Six Questions with Michael Boland

When SES rolls around next week, how many people in attendance will not own a smartphone? Enough to count on two hands? The mobile revolution has been a long time coming. But don’t be surprised if you feel a breeze in the room during Keeping it Local: The Convergence of Phones & Local Search. That’s just the mobile era whizzing past, slamming the door shut and announcing it’s here to stay.

Michael Boland
Michael Boland

Michael Boland is the senior analyst for The Kelsey Group, an independent research and business strategy organization that examines the local and digital media space. Michael’s a speaker and moderator of several SES sessions focused on the intersection of local and mobile marketing, and is no stranger to the Bruce Clay blog.

Last year Mike shared his thoughts on the state of local search and small businesses. This time around, mobile search, mobile applications and the effect of the economy take the stage.

1. You’ll be speaking during The Convergence of Phones & Local Search panel. A look at the session description seems to suggest that mobile search has finally reached critical mass in the U.S.: “These folks aren’t looking for web sites – they’re looking for physical locations. This is Local Search finally working!” Would you agree?

We’re getting closer but there is still a long way to go. The mobile products are in place, based on better device standards that have entered the market, and an opening up to third party innovation (mobile apps). So the consumer facing models are somewhat in place, but that’s only half of what I consider to be a successful scenario in mobile search.

In order to monetize these mobile search products, we’ll need more advertiser interest. That will eventually follow but right now it isn’t happening fast enough, due to lots of factors, including the economy. It’s kind of ironic that we’ve seen so much evolution on the product and user adoption side, and then the economy tanks – making advertiser interest slow down considerably.

Since mobile is viewed by many advertisers as “experimental” it’s often the first thing to be cut from ad budgets. On the bright side this is having the opposite effect on some advertisers out there who are being forced by recession to reevaluate their ad spends and demand more measurability and concrete ROI. This has accelerated a shift from traditional media ad spending to more measurable media like search and mobile.

But we’ll see even greater advertiser demand as we emerge from recession. Like other forms of media, advertiser demand will start with larger brands or agencies and then reach adoption at the local SMB levels. With mobile marketing that hasn’t happened yet, so that’s another reason why I think we’re not quite there yet. There are 23 million small businesses out there and that’s where the true mobile local opportunity will lie.

2. The Kelsey Group is known for its independent research in the fields of mobile and local marketing. Mobile and local marketing are often tied together because local search is often conducted on a mobile Web device, as a user is out and about and looking for something. But what about mobile apps? Should search or app development be the priority as mobile Web usage continues to grow?

windows mobile smartphones
CC BY-ND 2.0

This is an interesting area. Stepping back to a historical perspective, the online (desktop) web has moved away from heavy desktop software towards more browser based products and content that resides in the cloud. This is behind what many define as Web 2.0 – (although that term has been stretched out).

But in the past few years of mobile, we’ve moved in an opposite direction – towards apps that reside at the client level. To answer your question, I believe we’ll see a reversal of this trend and we’ll move closer to the aforementioned online trend of more browser based products – call it mobile web 2.0.

This will be driven by more capable web browsers that can perform the functionality that was previously reserved for native apps. The most recent example is the introduction of the iPhone V3.0 software which came with a more functional version of the Safari web browser. This includes a lot of self contained functionality like pulling in a user’s location and launching maps from within the browser. More evolutions like this across the industry, which utilize the emerging HTML 5 standard, will signal a move towards more innovation on the mobile web.

In other words – less apps and more mobile websites, a.k.a web apps. Google has already announced on a few occasions that this is the direction it is moving. Most of the products it’s launched on the iPhone so far have been web apps rather than native apps, including Gmail, GTalk, and Latitude. We’ll see much more of this to come.

3. Earlier this year The Kelsey Group predicted local mobile ad revenue is set to grow over the next few years. From your comments in this article, it sounds like most of this revenue is coming from an online ad format that’s been ported over to a smaller screen, with display advertising being a good example of this. You explain that there’s also experimentation happening with mobile ad formats, like game apps, but that these strategies often don’t account for how people use their mobile devices. Could you give these misguided marketers some tips?

What I think I remember saying is that most of the money being spent on mobile marketing so far is national brand advertisers or agencies. And what they’re doing is mostly porting over their online strategies to a smaller screen. This mostly involves display ads in both branding and direct response formats.

