Mobile Ad Spend to Rise, But Still Leave Room to Grow

[qi:115] Mobile Internet ad spending is expected to increase fourfold over the next five years, according to new projections from Juniper Research, with emerging markets fueling much of the growth. Despite all the hype, though, mobile ads will remain a small sliver of overall advertising dollars for the foreseeable future.

Juniper predicts worldwide ad revenues on the wireless web will surge to nearly $2 billion by 2014 from $500 million this year thanks to increasing traffic from markets such as India and China, where fixed-line Internet access is limited. The overall mobile ad market (including online as well as text ads, Bluetooth-based campaigns, etc.) is expected to grow at a similar clip, increasing to $6 billion in 2014 from $1.4 billion this year.

While the predicted growth may be impressive, recent figures from IDC illustrate just how small mobile is compared to the online advertising world at large. Worldwide online ad spends rang up $13.9 billion in revenues during the second quarter alone, the firm found, $6.2 billion of it in the U.S. Of course, IDC’s estimates underscore how much potential growth remains in the wireless web. As Rutberg & Co. recently noted:

“The traditional media industry may be under fire as the weak economy crushes advertising spending, but companies and investors are scrambling to stake out new territory in the world of mobile content…In our view, the uncertainty is less around whether $100MM+ exits will occur and more around whether $1B+ exits will occur.”

The new wave of smartphones is clearly playing a major role in spurring increased usage of the wireless web, but it still remains difficult to access on most phones. Higher-quality browsers will be necessary (the recent RIM/Torch Mobile deal should help) and publishers must do a better job of creating mobile-specific sites that take into account the small screens and limited functionality of phones. Adjust your expectations accordingly.

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