From gigaom.com By Ryan Kim Jun. 9, 2011, 4:28pm PT
"Location-based services are expected to bring in $10 billion in revenue by 2016, according to research firm Strategy Analytics. The biggest chunk, just over 50 percent, will come from location-based search advertising.
The firm said the biggest obstacle is consumer privacy concerns about location data, something that has been stoked lately by recent questions about tracking from iPhones and Android devices. But if location services provide enough transparency about how they use and store this information, it should not derail the approaching money train.
It’s still early days but I agree there’s going to be a lot of money in location-based services, particularly advertising. That’s where things get interesting: We’re seeing that location-based ads can demand a premium because they’re more targeted and often more relevant to users. There’s a big opportunity in being able to use a very personal device like a smartphone to deliver tailored, very local ads. That’s still a ways off but that’s something Google, the recently acquired WHERE, and a host of other mobile advertising companies are banking on.
Search ads, however, are just one part of the mix. There’s a whole business brewing about pushing ads, offers and deals to consumers based on their preferences, location, shopping history and other signals. Groupon and Living Social are testing more real-time local offers to users. Increasingly ad and marketing offers won’t wait for someone to search for something. Companies are going to try and anticipate what a user wants and provide it for them. That’s the future that Google’s Eric Schmidt has talked a lot about...."