• by Lynn Russo Whylly , January 2, 2008

Advertising spending goes into the pocket

Remember back in the day when people had pagers? If the thing kept beeping every two minutes, friends would say, "You're blowing up." Maybe that went out with bottle service and Paris Hilton's chastity, but, in the parlance of those times, mobile is about to blow up. Spending is projected to reach $3.6 billion by 2011, up from $277.3 million in 2007, according to the latest eMarketer report, Mobile Brand Advertising. However, branding is still a small percentage - just 22 percent - of overall mobile spending. The bulk of the dollars comes from direct response programs, which will reach $12.6 billion by 2011, up from $2.5 million in 2007. 

Mergers and acquisitions in 2007 between large companies and mobile advertising solutions providers are paving the way for growth, including AOL's acquisition of Third Screen Media, Nokia's purchase of Enpocket and Microsoft's buying ScreenTonic.

"AOL is going for the branded approach," explains John du Pre Gauntt, eMarketer senior analyst and author of the report. "Their message is, 'Whatever you want, any platform, any time, we never close.' " Companies like Third Screen Media "want to go after the seven- and eight-figure marketing campaigns," he says. "What they get from the deal is a larger sales force that has higher-level relationships."

There are four main types of mobile ad inventory available for branding: First is telecom carriers' on-deck portfolio content and services, which are strong in targeting but weak in reach and quantity, du Pre Gauntt reports; second is search; third is inventory from national media titles such as USA Today; and fourth is mobile equipment vendors such as Nokia's ad service. As a result, says eMarketer, mobile brand advertising is a layer cake of largely separate media buys in a complex market.

ISPs and telecoms have the highest percentage of mobile-enabled Web content (23 percent), followed by travel (18 percent), entertainment (17 percent) and consumer electronics/home appliances (16 percent). Consumer packaged goods weighed in with just 3 percent, even though the category accounts for 190 out of the top 1,000 brands, or nearly 20 percent.

It will be a while before advertisers catch up with the networks and solutions providers. According to a rareplay.com/Brandweek survey, just 6 percent of the top U.S. brands have a mobile version of their Web site today. But it's not a "stunning indictment that [major] brands are way behind," says du Pre Gauntt. "There are going to be some brands that will spend disproportionately in mobile advertising because that's where their customers went. You have to look at which audiences are moving into brands the fastest. Automotive, fashion, soft drinks, entertainment: They are going to carry mobile into 2008."

While the top 1,000 U.S. brands are moving slowly, the top 100 Web sites are being more aggressive. Twenty-six percent of the most heavily visited sites had mobile versions, with an additional 16 percent having automatic detection of a mobile device.

Mobile will represent the largest increase in spending among just 4.7 percent of small companies' top clients (under $1 million in size), according to BusinessWeek. That figure is just 2.9 percent for mid-size companies (between $1 million and $750 million in size), and jumps to 9.1 percent of top clients among companies over $750 million in size.

Going forward, du Pre Gauntt says, "I would expect a lot more multi-brand plays. Most of the brand campaigns have been a single brand trying to move the customer further in the sales funnel. Going forward, I think you're going to see mobile campaigns involving more partnerships."