Juniper Research predicts that the value of the mobile context and location-based services (LBS) market will more than triple in the next five years, thanks in large part to the adoption of highly targeted and context-aware ad-supported apps, which will account for over two-thirds of revenues.
The research firm said context-aware and location services will generate $43.3 billion in revenue by 2019, up from just $12.2 billion this year. Social apps, such as Facebook (NASDAQ: FB), will be the primary driver of growth in ad-supported revenues related to apps.
Local search apps will come in second in terms of ad spending. "Although these will not generate the equivalent of mobile web search, Google's opening of its deep linking API (application programming interface) to developers will undoubtedly close that gap," Juniper said.
In-app purchases are also expected to take off, growing on average more than three times as rapidly per annum as the classic pay-to-download model. Navigation, social and tracking apps will feature in-app purchasing, but consumers are likely to prefer zero or minimal entry costs to participate. In response, developers will have to leverage lifetime value rather than one-off sales.
Personalized, context-aware mobile advertising is attracting attention among venture capitalists and other investors. For example, Quettra, a Silicon Valley startup, recently raised $2.9 million in funding to bolster its plan to create a software platform that will build rich profiles of mobile users that can be used to ensure that mobile advertisements match individual tastes and preferences.
Growing interest in mobile advertising is also helping drive deployments of Wi-Fi hotspots and Bluetooth low-energy beacons, which can be instrumental in creating location-based offers targeted at mobile-device users.
- see this Juniper release
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