You probably don’t use your smartphone to make phone calls much these days.  You’re far more likely to look up nearby eateries, because you’re hungry and it’s lunch time.  Indeed, smartphones have become extremely resourceful tools in navigating our surroundings, and that very act of curiosity has empowered an entire industry to market differently to us consumers.

The retail and restaurant sector in particular has been early to jump on this bandwagon, looking to leverage the smartphone’s ability to merge our online and offline worlds.  A recent report published by IAB revealed that retail is the biggest investor in internet advertising, holding 20%, or $3.4 billion (of total $17 billion), of internet ad revenues. And it looks like efforts are starting to pay off.

According to the November SMART study from mobile ad platform Millennial Media, close to half of all mobile ad campaigns from the retail and restaurant vertical included a store locator during the first half of 2012.

The store locator includes foot traffic to bricks-and-mortar stores (38 per cent), or site traffic (17 per cent).  Accordingly, the number of campaigns on the Retail & Restaurants vertical incorporating Store Locator functionality was much higher than the average on Millennial’s platform – 44 percent, compared to 19 percent.  Similarly, campaigns leveraged site search (40% vs. 21%) and view map (18% vs. 6%) at a greater rate.

“Mobile presents advertisers a great opportunity to drive foot traffic into various physical locations, and brands are responding by increasingly shifting ad spend away from traditional local channels and into mobile,” said Marcus Startzel, general manager of North America at Millennial Media.

“Of note, we saw 44 percent of all campaigns in the vertical used a store locator, which was significantly higher than our platform average, and shows how advertisers are dedicated to ensuring consumers can always find the closest location, no matter where they may be,” he said.

Other postclick campaigns for restaurant and retail advertisers included mobile commerce (36% vs. 8% average) and retail promotion (30% vs. 16%), as brands looked to drive purchases on mobile and websites and engage consumers with offers.

Restaurants Lead Location-Based Targeting

According to the Millennial Media report, the restaurant and retail vertical outpaced entertainment and technology and was the third largest on the Millennial Media’s platform during the first and second quarters of 2012. These verticals grew by an average of 11 percent each month during the first six months of the year.

Clothing retailers jumped to 30 percent of the campaigns used by retail and restaurant companies, followed by Home products with 21 percent.

Millennial Media reports that 61 percent of retail and restaurant advertisers use location based advertising targeting their campaigns. Of those, nearly 60 percent were by quick service restaurants, 39 percent fast food establishments and 21 percent were fine dining restaurants.

Moreover, when it comes to mobile campaigns, 38 percent of marketers jumped to drive in-store traffic, while 70 percent aim to drive site traffic. Nearly 16 percent retailers and restaurants advertising on the platform want to use brand awareness in the form of jewelry brands, quick-service restaurants and apparel retailers.

Post-click Campaigns

Nearly 36 percent of all campaigns in the vertical featured a mCommerce post-click action. For example, eight percent of consumers after clicking on an ad want to download an app. Apps downloads constituted up to 40 percent of post-click activities across all industries. The second position goes to commerce-related activities with 36 percent, while only eight percent of mobile campaigns across all verticals included commerce as a post-click action.

“Branding campaigns and driving store traffic are incredibly important to brands in the retail and restaurant vertical, but there is also a great opportunity to use mobile to drive direct sales via mcommerce,” the report says.

“We saw 36 percent of campaigns feature a mcommerce post-click action, which was 4.5 times our platform average.”

Home products brands accounted for the second-largest share (21 percent) of retail and restaurant campaigns, followed by QSR/Fast Food restaurants.

BIA/Kelsey, advisor to companies in the local media industry, forecasts that local mobile ad spending is likely to reach $1.2 billion in 2012 as compared to $0.7 billion in 2011. The growth drivers include smartphone penetration, location data, ad targeting innovation and advertiser evolution to utilize these factors for higher-performing mobile local ad campaigns.