Swedish intelligence consultancy Berg Insight
foresees a sharp increase in the value of the location-based
advertising (LBA) market from € 192m in 2011 to € 4.9bn in 2016,
rising at a compound annual growth rate (CAGR) of 91%.

According to a new report by the
Gothenburg-based firm, LBA will represent some 28.3% of all mobile
advertising and marketing worldwide, and 4% of all digital
advertising.

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LBA promotions locate the consumer’s location
and provide tailored advertisements straight onto their handsets.
Such ad and marketing campaigns are becoming increasingly popular
as the mobile payments market continues to grow. LBA and marketing
is considered a key success factor for mobile payments among many
such providers.

“The growing attach rates of location
technologies in handsets and the increasing consumer acceptance of
location-based services in general are the main game changers”,
said Rickard Andersson, telecom analyst, Berg Insight.

Berg Insight forecasts a progressive adoption
of LBA among mobile advertisers with SMS, mobile search and coupons
emerging as the main LBA formats.

“Major brands are progressively embracing
location-based advertising across the range of mobile formats, and
LBA also opens up the mobile channel for new advertisers such as
local merchants”, said Andersson.

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In its report, Berg Insight points out that
although the value chain is fragmented and the industry has not yet
reached maturity, major digital and telecom players such as Google,
Apple and Nokia are competing to gain market shares in the LBA
market.

Other players interested in this technology,
according to Berg Insight, are LBS players, location-aware apps and
media, mobile coupon providers, mobile search companies and
proximity marketing providers.