Mobile Advertising Could Have a Big Year in 2011

Mobile marketing is finally catching on as a viable marketing and advertising platform, and will be the fastest growing of digital formats in 2011, according to a survey conducted by Deutsche Bank.

In addition to mobile, the fastest-growing online advertising categories in 2011 will be social media and online video, all of which are believed to be gaining share of wallet within online marketing budgets.

Classic display appears to be the most vulnerable to this shift. In fact, half of the respondents think display is losing share, and only 20 percent consider it is gaining share.

“It finally feels like the tipping point for mobile is here,” Deutsche Bank says in its report. “According to our media buyers, mobile will represent roughly five percent to seven percent of online budgets in 2011. That would imply spending of about $1 billion to $1.5 billion in the U.S. market, assuming total online spending of $28 billion.

Mobile Marketing and Technology

Mobile Ad Trends 2011

Typical U.S. Mobile Ad Campaign is 2-3 Times Bigger than Similar European Campaigns

The United States is the second largest mobile advertising market in the world, behind Japan, Nick Lane, mobileSQUARED chief analyst says. In 2010, the US mobile advertising market will be worth $797.6 million, rising to $5.04 billion in 2015.

As with other forms of online advertising, most users exposed to ads do not actually "click" on mobile ads. (Click on image for a larger view of the data)

In and of itself, that is not a particular problem, as nearly all forms of advertising involve much "waste" (users are exposed who are not actually "prospects").

Because of the country’s vast population, the average mobile campaign spend is significantly larger than anything witnessed in Europe, for example. In the United States, the average mobile advertising campaign spend is between $75,000-100,000.

On average, creatives receive 10 percent to 15 percent of the budget which could total $15,000, for example.  In the UK for instance, the average creative budget would be approximately $5,000 maximum.

In the United States, this equates to a little under 8,000 mobile advertising campaigns, and an average of 21.8 new campaigns each day.

According to ZenithOptimedia, part of the Publicis Groupe, the US is set for a 2.4 percent increase in advertising spend to $151.5 billion in 2010, with global ad spend for 2010 expected to be worth $449.5 billion. For the U.S. advertising industry, mobile represents one percent of total spend.

Enterprises Dominate Mobile Ad Spending

More than a third of interactive marketers have implemented or plan to pilot mobile search and display advertising in the next year, according to Forrester Research analyst Melissa Parrish. And just about everyone believes such spending will grow.

For that reason, Forrester Research expects that interactive marketer spending on mobile search and display will grow at a 28 percent compound annual growth rate over the next five years.

Forrester expects that mobile Internet usage will increase at a compound annual rate of 12.7 percent, with 117 million people — 36 percent of the US population — searching and browsing while using their mobile devices by 2015, Parrish says.

Mobile marketing opportunities will grow as more people use the mobile Internet, of course. At the end of 2007, only 10 percent of U.S. adult subscribers used the mobile Internet. In 2010, mobile Internet usage is up to 27 percent of mobile subscribers, representing 64 million consumers in the
United States market.

Mobile Internet users also are learning to use their mobiles to make purchases. And they aren’t just looking for the nearest coffee house; they’re buying airline tickets, researching cars, and receiving coupons for products like coffee or detergent.

Forrester forecasts that mobile search and display dollars will grow to $2.8 billion by 2015, at a
28 percent CAGR.

But critical mass still is lacking. Though mobile Internet usage is increasing rapidly, marketers still can’t get enough eyeballs on content to justify spending big bucks in the space, says Parrish.

Currently, 78 percent of the US population access the Internet at least monthly while only 21 percent access the mobile Internet. By 2015, mobile Internet usage is expected to reach 43 percent of total desktop Internet usage, making the mobile medium a much more viable channel.

Inability to track performance against spend. More than half of interactive marketers feel they have no capability to measure the ROI or brand impact of their mobile marketing campaigns.

Interactive marketers prefer performance-based campaigns and are willing to pay more for these metrics. Vendors like Google and Bing offer cost-per-click pricing for click-to-call and click-to-get-directions type activities, but mobile display is still largely based on potential impressions, an unsatisfactory metric to most marketers.

