Apr 2008 Mobile Marketing

Industry Stats & Data by eMarketer

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Mobile marketing is here to stay, April 2008

The US is the largest single market for mobile advertising, even though it lags both Europe and Asia in terms of mobile penetration. eMarketer estimates the total US market for mobile advertising will reach $6.5 billion by 2012. The US will continue to be the most dynamic region for mobile Web advertising because of its position as the largest interactive economy. The large overall size of its interactive economy means that the US offers far more opportunities for cross-media efforts. That is why US mobile ad spending is projected to reach $1.7 billion in 2008 from $878 million in 2007.

Several key product launches and announcements, including Apple’s iPhone, Google’s Android operating system for mobile handsets, participation in the US radio spectrum auctions and Yahoo! announcing a slew of mobile product enhancements and tie-ups with global carriers have helped draw much needed attention to the mobile platform.

Mobile marketing and advertising made major strides toward maturity in 2007. While not quite “the year of mobile marketing,” there were enough highly public events, such as the iPhone launch, and under-the-hood improvements for marketers to move past the purely experimental stage. eMarketer projects that worldwide spending on mobile advertising will reach a total of $19 billion in 2012. The vast majority of this will be spent on text-messaging campaigns, with mobile display advertising and mobile search making up the rest.

Of the three main formats, text-based messaging will dominate throughout the forecast period and location-based ad units will cut across all three formats. While there are other mobile marketing activities, for example, ad-supported or sponsored multimedia such as tools or widgets, and nascent ad units such as idle screen mobile advertising, these categories are extremely young, even by mobile marketing standards.

Looking at spending by region, Western Europe should continue to have strong mobile growth through 2012. But one wild card is Europe’s mobile operators, who were among the first to start offering flat rate unlimited mobile data plans. Vodafone, T-Mobile, Orange and 3UK all offer some form of flat-rate mobile data on 3G networks. The extent to which this will jumpstart mobile advertising in Europe is not known. Another potential driver involves the high proportion of prepaid mobile users. Advertisers are finding that prepaid users tend to be more receptive to ad-subsidy of voice or data services, according to the Mobile Marketing Associations (MMA).

By 2011 or 2012, it is likely that Asia-Pacific will pull ahead in overall mobile ad spending. Even though Asia’s total interactive market is likely to remain smaller than that of the US, its mobile component will be proportionally larger. Alvin Graylin, the CEO of mInfo, China’s largest mobile search provider, estimated that online marketing accounted for about 6% to 7% of China’s 2007 total advertising spend of around $25 billion. He told eMarketer that digital should grow to between 15% and 20% of total advertising spending by 2012, with most of that being directed to mobile. “My prediction is that, within five to six years, mobile marketing will overtake online marketing in China because the user base will be so much more massive,” he said. “It’s not far-fetched when you look at 800 million Chinese mobile subscribers, compared with 300 million accessing the Internet through a PC.”

Even though mobile advertising did not break into the mainstream during 2007, important groundwork was laid. Publishers developed more mobile-native content instead of simply repurposing from the Web. Brands and agencies began budgeting for mobile as a separate line item and mobile search providers reported sharply higher and broader usage among consumers. More mobile operators introduced flat-rate data plans and some carriers even spoke of opening their mobile networks.

Although 2007 saw some important groundwork laid for mobile advertising, there are sticky disagreements concerning mobile customer information among mobile operators, Web portals, brands and agencies. All agree that better contextual targeting (for example, location, time, history) is a prerequisite for mobile advertising to succeed. But how to get there in the short-term remains an open question. Surrounding all issues are worries that mobile has not yet proven itself in terms of marketing ROI.

To find out more about eMarketer’s Mobile Advertising: After the Growing Pains Report, click here.

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