Location is the Holy Grail of Online Advertising

Reports of online advertising's death are greatly exaggerated. To be sure, online ads are broken in their current form. Unlike traditional media, the internet is not a passive medium and when ads are pushed to users, they only get in the way of what the users are trying to do when they're online. The very phrase 'pop-up' implies that something unwanted is appearing out of nowhere. But if browser-based ads are distracting and irrelevant, mobile ads have the potential to be just the opposite, particularly those informed by the user's location. If I'm heading out to lunch and I get an ad on my phone for a nearby restaurant, I might just consider it. Especially if they send me a coupon with the ad. This is the idea behind services like Yowza and Coupon Sherpa, but the potential is much greater than even these coupon apps.

Location-based social networks like Foursquare and Gowalla are betting on the power of location-based ads, and I think they're onto something. Imagine I check into a bar on Foursquare and immediately get an ad from the bar across the street luring me to their place instead, telling me that a friend of mine is already there and he's enjoying the 2-for-1 drink special they've got going on that night. Pretty powerful stuff.

Look for the location-based ad space to explode in 2010.