• by Mark Walsh  @markfwal, March 27, 2008

Worldwide mobile ad spending will grow from $2.7 billion in 2007 to $19.1 billion in 2012, mainly on the strength of text-message campaigns, according to a new eMarketer report.

Regionally, mobile spending in the U.S. will jump from $878 million in 2007 to $6.5 billion by 2012, but will be eclipsed by the more mobile-centric Asia-Pacific market by then.

U.S. mobile spending is projected to nearly double to $1.7 billion this year.

Because text-messaging will remain the dominant non-voice mobile service over the next several years--especially in big markets like China and India that lack 3G networks--that's where most ad dollars will flow.

Advertising linked to SMS and MMS text-messaging, mobile instant messaging, and mobile e-mail will collectively account for more than $14 billion of the $19 million total projected in 2012--up from $2.5 billion in 2007.

Response rates to mobile text-based ads to date have also been far higher than those on the wired Internet, reaching 12% in the U.S.

Lagging development of high-speed mobile networks, however, will limit the growth of display and search advertising on cell phones worldwide to $1.2 billion and $3.7 billion, respectively, by 2012.

The build-out of 3G networks and recent introduction of flat-rate mobile data plans and $99 smartphones will help expand the U.S. mobile Internet audience and spur advertising.

John du Pre Gauntt, senior analyst at eMarketer, likened the $99 smartphone to the rollout of the $500 PC in terms of encouraging mobile Web adoption. "Some of the economics of mobile broadband and ease-of-use are slowly coming together," Gauntt said. "It's going to take a little longer than people will like, but it will come."

Similarly, initiatives like Sprint's $99 unlimited plan covering voice and data will help bring down barriers to mobile Web access.

Even with consumer costs declining and mobile technology improving, however, the emerging industry still needs a "killer app" to push mobile media into the mainstream. "The likely candidates for that have to include the location-based dimension because that's a unique part of mobile," du Pre Gauntt said.

A breakthrough mobile app would also have to include some type of social element--since cell phones are, at the core, communication devices. "Then you get that killer consumer experience where people are going to dive in," du Pre Gauntt said. Exactly when that will happen isn't yet clear.

Even so, marketers are increasingly including mobile media in digital campaigns. "It's become a standard part of the digital mix," said du Pre Gauntt--especially in brand campaigns aimed at youthful consumers.

The eMarketer report cited a September 2007 study by AdMob and M:Metrics that found 72.4% of the worldwide mobile Internet advertising audience was below the age of 35.

The average price for a mobile marketing campaign more than tripled to $100,000 in 2007.

Because the U.S. has the biggest interactive economy, it will lead the way in mobile advertising for the next few years. Platforms developed by companies like aQuantive or DoubleClick for digital media-buying are now being used for mobile buys.

But that advantage will gradually give way to the sheer size of the mobile market in countries like China and India, where the huge middle class uses cell phones as their main interactive device.

The Asia-Pacific region is poised to overtake the U.S. in mobile ad spending within four years. By 2012, mobile spending will hit $6.8 billion, possibly outpacing online marketing in the region.

Western Europe is expected to see continued strong growth as well, with mobile spending reaching $5.5 billion by 2012.