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US mobile ad spend to exceed $1B by year-end: Forrester

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Fandango commerce-enabled mobile video ad campaign

A new report released by Forrester Research predicts that marketers will finally allocate sufficient funds into mobile, with an estimated $1 billion in spend for mobile display and search advertising by year-end.

Forrester predicts that marketers will become masters at using mobile marketing channels to generate real leads, drive foot traffic into stores and to sell products and services.   

“Smartphone adoption is growing and with it activities typically associated with PCs, such as researching products, booking hotels, trading stocks, finding nearby restaurants, or simply browsing the Internet,” Forrester’s 2011 Mobile Trends report says.

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“Consumer product and service companies will also need to promote their mobile content and services,” it says. “No longer citing an inability to reach their customers as a reason to hold back, marketers will take advantage of the growing audience, targeting it better through location and behavior, as well as using richer media formats, such as video.”

Mobile trends
Besides the explosion in mobile advertising spend, Forrester has nine other predictions for what is in store for the industry in the year ahead.

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1. Mobile, social and local
Marketers will be increasingly combining mobile with social and local to better target consumers.

However, Forrester predicts that this marketing combination will generate very little revenue in 2011.

2. Dumb smartphones
Smartphones will take over in 2011. As Android and Apple come up with newer and better devices, the older ones will become cheaper and therefore will become available to the masses.

Obviously marketers should be very excited about this. However, new smartphone users will not be as engaged and active as the early adopters were.

“The good news is that thanks to customer education and the convenience that these devices offer, even dumb smartphone users will consume more mobile media than ever before and will have incremental usage of mobile data,” the Forrester report says.

3. Mobile fragmentation
Mobile fragmentation was a problem in 2010 and will continue to be an issue in 2011, as even more smartphones and platforms roll out.

Marketers will need to prioritize based on which platforms their target audience relies on most.

Cross-platform development has not yet been achieved successfully, but this may be one of the new developments to come about in 2011. We will have to wait and see.

4. Apps versus Web
The never-ending debate on whether applications are better than the mobile Web will continue in 2011.

Forrester said that this debate is irrelevant and that it is not a question of whether to have one or the other. Marketers need to have both.

5. Mobile to interact with the physical environment
According to Forrester, mobile will continue to prompt consumers to interact with their physical environment, whether that means scanning a bar code, using augmented reality or responding to a call to action that asks them to text in.

“Technologies such as QR codes and mobile augmented reality are already helping bridge the real and digital worlds via mobile devices,” the Forrester report says. “2011 is — finally — the year that near field communication (NFC) begins to matter.

“The market will finally move away from the trial stage in regions where NFC infrastructure is in place,” it says.

6. The deal with 4G and LTE
The industry will be surprised to see that the buzz around 4G was actually greater than the impact of these new carrier networks, per Forrester.

Additonally, few LTE devices will be available for consumers before the end of the year.

7. Convenience will be key
As in previous years, companies first entering the mobile space will be focused on convenience.

Acquisition will come second.

Other benefits that mobile offers, which marketers will focus on, will be revenue generation and cost savings.

In the retail space, Forrester expects more companies to reach seven figures in direct mobile transactions.

8. Casual gaming
“Casual gaming will continue to lead the mobile charge for content companies,” the Forrester report says. “Forrester has already highlighted how media companies have some of the most advanced mobile strategies.”

Forrester expects mobile to represent more than 20 percent of publishers’ total online audience in 2011.
However, advertisers will probably not follow consumers that quickly and publishers will need to figure out new revenue streams.

Expect new business models based on subscriptions, microtransactions, and in-application billing to expand from gaming to other content categories, such as news and music.

9. Mobile will mean a lot more than mobile phones.
The definition of mobile began to change in 2010 with the proliferation of tablet devices such Apple’s iPad, Samsung’s Galaxy Tab and BlackBerry’s PlayBook.

As consumers continue to adopt these new tablet devices, the term mobile and therefore mobile marketing will continue to change. The possibilities will increase as well.

Forrester recommends…
To make the most of these 2011 trends, Forrester said that product strategists should:

• Ignore the technology hype.
• Mature their mobile consumer approach.
• Anticipate and measure the impact of their mobile initiatives
• Define their mobile product and services’ road map for the next 12 to 18 months

“For consumer product strategy professionals who want to engage with their customers in the mobile environment, navigating the complex mobile ecosystem with its many different devices, platforms and operating systems — and which now includes tablets and other connected devices — will continue to pose challenges,” the reprot says.

“With the traditional hype around technologies that will emerge in 2011, such as 4G networks like LTE, NFC, bar codes and augmented reality, it is also challenging to figure out the real business opportunities,” it says. “Forrester believes that the mobile/social/local combo will drive lots of innovation and growing consumer adoption but not real revenues — yet.

“The focus for companies willing to tap into the growing mobile opportunities should be on moving from experimentation to the creation of a mobile business case and strategy, while recognizing that the challenges associated with fragmentation will persist.”

Final take
Since Apple has made so many strides in mobile advertising, here is a video of Steve Jobs (feel better Stevo!) describing the iAds platform:

Giselle Tsirulnik is deputy managing editor on Mobile Marketer and Mobile Commerce Daily. Reach her at giselle@mobilemarketer.com.

 
Related content: Research, Forrester Research, mobile trends, dumb smartphones, mobile fragmentation, apps versus Web, mobile to interact with the physical environment

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