• by Tameka Kee , September 11, 2007

A new study by The Kelsey Group pegs mobile search advertising revenues at over $102 million in 2008--tripling this year's $33 million--and mushrooming to $1.4 billion by 2012.

The U.S. Mobile Advertising Forecast breaks mobile search into three distinct revenue and usage streams: ad-supported directory assistance (free DA), mobile search and display ads, and ad-supported multi-modal applications (voice-powered, downloadable software that consumers use to access searchable content--essentially bringing off-deck content on-deck).

According to the report, companies like Jingle Networks (purveyor of the 1-800-FREE-411 service) will fare well in the next five years, as the number of ad-supported directory assistance calls consumers make will top 2 billion (dwarfing this year's 270 million). In comparison, the number of consumers paying for directory assistance calls will decline slightly, slipping from over 1.6 billion this year to over 1.4 billion in 2012.

With strong sales teams, newer mobile-centric entrants in the local advertising market can snag more ad dollars--much like Yellow Pages and IYP companies already do, according to Matt Booth, The Kelsey Group's senior vice president and program director, Interactive Media.

The opportunity to geo-target consumers during the minutes before they are slated to make a purchase makes free DA an attractive ad model--one that will comprise approximately 40% of mobile search ad revenue in the next five years, according to the report. But the revenue stream is not lost on the carriers themselves, as AT&T launched a demo of its own ad-supported 1-800-YellowPages service late last year.

Advertisers also have the option of sponsoring local search that's bundled with maps, ringtone finders, and other mobile services into multi-modal applications--tools that allow consumers to speak their choices into a handset and get search results or other information on-screen. Microsoft's acquisition of voice-service provider TellMe Networks is an example of one outsider staking claims on the space, but Booth says mobile service carriers themselves are already developing multi-modal apps and partnerships.

"We're anticipating about 12-24 months before a bunch of carriers start offering unlimited directory assistance, plus maps and other services--either for a low, fixed price per month, or totally ad-supported," said Booth. "There's this perception that carriers are either dumb or unable to act quickly to market changes, but when you spend time talking with them, it's clear that they realize how much revenue is at risk with mobile search--and how fast they can come up with a way to tap into it."