Additionally, the holy grail of mobile is location-based marketing, but it’s still unclear how the connection between location-marketing efforts and in-store purchases will occur. Vendors must develop the tools for marketers to track performance and then help marketers understand the value and how to use these new tools.

·Spending by small and mid-sized business is not having too much impact, says Parrish. Forrester’s data suggests that fully 95 percent of mobile advertising dollars currently come from companies with more than $100 million in revenue.

Though the value of mobile advertising is highly relevant to small and mid-sized businesses, which benefit greatly from local and location-specific advertising, smaller budgets and less marketing
expertise will make the percentage of overall spend from SMBs consistently less than eight percent of total mobile spend.

Concerns over privacy, specifically location and carrier information, could provoke a backlash among consumers, leading to some caution as well. Consumers consider mobile phones personal devices to a greater extent than PCs and, for that reason, might continue to expect greater privacy in a mobile context, Parrish suggests.

U.S. Mobile Ad Forecasts: Take Your Pick

Analysts at Borrell Associates admit they are "shocked" by their own analysis of mobile ad growth in the U.S. market, but stand by their forecasts.

Most other researchers take a more "linear" view.

Most new markets grow in a linear fashion until an inflection point, and then growth goes parabolic.

The issue is how soon an inflection point is reached. Borrell Associates obviously believes we are closer to an inflection point than nearly all other observers.

see more here

Mobile Advertising Grows 79% in 2010

Some people might say an upside surprise for mobile advertising spending in 2010 means that mobile marketing has broken through to reach the mainstream of digital advertising in 2010. Others would be happy to note the unexpected growth, even if it is still a bit premature to call mobile advertising "mainstream."

This year, U.S. mobile ad spending will be up 79 percent to reach $743 million, eMarketer now forecasts. That growth will slow somewhat to still-dramatic double-digit rates as spending hits over $1.1 billion in 2011 and more than $2.5 billion by 2014. 

Earlier estimates had called for 2010 growth to perhaps $570 million. 

For now, however, text messaging still is the largest channel, with spending of $327 million estimated for 2010. But growth is fastest for video advertising, mobile display and mobile search.

Still, $743 million is a fraction of all U.S. advertising. That is a market worth about $170 billion, so it is a bit premature to talk about how "mainstream" mobile advertising or mobile marketing has become. 

Online advertising is still about 12 percent of total advertising. If you are looking for where the growth is, online and mobile are good bets. But if you are looking at where organizations and businesses spend their money today, mobile would not be one of the largest buckets.

Mobile Ad Spending Up Nearly 80% in 2010

Most Users Don't Like Ads, but iPad Owners are More Receptive

A new study by Nielsen suggests iPad users, who tend to skew younger and male, are the most receptive to advertising, compared to other smartphone users. Keep in mind the findings are relative. By inference, 65 percent of iPad owners do not enjoy ads on their iPads. Some 82 percent of iPhone users do not enjoy ads, while 83 percent of all connected device owners do not like ads.

Preference for In-App Advertising Strong Across Platforms

In-App Advertising Works

In-app advertising appears to work, according to Nielsen.

In-App Advertising Preferred by End Users

Mobile advertising is increasingly finding its way into mobile apps, with teenagers being much more receptive than their elders, says Nielsen.

Fifty-eight percent of teens say they “always” or “sometimes” look at mobile ads. In general, men of all ages are more receptive to mobile ads than women. Only 37 percent of men say they are not at all likely to respond to an ad on a mobile device, compared to 44 percent of women.

Across all operating systems, apps users would prefer to view mobile ads within an app. Android users are more likely to click on an advertisement within an application, while iPhone users are the least interested in having ads take them outside of their application.

Mobile Advertising Will Be Indistinguishable from Online Advertising by 2015

About one online marketing dollar in every five spent in 2010 will go to a mobile campaign, says Borrell Associates. By 2015, the mobile share will have grown to almost two of every three dollars spent. Part of the reason for this heady forecast is the expected growth in the number of smartphones, Borrell Associates says.

