CBS will test out ads on its mobile news and sports Web sites that take a person’s precise location into account when deciding which ad to serve to someone’s phone, BlackBerry, etc. A smart idea, and one that we’ve been hearing about for years. And it will take several more years before it sees significant pickup.
Why? Because location-based targeting will only work on mobile carriers that CBS’s partner Loopt Mobile has deals with — just Sprint Nextel (S), so far — and mobile phones with GPS capabilities. Loopt’s CEO Sam Altman tells the Times that he expects about 50 million phones to be ready by the end of the year — about 20% of the U.S. mobile market.
But compatible phones are only part of the challenge. CBS and Loopt will need to figure out whether location-based display ads perform any better than other targeting methods. Location-based search ads make intuitive sense — if we’re in Brooklyn and searching for “pizza”, an ad for Grimaldi’s is a slam dunk. But this deal isn’t tied to search, so we wonder about the utility. Last, of course, they’ll have to figure out how to sell them: Location-based ads are going to involve local advertisers, and Web advertisers still haven’t made a ton of progress selling to ma and pa shops.
We do think location will play a role in mobile ad targeting sometime in the future. But for now, this is basically an experiment.
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