Formats, pricing issues hinder mobile ad spend volume: Study
May 19, 2008
Billions in ads served
A new study claims that although companies seem to be spending more of their ad budgets on mobile advertising, mobile ad revenues probably won’t reach significant volume until 2010.
The study, from telecoms research firm Heavy Reading, suggests that companies first need to wrestle with formats, standards and pricing strategies before the mobile advertising market can truly take off. It projects mobile ad spend will cross $10 billion in 2010.
“Our client base is made up of telecom network operators and companies that supply equipment to them,” said Dennis Mendyk, managing director for Heavy Reading, New York. “With regard to mobile advertising for these particular markets, there will be rapid growth but it won’t happen as fast as some other research firms are saying and we don’t see it happening in the next 24 months.”
Network operators can expect to make $3.4 billion from mobile advertising in 2012, according to the study.
Once companies leap over technology and business model hurdles, mobile advertising revenues will show significant and sustained long-term growth worldwide with mature markets like Japan, Britain and the United States in the lead, the company said.
The Heavy Reading report focuses on the mobile advertising ecosystem and analyzes the market positioning of 25 key participants in the mobile ad value chain, including advertising agencies, content aggregators, ad networks, search providers, network operators, technology suppliers and mobile content optimizers.
The mobile advertising ecosystem is still in a state of evolution today, causing a high degree of unpredictability, the report said.
This ecosystem will need more time to develop, and the industry will only exceed $10 billion in annual revenue in 2013.
The study points out that service providers that leverage the multi-screen will have the most success in attracting advertising revenues.
Advertisers are increasingly interested in cocooning their customers within their brand and want their brand messages to be available across device platforms, per Heavy Reading.
Service providers offering fixed-line and wireless services have a unique ability to integrate advertising across the television, PC and mobile device, the study said. This could offer advertisers significant value, provided it is packaged correctly.
“Once most mobile phone users have data plans, then the market will see significant growth,” Mr. Mendyk said. “Japan, the U.S. and Britain are going to lead the way.”