The report, "Going Mobile: The Mobile Local Media Opportunity," said only about 20% of U.S. cell phone subscribers are on the mobile Web right now, and only about 5.2 million are doing searches. Because of this, SMS advertising is the dominant form of mobile advertising.
But the firm said habits will change over the next few years, and more mobile data networks will get rolled out. Local search in particular will be a beneficiary, and it's expected to grow in volume from 28% to 35% by 2013.
"As mobile data consumption rises, we expect local marketing to be a big winner," said Michael Boland, the Kelsey Group's program director, in a statement. "There is a strong correlation between local search and the mobile use case, which will cause a good portion of the ongoing mobile application boom to focus on local."
The iPhone 3G is a prime example of the appeal for local search, the report said. Out of the more than 15,000 applications in the App Store, nearly 15% are geared for local search. These programs come from the likes of Yelp.com, and offer reviews and directions to local restaurants, stores, and more locations.
Google has long been eyeing the mobile space, and CEO Eric Schmidt has said he believes mobile advertising will one day generate more revenue than advertising on the normal Web. The company already has tweaked its AdWords program so advertisers could easily target the iPhone and Android platform.
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