Smartphone Sales Can Power Mobile Ad Reach

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About 28.7 million Android units sold in the fourth quarter of 2010, and Verizon accounted for roughly 20% of total Android users worldwide, estimates Gene Munster, senior research analyst at Piper Jaffray.  

Although Munster published the numbers to demonstrate the threat that Apple's iPhone sold through Verizon will pose to Google, advertisers may want to take notice of the potential to reach consumers through the total mobile market -- no matter what company sells service and phones. Based on Google's $1 billion run rate forecast for last year, Munster estimates Google generating $850 million in mobile ads for 2010.

Google has seen a 400% increase in the number of searches on mobile devices within the past year, according to Dennis Woodside, president of mobile in the Americas at Google. Twenty percent of search volume related to telecommunications comes from mobile devices. The GoDaddy Super Bowl commercial drove watchers to their mobile devices. In fact, the company had a 300% increase in searches one minute after the spot aired.

Woodside noted that one in three mobile searches on Google has local intent, and 61% call the business for the ad that was clicked on. In the consumer electronics category on Google, one in seven -- or 15.5% -- of queries occur on a mobile phone. Compare that with beauty and personal -- at 14.9% -- and finance and insurance -- at 15.8% -- for example. About 16.8% of queries for auto occur on a mobile phone. In aggregate, consumers play 65 million minutes of Angry Bird daily. YouTube Mobile is the second-largest video site, and 58% of users stay online for more than 20 minutes.

Google estimates that 79% of its advertisers are not prepared to engage their customers on mobile because they think the medium is too difficult to deploy. Woodside tried to debunk the myth by presenting five things that advertisers can do within 90 days to move into mobile: create, local, get personal, track data and iterate. For starters, build a mobile site, an application to a Web site, and add click-to-call information, track clickstreams and conversions of traffic independently from desktop advertisements.

"We think the mobile market will dwarf the PC market," Woodside said. "We already saw in Q4 that mobile device shipments outstripped PC shipments for the first time."

eBay reported seeing one transaction every second on its mobile service, and Google reported two weeks ago that three Ferraris per month sell through eBay Motors's mobile site, Woodside said -- reminding the group that Google activates 300,000 Android phones daily.

Mary Meeker, partner at Kleiner Perkins Caufield & Byers, and Matt Murphy, partner and manager of iFund at Kleiner Perkins Caufield & Byers, presented trends during the event, confirming mobile's pace to become the dominant tool to access the Internet.

Meeker said eBay expects revenue from mobile commerce to reach $4 billion this year, up from $2 billion in the prior year. Four key trends prompting this rise include a focus on entertainment, immediate gratification, local information, and shopping companion. Google and analysts expect this trend to accelerate.

 

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