Increase use of location-based Ads is expected to drive mobile Messaging Adspend to $7.4bn by 2017, according to new report by Juniper Research.
According to the report, ‘Mobile Advertising: Messaging, In-App and Mobile Internet Strategies 2012-2017’, the growth will be driven by ‘dramatic upsurge’ in the use of location-based SMS to deliver relevant ads to consumers.
Report author Charlotte Miller said sending adverts using mobile messaging gives advertisers a simple, cheap and effective way of reaching consumers.
"Adding location technologies is an even more powerful proposition, particularly for transactional advertising as marketers can reach consumers who are near a location where they can purchase," Miller said.
"Knowing that the recipients of an ad have actively asked to receive it and will in all likelihood open it is also particularly attractive."
The report assesses the delivery channels which include four market segments: Mobile Messaging, In-App, Mobile Internet and Ringback Tones.
Though the mobile messages may lack the rich media content of other advertising formats, they are very familiar to consumers and have a much higher chance of being opened, even if unsolicited, the report said.
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And for marketers, the SMS ads are also cheaper way to reach to the large volume of customers like in the UK, for example, a bundle of 1,000 text messages costs around £0.05 per message, and £0.03 for larger bundles.
The location-based SMS could also raise questions of privacy amongst consumers which could pose as hurdle before the mobile advertising industry.
Keeping in view of the concerns, some operators are allowing consumers to choose which types of offer they would like to receive.
According to the report, these types of schemes will become more common as operators attempt to look for revenue streams beyond voice and data but it is unlikely that schemes will become opt-out or compulsory.
