• by Mark Walsh  @markfwal, January 10, 2007

U.S. mobile ad spending will grow to $4.8 billion in 2011 from $421 million in 2006, or to 12% from 2.6% of overall U.S. ad dollars, according to a new study on mobile marketing and advertising.

Market research firm eMarketer predicts that the growth will be fueled by the mobile industry shifting toward more of an ad-supported model than a transactional one over the next several years. This year, U.S. mobile advertising is expected to more than double to $878 million, mainly through cross-media campaigns where mobile devices are tapped for direct response marketing, according to the report released Tuesday. By 2010, eMarketer expects mobile marketing and content tied to broadcast TV to reach nearly $1 billion.

A key factor helping to drive mobile marketing is the medium's high rate of click-throughs and conversions. As an example, the report cites a Dunkin' Donuts campaign that used mobile coupons to help promote a new latte drink that generated a 4% response rate which translated into a 21% increase in store traffic. High response rates also translate into high CPMs--$41 for mobile display ads in 2006. By 2011, CPMs are still expected to remain fairly steep at an estimated $23.

eMarketer warns, however, that brand marketers have "heavy lifting" to do before mobile advertising can reach its potential. "Buying mobile ad inventory circa 2006 does require a brand to go through some grief to learn about handsets, present consumer attitudes and the fact that it is impossible for a brand to make a cross-carrier media buy," states the report written by John du Pre Gauntt, a senior analyst at eMarketer.

On the carrier side, it urges wireless operators to become more savvy about data-mining quickly. "Without providing analytics that are valuable to marketers, there is little chance that anything more than experimental budgets will be risked," according to the study.