Mobile Advertising Grows to $16.5 Billion

Rich Tehrani : Communications and Technology Blog - Tehrani.com
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Mobile Advertising Grows to $16.5 Billion

I was perusing some articles on mobile advertising recently and was absolutely stunned at how big some analysts think this market will be. According to this TMCnet article, Strategy Analytics predicts the global market for mobile advertising is slated to reach $14 billion by 2011.
 
ABI Research predicts the global market for mobile marketing and advertising will reach $3 billion by the end of 2007, and expand to $19 billion in 2011.
 
If we take the mid-way point between the estimates, the mobile ad market will be $16.5 billion in 2011. To put this in real-world terms it means that one-billion users will generate about $16 apiece.
 
It would seem to achieve this grand vision things will have to drastically change in the way we interact with mobile devices. One would imagine the path we are on at the moment cannot possibly get us to these numbers.
 
So as sit here looking at the gargantuan estimates above, I just wonder what would have to change to make these numbers achievable. I have a few ideas and I have assigned some percentages to each… Each point below represents a trend which I expect to have potentially significant market impact in the years to come.
 
The iPhone 15%
 
The simplest way to get to lofty advertising numbers is to get iPhones and similar devices in the hands of as many people as possible. The web browser on an iPhone allows an incredibly good browsing experience and in turn provides a wonderful platform for advertisers to display their ads.
 
I should add that part of the reason this is so has to do with the 480x320 resolution of the device which dwarfs most other phones on the market. Why haven’t the entrenched mobile device manufacturers come up with a device this small and with this much resolution? Who knows? When will they? – Again, who knows.
 
Mobile-Friendly Websites 20%
 
I am noticing more and more of my favorite websites have become mobile friendly. The sad part of this trend is there aren’t too many mobile advertisers as of yet so I see the same mobile ad ten times a day. As more mobile advertisers get on the bandwagon we can expect serious revenue from many of the world’s ad-supported sites.
 
SMS 5%
 
Another simple area of mobile ad growth lies in the potential business model shift of mobile carriers allowing ad-supported SMS messages to propogate on their networks. There seems to be a great deal of potential for such a business model to emerge.
 
Location Based Services 10%
 
In a recent article focusing on the chasm between my desires and surroundings I discussed what a mobile killer app could be – it would allow me to intersect my desires with my surroundings at all times. I would gladly let the mobile operator know that I like -- seafood, gourmet coffee and souvenir hockey pucks. As I travel, my phone could let me know when I am near products or attractions I have an interest in.
 
Nokia Buying NAVTEQ 10%
 
Nokia is the world’s leading mobile device manufacturer and NAVTEQ is the world’s leading mapping company. As GPS devices begin to access mobile networks it will be a no-brainer to flash ads on GPS units based on past preferences. Did you ever punch in P.F. Changs into your GPS unit in the past? If so, the next time there is one of these upscale Asian restaurants ten miles away or less, expect an alert on your screen.
 
Google 15%
 
Google’s advertising network is hundred of thousands strong. Google is going to get into the mobile communications market in one way or another. A simple way to gain massive share in this space is to subsidize wireless service with ads. Just as Google subsidizes so many of its services with this ad network, expect phones of the future to be embedded with ads from Google’s massive network.
 
Speech Recognition 3%
 
We are seeing the advent of speech recognition allowing companies to provide ad-supported services such as directory assistance. As time goes on, expect more speech-recognition-based, ad-supported services to be rolled out. Mobile search is a natural area of growth and the reason behind Microsoft’s acquisition of Tellme.
 
Social Networking 7%
 
Social networks are all the rage. I have to admit that the craze has grown beyond my wildest expectations and it is mobilizing, allowing mobile citizens to twitter and update Facebook pages on the go. It is just a matter of time before significant ads get broadcast to users of these mobile services.
 
YouTube 5%
 
The viral nature of YouTube means I get at least one of these videos sent to me a week. Oftentimes I am on a mobile device when I open such an e-mail and as more mobile devices gain flash support we can expect the mobile video ad market to grow.
 
Broadcasters Evolving 10%
 
Broadcasters are making sure their programming is accessible via mobile devices and as this trend grows so will the advertising supporting these broadcasts.
 
I would like to go on record saying I am still somewhat surprised at just how large the analyst’s estimates are regarding the mobile advertising space. I do remain optimistic however that the market will evolve in multiple directions and some of these are outlined in the above article. It will be interesting to revisit the space over time to see how it has evolved but I really don’t have time to focus on this article any more as I am late for dinner reservations and need to fire up Google Maps on my mobile phone so I can get to the restaurant as soon as possible. :)


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