In a recent report from BI Intelligence on location-based data, we analyze the opportunities emerging from this new local-mobile paradigm. LBS have evolved far beyond smartphones and basic proximity marketing. Throughout this report, we’ll look at the new LBS frontiers such as profile targeting and audience-building.

We specifically examine how location-enabled mobile ads have generated excitement, recommend the top local-mobile strategies for mobile marketing, look at how location-based features have boosted app engagement, and finally: we demystify some of the underlying technologies and privacy issues.

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Take a look at this infographic: 

A pure GPS approach and the “lat-long” tags it generates is considered the gold standard for location data, but that’s not the only method in use. There are at least four other methods, sometimes used in combination, for pinpointing location:

• Cell tower data: When GPS signals can’t reach the device’s GPS chip, which often happens indoors, the device will often report its location by communicating with the cell tower it’s connected to and estimating its distance. It’s less accurate than pure GPS data.
• Wi-Fi connection: It’s an accurate method but requires an active Wi-Fi hotspot. Wi-Fi locations are matched with GPS coordinates. It can pinpoint a user to a specific storefront, which is why many retailers are rolling out free public Wi-Fi to enable in-store mobile ads.
• IP address: Location can be gauged by the IP address associated with the data connection. The accuracy of this approach varies between carriers, and is far less reliable than the above methods.
• User-reported: When users sign up for emails or register for mobile apps and services, they often enter their addresses and zip codes. This data can be translated into GPS coordinates to build a geolocation profile of a single user or user base.

As we detail in our report, there are many opportunities emerging from this new local-mobile paradigm, including location-enabled mobile ads, search, and features that boost engagement for apps.

The result will be a new market for mobile engagement providers that will grow to $32.4 billion by 2018 (see Figure 1 below). No vendor can do all of this today, but suppliers from six categories — digital agencies, management consultancies, mobile specialists, product development specialists, systems integrators, and telcos — are chasing the prize. The payoff for vendors that make this investment will be to earn a seat at your table as a long-term partner in your engagement success.

Figure 1 Mobile Services Will Soar Globally To $32.4 Billion By 2018

Version one of your mobile app was just a standalone pretty face. But in versions two, three, and four, your mobile app will be the new face of systems of engagement, with a goal of helping people “take action in their immediate context and moments of need.”

Fulfilling this mission – and reaping the benefits of a close service connection to your customers and employees – means solving a much bigger problem than shrinking down your Web site or screen-scraping your SAP system. It means serving customers and employees whose minds have shifted to expect anything, anywhere, at any time.  If version one of the app cost $250,000, it’s not unusual for version two to cost $2 million.

You’ll spend that money deciphering what your customers really want to do on the mobile devices then building dramatically simplified mobile experiences on complex systems of engagement. You’ll also re-engineer your core processes, systems, and products to help people in their “mobile moments.”

This new $32.4 billion market is comprised of three kinds of services:

1. Mobile engagement services: This includes the complex services for building a full system of engagement: ethnographic research, experience design, mobile strategy, business process re-engineering, redesigning middleware, analytics, system consolidation, and upgrades to back-end services. Cloud delivery, third-party services, and platform operations are not included.
2. Mobile device and app management services: This includes the per-device fees for managing devices and the apps that run on them: mobile device management and mobile app management. It could include the setup and management of a corporate app store to manage app and policy updates. It does not include monthly telecom or wireless broadband expenses.
3. Mobile app development services: This includes developing and maintaining native and hybrid apps for smartphones and tablets as well as mobile websites, including responsive design. It also includes using existing APIs to provide connections to the back-end systems. It does not include experience design.Ted Schadler is a Vice President and Principal Analyst at Forrester Research serving CIOs. You can follow him on Twitter @TedSchadler.