The Kelsey Group‘s US Mobile Advertising Forecast has predicted that the US mobile search ad market will grow from $33.2 million in 2007 to $1.4 billion in 2012, at a compound annual growth rate (CAGR) of 112 percent. There are several factors which the Kelsey Group argues indicate that the cry of “mobile advertising will be huge next year” is actually valid now, as opposed to when it was said the last few years. First is the drive of major online companies into the mobile advertising space…Google is seeking new areas for growth to appease its shareholders, while Microsoft and Yahoo are keen to beat Google to the punch. “In addition, Google’s advertisers are looking to spend more money with Google, but Google doesn’t have the targeted inventory available for them to spend it on. Analysts estimate that between $1 billion and $2 billion in online ad budgets go unspent, so if Google can offer a way for advertisers to spend that money and get a good ROI, they will spend that much and more”.
The report argues that mobile ad providers will have to partner with local Yellow Pages companies to get into the local mobile advertising market, and that “widespread shipping of GPS-enabled devices, along with the Apple iPhone and inevitable copycats will improve the mobile Internet browsing experience and allow for improved mobile applications, bringing more users online and paving the way for mobile ads”. (release)
The San Francisco Chronicle has a piece on mobile advertising, quoting Gartner as predicting that the worldwide mobile advertising market will grow from $895 million this year to $14.6 billion in 2011. It spoke to a number of companies in the industry, including Amobee, 4INFO, Virgin Mobile, MobiTV and Hands On (which just launched ad-supported games). The general consensus is: Don’t annoy the customer. “Scott Kelliher, director of the mobile advertising group at Virgin Mobile, said 425,000 of Virgin’s 4.8 million subscribers have used this setup to get free minutes. And the rate at which consumers click through to connect to a sponsor is 5.5 percent, he said, much higher than traditional Web ads. The key, Kelliher said, is clearly communicating to subscribers what they’re getting…”One of the reasons this has been an unqualified success is that users are very aware of what they’re doing and why messages are coming to them,” he said. “They go into the Sugar Mama area, and they know it’s going to be all ads, so they’re more receptive to what they find there.”