The dial continues to be turned up on location based mobile marketing. While usage evolves and creates monetization opportunities, advertiser interest grows from secular and cyclical shifts. The latter will continue to improve as we emerge from recession.

As for location targeting, not only does proximity correlate to purchase intent (compared with desktop browsing), but a mobile Web and apps ecosystem proliferates through smartphone penetration. Netbooks, eReaders and iPads could bring this to another level.

But until that happens, the most prevalent form of mobile engagement continues to be SMS. It’s second nature for a lot of people (see Nielsen figures) and continues to assimilate through major cultural phenomena and events (“American Idol,” Haiti relief).

Building Hot Spots

Sonoma, California-based Convergent Mobile has built an SMS marketing and promotions engine on this idea. It has secured the valuable short code US411 and gives small businesses a keyword of their choice. This term becomes branded to the business and joins its marketing in print, radio or onsite (think menu inserts, or window signs).

Users who text the keyword to US411 will receive SMS info and promotions as well as links to an SMB landing page that Convergent hosts and provides the tools to build (example below). Businesses pay $20 to secure a keyword, then a $10 monthly flat fee. This comes with a dashboard to create and modify promotions on the fly.

The company is in the process of signing on channel partners such as Yellow Pages companies and local search pure plays, in order to scale its advertiser reach. Publisher benefits include mobile calls to action in print listings — both a brand PR move and a retention tool for increasingly results-oriented advertisers.

Next steps include beefing up content and coupons. This will require a separate mobile coupons provider, says President and Director Mickey Breen. Meanwhile, it already pulls in Yelp’s API and lets businesses decide if they want their Yelp star rating showcased on their mobile landing page.

Going Deeper

Ties with a company like Yelp could also make sense to build deeper physical integration with SMB locations. This is something Yelp has separately shown interest in (window decals, etc.). It’s also pushing toward more dashboard tools for SMBs to have control over their marketing (not to mention a growing mobile focus).

Self-serve SMS account management would also seem to plug into Google’s general strategy to broaden AdWords offerings. We heard from Google’s Surojit Chatterjee at our ILM conference about how it has integrated checkbox-like simplicity for advertisers to “add mobile”. AdMob broadens that capability, and SMS tools could do similar.

Breen believes the US411 short code and the simple dashboard are what differentiate Convergent. He also boasts competitive pricing. Annualized at $140, he claims its fees undercut most competitors by a few hundred dollars.

All in all, the company has the ingredients, but will have to prove itself through distribution deals and channel partnerships (or acquisition) to scale its reach to SMB advertisers.