that understand usability and focus on mobile. Mobile is treated in relative isolation but remains firmly part of the digital mix.

I find it surprising that brands and media owners do not treat mobile differently. Ten years ago most saw the opportunity Internet presented and were quick to develop specialist teams that could take forward viable business plans. Not to approach mobile in the same way is like suggesting radio programmes translate well to television. The channels have very different characteristics and capabilities.

The players with structured local content should have a natural advantage. In a previous column I wrote for mSearchGroove (MSG), I said that directory publishers are best placed to deliver compelling local mobile services and importantly commercialise them through advertising. I still firmly believe this should be the case. They are best placed to commercialise the channel, all have existing customers and a very powerful sales force to sell advertising products. Despite the opportunity the challenging business conditions that many find them self in today are impacting on their ability to focus on the mobile environment and realise opportunity it presents. This leaves the door wide open.

Why is the mobile experience different? Go back to grass roots. For most people the mobile is a communications device. This is unlikely to change. What else it is capable of is increasingly important. The device has evolved into a multifunctional tool – it is our social organiser, our information resource, our boredom filler. Basically, it supports our lives. Personal attachment is unrivalled. As well as the form factor this is what makes mobile different.

Mobile comes with a whole set of new rules. The challenge is that many businesses have not yet figured out these new rules. Most try to adapt what they understand from existing media and simply move it to the next. This will not work. Understand these new rules and the channel can deliver real returns. A good start point for many will be to answer three core questions: ’how’ are you going to approach? ’why’ is your offer relevant? and ’what’ do you expect a consumer to do?

Despite a tough economic outlook for advertising mobile is set to buck the trend it will present a significant opportunity for many. I believe the jury is still out for those that can and will be winners. What is for certain is those that continue to carry on a path which does not reflect the potential new rules and the recognise level of expertise needed to execute are unlikely to reap rewards.

As a marketing medium mobile is only set to grow in value. A channel that brands and advertisers can no longer afford to overlook as part of their mix, as such the potential for commercial reward will increase. Providers who get the basics right, deliver features that add value and bring together quality partnerships that enhance the offer and support commercialisation will be the likely winners.

Importance of mobile is increasing, the channel is set to become a primary content environment for the majority. Gearing content and commercial capabilities for mobile will be key. 

Need more advice?  We specialise in mobile and are here to help.