The rest of the spectacular gains are simply the growing "mobilization" of consumer devices. Within five years, the majority of phones, computers, game machines, e-readers, and GPS navigation devices will be true mobile devices, each capable of receiving mobile-targeted advertising.

In effect, there will no longer be any real distinction between mobile and online, says Borrell Associates.
The other big change is that mobile campaigns will assume greater prominence for local marketers as well.
Today less than seven cents of every mobile marketing dollar is spent locally, by locally owned businesses. About 93 percent of mobile advertising is "national" in focus.

This will change as the devices themselves improve and the tools available to local marketers become less expensive and easier to use. By 2015, a quarter of every mobile marketing dollar will be spent locally, Borrell Associates forecasts.

Analytics is Key for All Targeted Advertising

Mobile analytics are crucial for the future of mobile advertising for drop-dead-simple reasons. The whole point of targeted and location-based marketing is that companies pay to create impressions and leads at the times when such pitches are likely to have an impact, and rarely, if ever, at other times.

That old adage about "half my advertising investment being wasted; I just don't know which half" is being challenged by targeted approaches, when it is possible to eliminate the "wasted half."

The long-term repercussions on the advertising ecosystem are hard to predict, though. One might argue that new targeting techniques will drive incrementally more spending, or incrementally less.

Mobile Search and Display Advertising Growing Fastest

While it's still too early for most research firms to form reliable estimates for location-based mobile advertising spending, the most relevant figures would be mobile display ad spending, which is expected to increase 59.7% this year, reaching $166 million. By 2013, eMarketer expects mobile display ad spending to reach $546 million.

Overall, the mobile advertising market will reach an estimated $593 million this year, up 42.5% from 2009. By 2013, it's expected to reach $1.5 billion.

eMarketer estimates advertising spending on Facebook will reach $835 million in the US this year, up from $500 million in 2009. Worldwide, Facebook is expected to bring in an estimated $1.28 billion in advertising revenue.

AdMob Chief Talks about Mobile Advertising

Google's AdMob division head talks about mobile advertising.

76% of Users Prefer Ad-Supported Apps to Paid

Users always have had a complicated relationship with advertising. If you ask them, they typically will say they "don't like ads."

But if you ask them whether they would like access to a desired type of content, for free or at vastly-reduced prices because of the presence of ads, they will tend to opt for the advertising.

That appears to be true for 76 percent of smartphone owners with web access, who say they would rather have access to ad-supported applications for no additional cost, rather than pay for them, Jiwire has found.

see the survey results here

Nissan's First iAd Campaign

Mobile Advertising Growing, But Revenues Still Modest

Mobile advertising will continue to be a modestly-sized segment of the digital media ecosystem as long as different segments of marketers have alternative media vehicles which better meet their business objectives, say researchers at MagnaGlobal. But mobile commerce and mobile marketing are destined to grow.

Global online advertising will rise by 12.4 percent in constant currency terms during 2010, to $61 billion dollars globally. Accounting for actual and expected changes in currencies over the course of 2009 and 2010, online advertising will grow during 2010 by 13 percent in U.S. dollar terms or by 21 percent in Euros.

Paid Search has quickly become the most important component of online advertising, and in 2010 this segment will account for nearly $30 billion, up by 16.5 percent over 2009 totals on a constant currency basis, and about 49 percent of total revenues.

Google is the global leader in paid search, but in the paid search markets of China and Russia, the leading paid search providers are domestic players Baidu and Yandex.

All other online advertising will account for $31 billion, up by 8.7 percent in constant currency terms.

Advertising networks retain their importance to advertisers given their ability to aggregate and monetize vast quantities of inventory in an inexpensive manner. Social networking sites such as Facebook capture a large and growing share of audience time.

These trends should continue over the next five years, and the report expects online advertising to collectively grow by 11.7 percent in 2011 and by an average rate of 11 percent through 2015. At this time the global industry will generate $103 billion dollars in constant dollars.