This is okay and is what I would expect them to do at this point. But eventually we’re going to require ad formats that better utilize the unique capabilities of the mobile form factor. Because it is location aware, and because it’s portable (i.e. in your pocket when you go to the store), there will be lots of room for other content and ad delivery that more effectively drives conversions. This could involve more cost per action ad models such as mobile coupons, promotions or “reserve item” functionality.

We’re already starting to see product models develop around these principles. TheFind is a great mobile app that pulls in data from point of sale inventory systems and tells users after they search for a product, who carries it, how many are on the shelf, and for how much. Another favorite is ShopSavvy, a Google Android app that lets you scan bar codes at the point of purchase to find out more about products, pricing, reviews and who else carries it. This is a powerful scenario, and different ways to monetize this and drive conversions at the local level will follow.

4. You’ll also be moderating Follow the Carrot: Cool Mobile Apps. In your research, do you see any trends that you expect to grow in the future? Are users showing a preference to informational, entertaining or other kinds of apps?

mobile game app
CC BY 2.0

Lots of the most popular apps so far are more entertainment than they are utility. Gaming is a big category among mobile apps. But it’s getting harder and harder to rise above all the noise in Apple’s app store, given more than 60,000 apps. Many apps see very little usage, and there are only so many apps you can have. Technically you can have 148 on the iPhone but the amount you will use on a daily basis will barely fill up one screen.

I think we’ll see a lot of application developers migrate to other platforms where there is still some semblance of “virgin territory”. This includes Palm’s application store, Blackberry and Android. Android is in fact, where I’m placing a lot of bets. It’s proven to be robust, flexible and not to mention free.

Many OEM’s are beginning to power more devices with Android including HTC, Samsung and Motorola. This will take share from Windows Mobile which has faltered on coming out with its next generation operating system (6.5) which will replace 6.1 and be able to complete with the functionality of the iPhone, Android and Palms WebOS.

5. According to research by The Kelsey Group, Europe, and Western Europe specifically, are witnessing the biggest boom when it comes to mobile search adoption. What can U.S. marketers learn from the European market that might help draw users here in the States?

Yes, that’s our recent Western European mobile forecast which examines mobile search and display ad revenues in the region from 2008 to 2013. During this period, mobile search ad revenues will grow from 39 million euros to 2.3 billion euros, a compound annual growth rate (CAGR) of 125.4 percent. Mobile display ad revenues will grow from 14 million euros to 1.1 billion euros, a 138.3 percent CAGR.

But the fastest growing area of the forecast will be mobile local search ad revenues. This is the local slice of the aforementioned search ad revenues, defined by ads that drive conversions to geographically specific areas or store locations. Ad revenues in this category will grow from 18 million euros to 1.4 billion euros, a 139.3 percent CAGR. This growth will be driven by local search volume increases and rates associated with locally targeted ads.

To answer your question, Western Europe leads the U.S. in each of these areas, mainly due to the region’s greater number of mobile handsets — currently 499 million, compared with 266 million in the United States. Smartphones will also drive mobile advertising, growing from 43 million to 149 million. This is a 28 percent CAGR, compared with overall handset CAGR of 2.8 percent.

Much of the ad revenue growth in the forecast in fact derives from expected smartphone penetration and mobile Web consumption. As mobile Web use continues to gain share among mobile subscribers, ad inventory will grow with it. This will combine with a growing demand for mobile marketing as advertisers shift spend from traditional media to more targeted and measurable mobile advertising. We’ll see a similar dynamic occur in the U.S. market over the next 5 years.

6. While you’re at the show, are there any sessions you plan to attend? Where can people meet up with you while in San Jose?

Definitely. I’ll also be speaking at the Local Search Summit run by Local Search News. It’s essentially an offshoot of SES which attendees can go to. Think of it like a separate mobile and local track. That’s on the 13th at the San Jose Marriot. I’ll also be going to some of the other main SES sessions on online video and social media, which are topics I’m very interested in. Anyone can get in touch with me to meet by following me or sending me a direct message on Twitter @thekelseygroup.

Thanks, Mike. These sessions are a sure win for small business owners and marketers working in the local and mobile space. Viva la smartphone! SES is going to be awesome!

Virginia Nussey is the director of content marketing at MobileMonkey. Prior to joining this startup in 2018, Virginia was the operations and content manager at Bruce Clay Inc., having joined the company in 2008 as a writer and blogger.

See Virginia's author page for links to connect on social media.

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