This report bundle is a complete set of five unique reports - offering in-depth analysis and unique insights into the mobile LBS market. This package comprise the following titles in Berg Insight’s LBS Research Series: Mobile Navigation Services and Devices, Mobile Location-Based Services, LBS Platforms and Technologies, Location-Based Advertising and Marketing and People Monitoring and Safety Solutions.
MOBILE NAVIGATION SERVICES AND DEVICES
Navigation solutions for car and pedestrian navigation can be divided into multiple categories. Car manufacturers offer factory installed in-dash navigation systems as standard or optional equipment on a majority of their models sold in developed markets. Drivers that want to add a navigation system to their existing vehicle can choose among numerous aftermarket solutions, including in-dash navigation and infotainment systems, Personal Navigation Devices (PNDs) and navigation apps for handsets. At the end of 2012, there were 230 million dedicated car navigation systems in use globally, including an estimated 80 million factory installed or aftermarket in-dash navigation systems and 150 million PNDs.
Even though the share of new cars fitted with factory installed in-dash navigation systems will grow fast as prices decline, the penetration among vehicles in use will grow slowly. The average age of vehicles in North America and Europe has grown to 9 years. Aftermarket navigation solutions will thus account for a majority of navigation systems in use in the foreseeable future. Since the different solutions are tailored for slightly different use-cases, multiple navigation-capable device solutions can be expected to co-exist in the future. Many consumers are also likely to own and use more than one navigation capable device.
The intense competition in the PND segment has led to market consolidation. Several vendors have already exited the market – either in the most competitive markets or altogether, while others have acquired competitors. MiTAC has acquired the PND operations of Navman and the consumer product division of Magellan Navigation. United Navigation, which began operations in early 2010, has licensed the rights to use the Falk and Becker brands for navigation solutions. Garmin completed the acquisition of Navigon in July 2011. On a global level, the PND market is now dominated by the three vendors Garmin, TomTom and MiTAC that together hold 73 percent market share. In Western Europe and North America, these brands have about 90 percent market share.
These companies have highly integrated operations ranging from hardware and software development to distribution. There are also some vendors that hold strong positions on a local or regional level such as United Navigation in Germany, Prestigio in Eastern Europe and Panasonic in Japan. As the market is declining, the leading PND vendors Garmin, TomTom and MiTAC, as well as the leading white-label PND software developers Elektrobit and NNG are increasingly focusing on developing in-dash navigation systems for the automotive industry.
Navigation services for mobile phones have been available since 2002, but have only become a serious threat to PNDs in the last few years as smartphone performance has improved and device adoption accelerated. The global active installed base of smartphones grew to 1.2 billion units at the end of 2012. Smartphone adoption – i.e. the share of all handsets in use – had reached about 23 percent worldwide, over 50 percent in North America and more than 40 percent in the EU27+2. Berg Insight estimates that the number of monthly active users of navigation apps for mobile phones was 150 million worldwide at the end of 2012.
The growing usage of mobile navigation apps has largely been driven by broader availability of free services. Starting in late 2009, all the leading smartphone platform and device vendors have introduced free navigation apps for end-users. Apple, Google and Nokia have developed their navigation apps in-house, while other device vendors such as BlackBerry, HTC, LG, Samsung and Sony Mobile cooperate with navigation app developers like Appello, Navmii, NDrive, ROUTE 66 and TeleCommunication Systems.
Besides handset vendors, app developers also use distribution channels including app stores and mobile operators. As competition from free apps has intensified, app developers are increasingly focusing on freemium business models where the core turn-by-turn navigation service is free and users have the option to purchase additional content and features. Advertising is also slowly becoming a source of revenues for developers with large active user bases.
LOCATION-BASED ADVERTISING AND MARKETING
The mobile channel is gradually strengthening its position in the marketing media mix as smartphones are becoming ubiquitous and drive mobile media usage. One of the key developments in mobile advertising is the increasing integration of location-sensitivity, which releases the full potential of the mobile channel. A notable divide can be made between static and real-time location-based advertising (LBA). Targeting by static variables involves using information which is part of user profiles such as place of residence and work. Real-time location targeting instead uses location information which is gathered when an ad is delivered to a mobile user. Such LBA campaigns leverage the same type of technologies to determine user location as other location-based services (LBS). Common methods include GPS, Cell-ID and Wi-Fi positioning which are all based on real-time information.
Targeting by location in combination with other contextual and behavioural segmentation greatly enhances the relevance of mobile advertising. It has been demonstrated that locationtargeted ads generate considerably higher returns than conventional mobile advertising. The associated eCPM and CTR levels are several times higher. Berg Insight estimates that the total global value of the real-time mobile LBA market was € 526 million in 2012, representing 9.1 percent of the total mobile ad spend. Growing at a compound annual growth rate of 65.2 percent, the real-time LBA market is forecasted to be worth € 6.5 billion in 2017, corresponding to 32.8 percent of all mobile advertising and marketing.
This means that location-based advertising and marketing will represent around 5 percent of digital advertising, or more than 1 percent of the total global ad spend for all media. Asia-Pacific is estimated to be the largest LBA market in 2017, followed by North America and Europe. Key drivers for LBA include the growing adoption of both outdoor and indoor location technologies, as well as the increasing consumer acceptance of LBS in general. Local advertising is further a major market and LBA opens up the mobile channel for new advertisers such as local merchants. Big-box retailers can leverage LBA to combat both online and physical competitors. The fact that LBA has higher performance has moreover translated into premium rates. The main barriers to adoption are related to the inherently limited reach of LBA which acts as a mental hurdle for advertisers. Education of advertisers and new methods for campaign performance evaluation are thus called for. Privacy issues can further not be ignored, but can be beneficially handled by privacy control options beyond simple opt-in mechanisms. The demand for geo-targeting remains comparably limited, but is bound to increase given the proven results such campaigns generate.
The LBA value chain is still forming and there are a large number of players involved in the ecosystem. The industry remains fragmented and far from mature. Many different companies are involved, ranging from LBA specialists such as Verve, Placecast and xAd, to LBS players including Telmap, Telenav and Waze, and operators such as AT&T, SFR and the new UK joint venture Weve. There is furthermore an abundance of location-aware applications and media which serve geo-targeted ads, with examples such as Foursquare, Shopkick and SCVNGR. Other stakeholders include coupons and deals providers including Vouchercloud, Yowza!! and COUPIES, search solutions such as Hibu and Yelp, and proximity marketing providers like Proxama, NeoMedia and Scanbuy. A number of traditional mobile advertising players are also active in the LBA space, for example Millennial Media, Madvertise and Nexage, as well as major digital and telecom players such as Google, Apple and Facebook.