Why 2010 Still Won’t Be the Year of Mobile Advertising

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I’m reading a lot lately about how 2010 will be the year that mobile advertising finally moves beyond novel niche market into the mainstream. Most of that hype, of course, comes from some of the players themselves: Yahoo EVP Hilary Schneider expects “exponential” growth in mobile advertising next year as the economy recovers, the Mobile Marketing Association predicts 27 percent expansion in the space next year, and the e-mail and SMS marketing firm mobileStorm breathlessly claims that the growth of mobile advertising is already taking “the industry to dazzling new heights at a dizzying pace.”

So, is this finally it? Will 2010 see the mobile-ad revolution we’ve been hearing about for so long? No. And here’s why:

  • The mobile web still sucks on most phones. Yes, the iPhone and a handful of other smartphones feature impressive browsers that effectively shrink online content for on-the-go users, but feature phones — you know, the ones that still account for the overwhelming majority of new phone sales — are still not up to the task. Yes, browsers like Opera’s Mini help, but until carriers can deliver an improved, simplified experience off the shelf, traffic on the mobile web will be dominated by users with high-end handsets. And that’s a pretty small fraction of wireless consumers.
  • There’s a lack of tools for analytics and determining advertisers’ ROI. Mobile marketing firms and market-research players offer some visibility into the space, but the industry has yet to develop products that offer the sophistication of the online-advertising segment.
  • In-app advertising is a space that grows more splintered by the day. Unlike the web, which is a remarkably standardized medium, mobile has long been plagued by a staggering number of handsets, networks and software platforms. That fragmentation is exacerbated by the rise in the consumption of applications and the emergence of in-app ads that — while enormously promising — provide just one more subset of platforms for advertisers to address. And that problem is likely to only get worse until we see some substantial consolidation among OS developers and application distributors.
  • There’s a steep learning curve for consumers. Banner ads on the mobile web are fine, but the real long-term opportunities in the space will hinge on campaigns that leverage the unique features of mobile phones and encourage users to interact in a variety of ways. Users will have to grow accustomed to even basic functions like click-to-call that aren’t available through other platforms.
  • Users must have ways of controlling the targeted ads they see. Because the phone is such a personal device, mobile advertisements that might be innocuous elsewhere can seem invasive on the phone. So ad networks will need to enable users to take some control over the targeted ads they see, and must be easily able to opt out of targeted ads entirely. Yahoo a few weeks ago introduced an impressive ad-control tool for its online users, giving them some visibility into how targeted ads work. If wireless advertisers don’t employ similar tools, federal regulators will be glad to mandate them.

None of this is to say that mobile ads won’t continue gain traction next year. Traffic on the mobile web continues to ramp up at a respectable pace, and consumers are increasingly using their phones for all sorts of functions beyond making calls and typing out texts. Meanwhile, the industry continues to address each of the stumbling blocks above and lay the groundwork for a massive mobile-ad industry in the long-term. For 2010, though, we should ratchet  down the hyperbole a touch.

Question of the week

What other problems must be addressed for mobile advertising to take off?

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