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Local advertising is transforming.  According to The Kelsey Group, local ad spending will decline at a 1.4 percent compound annual rate between 2008 and 2013, to $144.4 billion.  Meanwhile, interactive ad spending will more than double from 9 percent to 22.2 percent by 2013.  That doesn’t mean that local advertising is shrinking though.

More than ever, people are on the move and embracing their neighborhoods.  The growth in digital media indicates that advertisers are becoming more savvy and frugal in reaching their customers.  Spurred by the economy and a reshaping media landscape, local businesses need to reshape their ad model to reach their on-the-go customers, and mobile advertising is one of the best mediums for them to pursue- especially given the widening adoption of smartphones.

Are you still using a Zach Morris Phone?

Smartphone shipments grew 13.4% in the second quarter this year, despite a shrinking economy.  Blackberry is dominating the market, the iPhone is becoming an omnipurpose companion, and Google’s plans to subsidize smartphones with their OS are harbingers that only the stalwart luddites will still have those T9 flip phones.  Danielle Nohe, director of telecommunications and media for Compete, notes that “…  the iPhone has taken an early lead in getting owners to adopt app functionality and make popular applications a part of their daily lives… once users are hooked, they’re very unlikely to give up their device… “

More and more, phones are becoming appendages.  Using UrbanSpoon to find a good Eritrean restaurant, Google Maps to get there, and checking Yelp to find out what to order when you’re there is more commonplace than many realize.

According to a recent Compete Smartphone Intelligence survey, nearly half of all smartphone owners are receptive to location-based targeted ad offers at restaurants and offers to save and pursue at their leisure (including SMS advertising), and 45% would use mobile grocery coupons.  Once that seeking-via-phone behavior becomes the norm, people will start using their phones to find businesses and discounts- not the other way around.

With people’s heads in their phones, the return from traditional media will dwindle further.  What are you doing to keep your ad model relevant - whether it’s by phone or another medium?