The ongoing global economic recovery has contributed some modest uplift to the expectations of growth, but secular factors are the primary cause of this rapid and sustained pace of development. Importantly, says the study, industry growth is not directly caused by increasing numbers of consumers online nor by rising levels of time spent online.

Instead, growth is driven by businesses, many of them small, that find online media to be the single most effective platform to accomplish their business goals.

Mobile App Store Downloads 7X Bigger by 2014

Mobile app store downloads will increase by a factor of seven between 2009 and 2014, according to Pyramid Research. In 2010 Pyramid Research projects that 36 percent of paid apps will be downloaded through app stores and 86 percent of free downloads will take place through them.

App stores have become an important element in the mobile value chain in part because a wide range of easily accessible apps has quickly become a prerequisite for handset and platform vendors. Vendors also gain a new revenue stream, a powerful customer loyalty tool, an important gateway to additional revenue streams and an attractive resource for potential operator partnerships.

Advertising revenue is expected to play a big role in allowing developers to create revenue streams from free apps.

Developers will be the biggest winners, not only as they gain a higher portion of revenue but also because competition among stores will greatly improve support, payment terms and transparency.

Most third-party stores and aggregators will lose out over time to vendor and operator-sponsored stores, though Getjar might be the salient example of an exception to the rule.

FTC Opens Probe of Apple Mobile Ad Practices

The U.S. Federal Trade Commission will investigate whether Apple Inc.'s business practices harm competition in the mobile advertising market, Bloomberg reports.

It appears Apple's refusal to allow third-party firms access to analytics, as well as the apparent refusal to allow some competing ad networks access to Apple mobile applications, are contributing to the FTC's concern.

Regulators want to know whether moves by Apple will result in less competition in the growing market for ads on handheld computers and phones. Separately, Apple has barred applications using Adobe Flash, requiring all apps to use HTML5 for video.

This may not be the only antitrust investigation Apple faces. Justice Department lawyers recently contacted companies about Apple's practices in the music business. The Justice Department could forge ahead with that inquiry independent of the FTC's investigation.

The Justice Department is already investigating whether Apple and a range of other tech companies improperly agreed not to poach each other's employees, the Wall Street Journal says.

The starkly higher attention Apple has drawn suggests how Apple's role in several businesses--from content and devices to advertising--seems to have changed recently.

Apple recently surpassed Microsoft Corp.'s market value, a sign of its growing power in the technology industry.

Apple also controls around 70 percent of online music sales and has more of the overall music market than Wal-Mart Stores Inc., according to market research NPD Group. Apple's MP3 player market share is well over 70 percent, and its share of mobile phones is growing steadily, not to mention the explosive debut of its iPad tablet device.

The fear seems to be that Apple could be headed for such outsized domination of high-end mobile phones, a possible new tablet device category, and mobile advertising, now viewed as a key revenue source for mobile applications.

Some antitrust enforcers say that if they wait until a tech company has cornered a market, before moving to limit its power, it may be too late. The technology sector has powerful "network effects" that, some say grant outsize advantages to first movers and make it particularly difficult for competitors to break in, regulators say.

"The Commission has reason to believe that Apple quickly will become a strong mobile advertising network competitor," the FTC said last month. "Apple not only has extensive relationships with application developers and users, but also is able to offer targeted ads…by leveraging proprietary user data gleaned from users of Apple mobile devices."

It added that Apple's ownership of the iPhone software development tools, and its control over the developers' license agreement, "gives Apple the unique ability to define how competition among ad networks on the iPhone will occur and evolve."

Will Apple Get 48% of All U.S. Mobile Advertising by End of 2010?

Apple CEO Steve Jobs predicts the Apple iAd network will get 48 percent of spending on mobile advertising in the United States from July through December of 2010.

That's a stunning prediction, given that total U.S. mobile advertising for 2010 is estimated to be about $593 million. Apple has about six months to get that done, starting from zero. Well, not zero.

Apple says it already has gotten commitments for about $60 milliion from  Nissan, Citi, Unilever, AT&T, Chanel, GE, Liberty Mutual, State Farm, Geico, Campbells, Sears, JC Penny, Target, Best Buy, Direct TV, TBS, and Disney.