Mobile Opens New Doors For Web Firms

Santa Clara, Calif. -- When mobile device users search, advertisers better listen.

That was the message from a two-hour forum held during the Interactive Local Media:10 conference taking place here this week.

Right now, only about 30% of U.S. mobile subscribers have smartphones that allow them to surf the Internet, according to October research from the Nielsen Co.

But quicker than you can say iPhone, Blackberry or Android, the number of smartphone-equipped mobile phone users is expected to increase to 50% next year, according to Michael Boland, program director of mobile local media for Virginia-based advisory firm BIA/Kelsey.

Since only about 4% of the top online destinations have mobile-optimized Web sites right now, there’s plenty of work to do, Boland said.

“They’re going to have economic incentives to develop for the mobile Web. The result is going to be more content out there and a more user-friendly experience, compared to where we are now, which is very much a Wild West atmosphere on the mobile Web,” Boland said.

Mobile ad revenue is expected to rise as well, going from $491 million in 2009 to $2.9 billion in 2014, according to forecasts from BIA/Kelsey. Local mobile ad spending will drive that increase, going from just $279 million last year to $2 billion in 2014, according to BIA/Kelsey’s projections.

Several companies presenting at the annual ILM10 Conference are preparing for the new opportunities widespread use of mobile devices will bring.

In June of 2003, were 2.5 million text messages sent in the United States. said Zaw Thet. By June 2004, it was 2.5 billion messages a month. “That’s what we probably do in an hour at this point in the U.S.,” said Zaw Thet, CEO of 4Info, a mobile advertising company based in San Mateo, CA.

By 2015, Thet said, the number of people accessing the Internet from mobile devices will surpass the number logging in from desktop computers.

Higher comfort levels with mobile communication is driving the development of location-sensing technology, like the one developed by shopkick. That company’s third-party mobile app for iPhones awards points and other rewards to people just for entering Macy’s, Best Buy, Sports Authority or other participating retail locations, exploring specific areas of the store or scanning items’ bar codes.

Customers at Target and other participating stores instantly receive points that can be redeemed for gift cards, music downloads or other perks.

“We’ve only been out there for three-and-a-half months now, but we’re excited about what we’re seeing as a first step focused on driving people into a store and with a broader vision to deliver a lot of value once somebody’s there,” said Evan Tana, director of product management for the company.

Tana said once a customer enters the participating store, it’s very likely the person will buy something. Purchases happen 90% of the time at Starbucks and about 30% at retail locations, Tana said: “Those are pretty high close rates and the amount of money it takes to get somebody in the door isn’t that significant.”

However, check-in and other location-based services must proceed with cautiously or risk backfiring.

“You’ve got to be really careful about the privacy question,” said Alistair Goodman, CEO of San Francisco-based Placecast, developer of technology that gives incentives to customers after they enter consumers enter Starbucks, White House/Black Market, Sonic and other participating retailers.

“We’ve seen consistently that consumers will happily provide a little bit of their location information but you have to provide something of value in return,” said Goodman. “The minute that messaging goes across a perceived line, consumers immediately get turned off.”

Still, Goodman said, “We’re seeing consumers opening and taking advantage of these messages almost immediately more than 60% of the time.”

More ILM 2010 Conference Coverage.