• by Wayne Friedman , June 27, 2011

Location-based service advertising -- which ties in consumer locations with restaurants, retail shops and other locations through mobile devices -- will grow to over one-third of all mobile advertising in four years.  

By 2015, location-based advertising will be $6.2 billion, according to Pyramid Research. In 2010, location-based advertising was $588 million -- 18.5% of all mobile advertising. Location-based advertising will generate 60% of all location-based revenue in four years.

"The different components of mobile advertising (including search, display and messaging) are all growing," stated Jan ten Sythoff, analyst at large for Pyramid Research. "However, local search will be the most important driver of location-based advertising revenues."

ten Sythoff added that navigation applications are moving to a search-funded model, while many companies are "looking to capitalize on the growth of local search, including start-ups, (such as Poynt and Yelp), local business advertising specialists (such as Yellow Pages) and vertical aggregators (such as toptable and HotelBooker)."

Foursquare is probably the best-known dedicated location-based service with around 10 million users, and handles about 3 million user check-ins daily.

Analysts believe the continued growth of smartphones and mobile tablet GPS-based devices -- which allow tracking of consumer movements and locations --- will push more location-based advertising business.

North America is the largest region for this advertising growth because of the high penetration of GPS handsets. Japan and South Korea GPS are also high; while European services generally have lower GPS penetration, according to Cambridge, Mass.-based Pyramid.