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Companies of all sizes, from Google down to specialized firms such as location-focused ad network, Lat49, have been working to develop new approaches to geotargeted advertising that aren't search-based.

These attempts, for the most part, have been relatively small and narrowly focused and have not made much of an impact on the larger market. However, things may be about to change thanks to a recent Google acquisition and pent-up demand by existing ad resellers.

16% Growth

A new forecast from BIA/Kelsey confirms that geotargeted display ads are on the cusp of growth. This market is expected to grow from $897 million in 2008 to $1.9 billion in 2013, representing a compound annual growth rate of 16%.The prediction also anticipates that the geotargeted display market will grow from 10.2% of all display ads sold in 2008 to 15% by 2013, writes MarketingCharts.

Existing search resellers will be driving growth in the geotargeted ad market according to Matt Booth, SVP and program director, interactive local media, BIA/Kelsey. "The effective strategy for companies like AT&T, ReachLocal, Yodle and others will be to use geotargeting to increase margins by shifting spend from paid search to geodisplay. Simply, if a lead from search costs $30, these companies will shift to display where similar quality leads can be obtained for less."

Booth noted that the display ad networks have so much excess inventory, they will run whatever impressions are needed to meet reseller targets.

What the Big Players are Doing

The biggest boost display ads have recently received has come from Google's acquisition of Teracent last month. Display ads, currently a stagnant segment of the advertising market, are expected to become available in different sizes and in more customizable formats once the acquisition is complete.

Teracent has made a name for itself by delivering display ads powered by real-time algorithms that can customize and automatically build ads from among thousands of different choices of creative elements. They can incorporate user information - such as a viewer's geographic location - and can tell, for example, if a viewer is searching for hotels in Italy - and customize the images accordingly.

For the most part, display ads are still sold in packages, in specific sizes and tend to be static, according to Giovanni Calabro, VP of user experience at Siteworx (via E-Commerce Times). Now, however, "instead of merely selling a package, Google can offer a product based on an understanding of who is coming onto a site." Changes Calabro envisions include new - perhaps unorthodox - ad sizes that may be embedded in the content itself," he said.
Twitter also put a geo-locational ad targeting stake in the ground last month when it provided developers will tools to experiment with geo-tag Tweets and display locations. Early examples include applications developed by Seesmic Web, which also provides a tool for relationship-building at the microblogging service called Mr. Tweet, according to BNET.

Others experimenting with geo-tagging include Birdfeed, Foursquare, Gowalla, and Twidroid.

Smaller Initiatives

At the other end of the company-size spectrum is Lat49, which specializes in online audience targeting using such guides as a person's physical location, geographies of interest and website context. This week the company entered the mobile advertising, with tools that enable advertisers to target their messages to a mobile device user's physical location, as well as any expressed location of interest. This could could be based on map views, weather lookups, local business searches, or local news requests. These location data points can then be combined through customizing include and exclude rules, known as 'Location Logic'.