Sure, the hype around mobile advertising seems to know no bounds. And that might be tiresome, but many think the revenue will finally start flowing as the wireless landscape evolves. In fact, many say that mobile ads are, in fact, critical to the HSPA+ and 4G business model.
The argument for mobile ads is familiar. The idea is to reach your targets trough the one thing many clutch to themselves tighter than their children: their phones. The “characteristics of mobile communications, including their always-on nature, and the rich customer profiling that can be done,” makes it a perfect medium to “deliver marketing messages most effectively to customers,” said Rohit Dadwal, managing director for the APAC region for the Mobile Marketing Association.
Even so, the market today is still very small. Juniper Research says worldwide spending in 2009 on mobile advertising was a relatively paltry $1.4 billion (less than one third of one percent of total ad revenue across all channels). Obstacles linger for each of the stakeholders: Brands fear ending up with a fragmented identity through muddled and non-comprehensive strategies that are hampered by device diversity and disparate operator deals. For operators, there are complex technology needs to get data compiled from several network sources to craft targeted campaigns. Operators also simply need to see a role for themselves in the advertising value chain: revenue share models often cut the carrier out entirely, with ads existing as an over-the-top companion to third-party applications, mostly in the form of banner ads, which lack a high-impact effect on subscribers.
Snowballing Drivers
Mobile advertising might be lackluster so far, but there are some drivers that could soon change that. One is obvious: wider deployment of wireless broadband and app-ready smartphone devices. But further adding to the momentum is the fact that Apple Inc. and Google Inc. both recently purchased mobile ad firms (AdMob and Quattro Wireless, respectively, together transactions worth more than $1 billion). Meanwhile, while new form factors like Apple’s iPad are also providing a wider range of visual options for advertisers. In fact, Gartner Inc. predicts by 2013, there will be 1.82 billion smart devices out there, finally outstripping wired online endpoints — traditional PCs will number only 1.78 billion.
“Mobile advertising is poised to take full advantage of opportunities presented by the diffusion of advanced devices such as the smartphone,” said Heather Way, research analyst at Parks Associates. “Alongside smartphone proliferation, subscriber growth to 3G network data plans will further accelerate the advancement of mobile advertising in the U.S. and abroad. Advertisers will begin to incorporate mobile into their overall media campaigns as the advertising medium matures into a viable marketing tool.”
Juniper says that by 2014 worldwide mobile ad spending will more than quadruple to reach $6 billion. Berg Insight thinks the total value of the global mobile marketing and advertising market will grow at a compound annual growth rate of 43 percent to account for 11.7 percent of the total digital advertising market by 2014.
