It’s Semi-Official: Advertising Is The Mobile Business Model

This is has been gradually building from “users will change carriers if they get mobile advertising” a year or so ago to “users won’t pay for content, and will tolerate advertising” today, and the latest meme is that ad-supported content is likely to be the most successful business model in mobile.
Jupiter Research has issued a report saying that 11% of handsets will be video-capable in 2006 and 25% of consumers are interested in receiving video on their mobile phones, but only 1% are willing to pay for the service. “This high level of interest demonstrates that there is market potential,” said Julie Ask, Research Director at JupiterResearch an lead analyst on the study. “Service providers will need to give consumers context for watching TV on a small screen in order to convert interest into paid subscriptions. Given current consumer resistance to paying, the most plausible business model for carriers to adopt is one that combines paid and ad-supported mobile video subscriptions.” The article goes on to quote the report saying that consumers are most interested in live TV, full-length movies, short video clips and pre-recorded TV shows, which is an odd sequence of preferences.
Meanwhile, Informa Telecoms & Media predicts that mobile advertising will boom to more than $11.3 billion by 2011 from $871 million this year, but points out that carriers will want a slice of the ad action if paying for content doesn’t take off. According to Informa, by 2011:
–Search advertising and display advertisements on mobile web pages account for $3.1 billion,
–Text and picture messaging advertising will generate $2.7 billion,
–Advertising over mobile TV will be worth almost $4.4 billion.

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