Rationale For Mobile Advertising Growth

Rationale For Mobile Advertising Growth

A recently released U.S. mobile advertising forecast by The Kelsey Group indicates that the U.S. mobile ad market will grow from US$33.2 million to US$1.4 billion in 2012, a CAGR of 112 percent.

The Kelsey summary concludes that the potential of mobile advertising is about change, though for years forecasters and pundits have touted the potential but U.S. market has failed to materialize.

The forecast breaks mobile into three distinct ad segments: ad-sponsored directory assistance, mobile Internet (search, browse, etc.) and multi-modal applications. The two largest contributors of revenues, says the reprt, will see a substantial increase in usage:

  • Ad-sponsored directory assistance will grow from 270 million calls in 2007 to 2.1 billion calls in 2012, a CAGR of 50 percent
  • The number of mobile Internet users will grow from 37.9 million in 2007 to 91.7 million in 2012, a CAGR of 19 percent

The report suggests that the market is converging around several important themes that will drive mobile ad adoption:

  • Since top-line search growth is slowing, portals and search companies must move their monetization products into markets where they can utilize existing paid search links to promote top-line revenue growth
  • Google has advertisers who want to spend more money than current traffic levels can support, with some estimates showing the ad overhang at Google between US$1 billion and US$2 billion. Mobile traffic, therefore, translates to an increase in revenue events and top-line growth
  • The mobile and search markets are linked, and the KelseyGroup forecast says that market share in one could affect the other. For that reason, says the report, Microsoft will push hard into mobile, and Google will attempt to retain its dominant search position.
  • GPS handset devices are shipping en masse this year, and 50 percent replacement is expected within five years, allowing improved mobile applications
  • Apple's iPhone represents a transformative device, and many manufacturers will enter the market with similar form factors driving down prices
  • Finally, concludes the summary, Yellow Pages companies such as AT&T are executing on a multi-channel ad business. Mobile represents a critical link in this multi-channel strategy where these companies will try to dominate ad share
For more information on the KelseyGroup, please visit this link.
Next story loading loading..