M-Commerce To Outpace Mobile Advertising


A new forecast from UK-based Coda Research Consultancy predicts mobile ad spending in the U.S. will grow at an average rate of 37% annually in the next five years to hit $2.2 billion by 2015. That's roughly a quadrupling from the $546 million the firm estimates will be spent this year and impressive growth by almost any measure.

But starting from such a small base, the $2.2 billion total (including in-app advertising) in five years will still be only equal to about 10% of the $22.7 billion in U.S. online ad spending in 2009, according to the Internet Advertising Bureau. It's also not much more than total Internet ad dollars in 1998 ($1.9 billion), when online spending was more than doubling each year before the dot-com crash.

With all perennial hype around mobile advertising, it's good to keep in mind that even with respectable gains it's still only a small piece of even digital advertising. Coda projects mobile search in five years will account for half of mobile ad revenue, roughly the same proportion it commands on the desktop Web.

Display advertising will make up a third of the total, at $667 million, and the balance ($426 million) will go to SMX text ads. Display is expected to benefit from larger device screens and more personalized messages while SMS text--currently the most common type of mobile advertising -- will gradually lose share.

Where Coda sees much faster growth than mobile advertising is in mobile commerce, expected to increase at a 65% annually to reach $24 billion in 2015, or 7.7% of all e-commerce revenue. M-commerce per mobile subscriber will grow nearly ten-fold, going from $8.60 this year to $80 in five years. Among categories driving sales on mobile phones are physical goods from companies like Amazon and eBay, apps, video and music downloads, games and virtual worlds, and mobile coupons. E-bay alone has said it's aiming for $1.5 billion in mobile sales.

Underpinning that activity will be a broadening base of smartphone users on high-speed networks. Coda estimates that by 2015, there will be 194 million smartphone subscribers, nearly triple the 78 million in 2010, or 65% of all mobile subscribers. It also projects the number of cell users on 3G networks will nearly double by 2015 to 239 million, or 80% of all mobile customers.


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