• by Mark Walsh  @markfwal, January 27, 2012

Local and mobile have always been linked as a natural pairing, but the promise of that alliance has often outstripped actual ad spending. In a keynote presentation at MediaPost’s Mobile Summit Friday, local media guru Gordon Borrell said local mobile advertising was set for steep growth as dollars increasingly flow to mobile devices.

In particular, ad budgets earmarked for the desktop Web will shift to mobile in the next five years, propelling U.S. local mobile ad revenue to shoot up from about $2 billion this year to about $24 billion by 2016.

By then, Borell estimates that 88% of all local online advertising will be delivered on a mobile device. That growth will come directly at the expense of the desktop Web, where spending will decline 76% in the next five years.

To be clear, that total reflects ad spending across smartphones, laptops and untethered devices, including GPS-enabled laptops. Wider adoption of tablets, in particular, is expected to drive the hockey stick-like growth projected for local mobile advertising. Separate research from the Pew Internet & American Life Project showed tablet ownership among U.S. adults nearly doubled to 19% just over the holiday season. 

Borrell Associates estimates more than half of Americans will own a tablet or notebook computer in five years (52%) and 87% will have another type of mobile device.

The firm’s research also shows that interest among small and medium sized businesses is on the rise. More than half (52%) plan to use mobile marketing this year, though only 35.7% say they actually plan to spend money in the category. That suggests some are looking to extend owned or earned media efforts to mobile rather than paid advertising.

When asked which types of online advertising people expect to spend more on this year, 5.5% of small businesses told Borrell they plan to buy mobile. That compares to 13.7% for social media and 17.4% for email marketing. But Borrell says that figure belies the interest bubbling up in mobile marketing among local businesses and the gradual shift in ad dollars from the PC to mobile.

He noted that mobile right now feels a lot like the Internet in the late 1990s, when local merchants were just starting to hear anecdotal stories about how the Web could boost their businesses. “This is happening with great intensity right now in retail trade publications,” highlighting the impact of mobile in various industries.

Asked what percentage of ad budgets businesses planned to devote to mobile advertising or marketing, only about 17% said “nothing” or “don’t know.” The largest proportion (almost 30%) said they would devote 10% to 24%. And 5% said more than three-quarters of ad budgets would go to mobile. 

Among other projections, Borrell also predicts a sharp uptick in “proximity” marketing through efforts utilizing tools like Bluetooth, Near Field Communication and geo-fencing. That spending is projected to jump from a total of $272 million in 2011 to $8.3 billion in 2016.