Mobile advertising revenues in the United States will grow from $491 million in 2009 to $2.9 billion in 2014, according to BIA/Kelsey's U.S. Mobile Ad Revenue Forecast.

This growth represents a compound annual growth rate of 43 percent. The forecast comprises advertising placed in mobile search, display and SMS.

?Key findings are the overall growth in mobile ad spending, and the degree to which that growth will involve location targeted ads,? said Michael Boland, senior analyst and program director of BIA/Kelsey, Santa Clara, CA.

?This is a function of smartphone penetration, mobile Web use, related increases in ad inventory and the ability to more acutely target users based on location,? he said. 

?That location relevance will segment and reduce reach, but also come with the advantage of higher performance metrics and premiums on ad spending.?

Search, display and SMS
From 2009-2014, BIA/Kelsey expects U.S. mobile search ad revenues to grow from $59 million to $1.6 billion, at a 93 percent compound annual growth rate.

U.S. mobile display ad revenues will grow from $206 million to $803 million, a 31 percent compound annual growth rate.

Mobile SMS ad revenues in the U.S. will grow from $226 million to $562 million, a 20 percent compound annual growth rate.

?We project the mobile Web ? users of mobile browsers and native applications ? to grow from 64 million in 2009 to 158 million in 2014,? Mr. Boland said.

?Like many other emerging media, usage is a leading indicator of ad spending,? he said. ?Madison Avenue will trail behind the explosion in mobile Web use but will catch up, and many brands are already there as early adopters.

Local share of mobile
BIA/Kelsey expects U.S. mobile local advertising revenues to grow from $213 million in 2009 to $2.03 billion in 2014, at a 57 percent compound annual growth rate. This represents 44 percent of total U.S. mobile ad revenues in 2009, growing to 69 percent in 2014.

BIA/Kelsey defines mobile local advertising as that which is targeted based on a user's location and/or actionable locally.

Local targeting occurs to varying degrees and with different methods within each of the advertising formats examined in the forecast (search, display, SMS).

?The early adopters to mobile marketing will be able to get an early mover advantage and stand out to a greater degree, within a medium where a growing number of buying empowered and demographically attractive users are increasingly spending their time,? Mr. Boland said. ?This is also a stage at which key learnings can be acquired to get an edge on competing marketers that eventually embrace mobile.?

Mobile advertising challenges
Although mobile advertising is a great way to reach consumers who are on the go, some marketers are still hesitant about using the channel.

The reason is there are some challenges within the space.

The biggest challenge is for marketers to wrap their brains around the new metrics that do justice to the capabilities of mobile devices.

Clicks and impressions, in other words, do not always measure the unique forms of mobile engagement and are rather inherited from a different medium that is by definition, different (the desktop), Mr. Boland pointed out. 

?Location targeting is one example,? Mr. Boland said. ?Campaign creative, calls to action, and objectives should evolve with the capabilities of mobile devices and mobile user intent in mind.

?This learning curve will be one gating factor to mobile ad spending growth overall, or at least to the degree that marketers can be most effective with mobile marketing,? he said.

?One of the challenges here is that this local segmentation comes at the cost of reach, which to some brand marketers is the Holy Grail. In some cases reach will be sacrificed for relevance.  In other cases reach will continue to be the primary campaign objective as it should.?

Final take
Giselle Tsirulnik, senior editor of Mobile Marketer, shows some recent mobile ad campaigns.

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