According to this release from ABI Research, “location-based mobile social networking revenues will reach $3.3 billion by 2013 but successful business models may differ from what many observers expect”. They add: “While location-based advertising integrated with sophisticated algorithms holds a lot of promise, the current reality rather points to licensing and revenue-sharing models as the way forward for social networking start-ups to grow their customer base and reach profitability.”
What it means: First of all, I think “location-based mobile social networking” is a misnomer. From the get go, your mobile device is a social tool. It allows you to stay in touch with your friends via voice, e-mail, SMS and IM. Social and mobile go together like peanut butter and jelly! In addition, mobile and location have also a natural fit as the device moves with you (duh!). Finally, local search for me is a very social, it’s all about word-of-mouth. So, taking all that into account, “location-based mobile social networking” is really local search done on a mobile device. Now, based on that, I’m surprised ABI does not consider advertising (at least in their press release) as a way to monetize mobile social local search. It certainly looks like they’re underestimating the role existing local search stakeholders will play in this ecosystem.