Commentary

Forecasts Don't Reflect Full Scope Of Mobile Spending

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A new online ad forecast from market research firm IDC predicts mobile advertising will grow nearly 10-fold in the next 10 years, to $1.8 billion from $220 million this year. That's strong growth, but starting from such a small base, the total in five years will still account for only a small fraction of digital advertising.

Compare that amount to the $27.3 billion that search advertising alone will total by 2014, according to IDC. "Search ads may be less sexy than mobile online ads, but it's where cash registers will ring most loudly in the coming years," wrote analyst Karsten Wiede in his online ad report.

Despite the relatively small spending total, he called mobile a strategically important segment. He also warned that companies that didn't jump into mobile advertising now would regret it 10 years from now. That's "because if you don't stake a claim now both in terms of traffic and advertising market share as well as with regard to technology, you won't stand a chance to catch up later," he noted.

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That sounds a tad alarmist, especially for marketers. Is inventory suddenly going to disappear on the nearly 5 billion mobile phones out there? It's only going to increase as more and more people adopt mobile Web- and app-centric smartphones that will expand the audience for mobile ads.

And brands that are ready to devote substantial dollars to mobile shouldn't have trouble lining up publishers, agencies and technology vendors more than willing to help them take the plunge.

At the same time, ad spending forecasts by IDC and other research firms don't necessarily capture the full amount of investment going into mobile. Like social media, a large portion of the spending in mobile is going toward earned media -- items like branded apps, promotional contests, mobile coupons and mobile Web pages. Such investments aren't typically reflected in the traditional third-party ad dollars projected in industry estimates.

So the economic opportunity tied to mobile advertising and marketing may be larger than the spending totals forecast, while the urgency about getting into the segment might be overstated. With so many years previously predicted as turning points for mobile advertising, it's hard for anyone to say with a straight face, "Get in now or miss the boat" on mobile.

2 comments about "Forecasts Don't Reflect Full Scope Of Mobile Spending".
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  1. Jason Burke from clypd, Inc, May 21, 2010 at 11:24 a.m.

    Marketers must look at the advertising strategy holistically where mobile is just one piece of the advertising pie. Mobile is certainly not the silver bullet for marketers but those that neglect it certainly stand to lose out various segments of traffic. That said, mobile traffic will grow and both demand and sell sides of the game will benefit from using mobile for branding and monetization respectively.

    For mobile advertising to succeed, vendors that empower the distribution and delivery of ads need to put pieces in place to streamline the process. Ad Mgmt platforms and ad networks have a hefty todo list in front of them

    Jason Burke
    VP Product, ScanScout
    http://www.scanscout.com

  2. Vanessa Horwell from ThinkInk Communications, May 24, 2010 at noon

    Mark, your article cites a larger mobile marketplace (in dollar terms) than leading growth estimates imply along with a higher and longer-term growth potential for the channel as justifications for businesses to resist the prevailing urgency to jump into mobile marketing and advertising. Inevitable increases in mobile content inventory that will go hand in hand with a more mobile-centric future, you argue, make the imperative of claiming a share of the mobile market at this juncture a “tad alarmist”.

    I agree with a part of this argument - that the mobile explosion or ‘critical mass’ analysts have been predicting for years has yet to (and may never) materialize; I have addressed this notion in some of my Mobile Marketer columns- but deny vehemently the conclusion you reache. Yes, the mobile revolution in terms of marketing and advertising is shaping up to be gradual, but that doesn’t make it any less powerful, or any less important for businesses to be involved with. Moreover, the inflation of ad spend figures when considering ‘earned media’ only indicates that mobile marketing and advertising may be more of a mature market than analysts have realized, which would make a case for the urgency to get involved, not against.

    Mobile is not going anywhere, so I agree that the concept of ‘missing the boat’ doesn’t necessarily apply. But companies that don’t engage in mobile marketing and advertising at this point are ceding a significant early adopter advantage to their competitors. This isn’t strictly about staking a claim in the market (who wants to be the Pets.com of the mobile space?), but more about engaging the mobile channel to become conversant in the marketing language of tomorrow.

    Companies that utilize mobile marketing and advertising today are perceived as innovative and forward-thinking among their customers and competitors; companies that jump on the mobile bandwagon in five years will be behind the curve, and viewed as such.

    Mobile growth projections are impressive for a reason: the channel is quickly becoming a dominant medium for marketing and advertising. Consumers are embracing the mobile web and direct mobile communications, and the mobile device is becoming indispensible. Businesses and marketers that ignore or dismiss this phenomenon- or play the waiting game with a rapidly expanding channel- do so at their own peril.

    The mobile marketing and advertising revolution will be less like flipping a light switch (with late adopters shadows in a suddenly bright room), and more like building a bonfire. Those on the fringes will eventually see the light, but they won’t be nearly as hot as those who had been there from the first spark.

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