Mobile Ad Spending Mobilizes, Albeit At A Slightly Slower Rate

Mobile Advertising Revenue chart

The rate of growth of mobile advertising has slowed considerably over the past several months, but it remains one of the fastest growing emerging mediums on Madison Avenue, according to a new forecast being released today by Interpublic's Magna unit. U.S. advertisers are projected to spend $229 million on mobile media this year, up 26% from $169 million in 2008. Those numbers have been revised downward from Magna's last forecast in July 2008, when it projected that mobile ad spending would rise 43% to $298 million in 2009. Even so, Magna now expects mobile ad spending to nearly double by 2011, when it will reach $409 million.

The forecast, the second in an ongoing series of revisions that will be released over the coming weeks by Magna Global Director of Forecasting Brian Wieser, follows one issued last week that showed a similar slowing of the growth rate of online video advertising - to 32% this year, from Wieser's earlier forecast of 45% - indicates that like the rest of the media economy, the expansion of emerging media platforms has ebbed with the economic recession.

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"Although these figures represent downward revisions from our forecast in the middle of last year (prior to the subsequent escalation of the ongoing recession), we expect a re-acceleration in 2010 as the emerging mobile applications market organizes to support the sustained growth of ad-supported apps," Wieser explains in the new report.

In it, he notes that the mobile category isn't actually a single advertising platform, but is an array of a "highly fragmented group of divergent advertising models collectively organized around portable (and primarily cellular network-based) media, a wide variety of trends converge to produce this total."

All of them are being driven by the acceleration of several key variables, including the rise cellular subscriptions, the expansion of mobile Web access, and the explosion of the mobile apps model spurred by the launch of Apple's iPhone, and the ensuing App Store model.

Like other rapidly emerging, but unwieldy new media, Wieser says third part aggregators are racing forward to organize the disparate collection of mobile advertising opportunities into so-called "ad networks," which Wieser notes are currently the "largest sub-sector" within the mobile advertising marketplace, and are expected to experience the greatest growth over the next several years.

"By aggregating billions of advertising impressions on a monthly basis, ad networks represent the most efficient way to sell the largest possible collection of audiences, and thus have become the primary beneficiaries of increasing mobile web consumption," he writes. "At the same time, ad networks have leveraged their expertise into the application world, and can aggregate inventory to sell beyond the mobile web as the small publishers and developers dominating the application business will most typically outsource ad sales to these entities."

For more information about the revised forecast and to view a conversation between Magna's Wieser and Zaw Thet, CEO of 4Info, visit Mediabrands TV at www.mediabrandsww.com.

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