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Summary:

Mobile advertising is ramping up quickly and is poised to grow by more than 40 percent over the next several years, outpacing traditional online advertising. And that is fueling a spate of funding announcements and deals as the competition in this space heats up.

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Mobile advertising currently generates just a fraction of the total revenue earned by online advertising. But it’s ramping up quickly and is poised to grow by more than 40 percent over the next several years, outpacing traditional online advertising. That’s helping fuel a spate of funding announcements and deals for mobile advertising companies as the competition in this space heats up.

The Interactive Advertising Bureau started reporting mobile advertising revenue for the first time, saying mobile ads brought in an estimated $550 to $650 million in the U.S. last year. Online advertising raked in a record $26 billion in 2010, eclipsing newspaper advertising revenue for the first time ever. Mobile advertising, while small, is expected to grow from $491 million in 2009 to $2.9 billion in 2014, according to BIA/Kelsey, a 43 percent compound annual growth rate. It’s that promise of rising growth that’s fueling optimism in the online advertising space.

Google is a major player with its AdMob acquisition and said last year its mobile advertising business was on a $1 billion run rate. Apple has also used its Quattro Wireless pick-up to introduce iAD. But there are plenty of other players in this space who are making moves, picking up money and getting bought up.

Here’s a look at some of the recent activity:

Again, it’s still early and mobile advertising revenue is relatively small. But the promise is big for this industry, which can get in front of consumers and engage them in very personal and targeted ways. As rich media and location-based mobile ads grow, we’ll see more money head this way as advertisers look to use these channels for reaching consumers. Expect to see a lot more deals and funding announcements as mobile advertising ramps up.

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  1. Estuardo Robles Tuesday, May 10, 2011

    Mobile keeps growing in large part because it has proven its value by showing its effectiveness is greater than online. Yet the price point has yet to reflect this value, and currently mobile advertising space is being paid for at a significant discount as compared to its value. Looking at historic data one could argue that it is just a matter of time before the price actually levels off to reflect fair market price, but the problem with mobile is that it tends to have a higher cost to operate/sustain, generally speaking, than online, so this puts further pressure on the providers of mobile advertising space.

  2. We need a sanity check. There are several different types of mobile advertising. The investments aren’t mirroring the underlying value.

    The largest investments have been in the mobile equivalent of banner advertising. Personally I can say that I’ve clicked on this advertising more than a dozen time…but never intentionally. (fat thumbs!)

    I’ve intentionally opened a deal on Foursquare. Was it the advertising or the offer that made me click on it? If the offer needs to be a deep discount, does that then need to factor into the price point Estuardo mentions?

    The mobile companies that should get the most investment, are the ones that increase intentional click-throughs without changing the offer. That means companies which can refine targeting, increase the intrinsic value, or deliver in a method which makes the ad more relevant.

    Michael Imbleau

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