Local Mobile Ads Drive Mobile Shopping: Study

Posted on by Brian Quinton

Location-based mobile ads are not only bringing people into retail stores, but they’re driving mobile commerce. That’s one finding from a new quarterly report from location-based mobile media channel JiWire.

The latest version of the Mobile Audience Insights Report, covering Q4 2010, finds that 17% of U.S. mobile consumers made a purchase over their phones after seeing an ad that was delivered because of their location, most often through a mobile check-in on a social platform such as Foursquare, Gowalla or Facebook Places.

In addition, one fifth of those polled who saw a relevant location-based ad were prompted to visit a retail outlet nearby. Forty-two percent of respondents also said they are most likely to use location-based services (LBS) to find store locations. And the larger the potential discount offer in the ad, the more time average customer is willing to spend traveling to take advantage of it.

“Consumer demand for location-based services and reception to location-based advertising continues to increase dramatically, with companies like Groupon, Facebook and now even Google getting into hyperlocal deals,” JiWire marketing senior vice president David Staas said in a release. “Localized ads help consumers find the best deals and venues in their area, and as location-based services become more mainstream, people are becoming more willing to give their locations to reap the benefits of relevant promotions and discounts.”

The report uses data from some 450,000 U.S. public Wi-Fi locations to which JiWire delivers mobile ads, including many in airports hotels, cafes and other high-traffic venues, and from a survey of more than 3,000 customers using JiWire’s LBS channel. JiWire also offers a popular Free Wi-Fi Finder app for smartphones.

The study found that 78% of respondents used location-based apps on their mobile phone in Q4 2010, and 29% used those apps more than once a day. Thirty-four percent told researchers they have clicked on mobile ads because of a location-specific message, and 57% said they are more likely to engage with an ad that seems relevant to their current location.

Asked what kind of information they were interested in receiving through LBS, 42% of respondents said they wanted store locations and an equal proportion wanted general points of interest near their current location. About 27% said they wanted to check in to a location, and almost as many (26%) said they wanted to be offered sales, promotions or coupons. Twenty-one percent said they wanted to access reviews, and only 10% said they wanted to be able to check on product inventory in nearby stores.

Late last year, JiWire acquired mobile technology platform NearbyNow, which serves retail-related information up to mobile users including whether products are offered and available at nearby outlets, and lets users put a hold on those for in-store pickup.

More than one fifth of respondents (22%) told JiWire that they didn’t want any information from location services.

Linking people to mobile deals based on information they volunteer about their specific location has become a hot trend in mobile advertising in recent months, with the rise of both social check-ins on handsets and the growing popularity of group-buying services such as Groupon and LivingSocial that offer users a daily deal based on their home city.

Facebook recently announced the purchase of mobile ad start-up Rel8tion to improve the targeting of hyperlocal ads to its more than 200 million mobile subscribers. And JiWire and Groupon announced last December that they will roll out ads for Groupon deals that are linked to users’ specific location, in effect targeting not just a large urban area but a specific neighborhood for Groupon offers.

Other findings from the JiWire quarterly report indicate how willing consumers are to change their behavior for a discount deal received via LBS. The Mobile Audience Insights Report found that a large minority of customers (45%) say they won’t travel at all to take advantage of a 10% rebate on a $100 purchase. But as theoretical discounts increase, so do the average travel times. The majority of respondents said they would be willing to travel 30 minutes out of their way for a discount level just above 25%. To get that majority to travel one hour or more, discounts would have to reach the 50% to 75% level. At a 75% discount, 65% of the response group said they would travel an hour or more.

The JiWire Q4 report also found that smartphone owners are much more likely than the average user to make use of location-based services or to see location-based ads. Ninety-three percent of those users said they have used a location-based app, and 36% have used one more than once a day. Forty-six percent of smartphone users polled said they use mobile apps to check in to locations, and 84% said they have participated in some form of shopping behavior on a mobile phone.

The report also detected signs of the rise of the iPad and other tablet devices as the preferred means for connecting to Wi-Fi hot spots. While a JiWire survey in Q2 2010 found 9% of respondents connecting to public Wi-Fi via tablets, the latest figures put that segment at 19%. By contrast, only 63% of users logged on to the Internet using a laptop in Q4 and 49% using a smartphone, compared to 89% and 52% respectively in Q2. Wi-Fi enabled MP# and gaming devices and e-readers also showed a usage increase in the most recent survey.

All told, the average user connecting to a public Wi-Fi network now uses 1.6 devices to hook up, compared to 1.2 devices in Q2 2010.

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