Mobile has long represented little more than a rounding error in most advertising and marketing budgets, despite the burgeoning number of mobile users and their increasingly sophisticated devices and usage patterns.
Consequently, advertising and marketing dollars flowing to mobile will continue to lag behind consumer usage of the channel, similar to the situation with online advertising. And compared with online ad spending, mobile looks minuscule: eMarketer estimates that mobile ad spending, including messaging-based formats, will reach $416 million in 2009, compared with the nearly $24 billion that will be spent overall for online advertising.
Experimental budgets and limited ad buys make accurate spending figures hard to come by, particularly for newer mobile formats such as video. An additional complicating factor is that mobile is not easily classified. Some ad formats, such as display, search and video, fall under the banner of online advertising. Others, such as SMS and MMS, are complementary to both online and offline advertising, but really belong in their own mobile-specific category.
The Kelsey Group is one of the few research organizations to break mobile ad spending into its principal components—display, search and messaging. For 2008, it put total mobile ad spending at $160 million, 63% of which went to SMS, 24% to search and the remaining 13% to display. By 2013, Kelsey expects the mobile ad environment to look radically different, with search accounting for 73% of total spending and display commanding a slightly higher 18% share. SMS will dwindle to 9% of the total, although overall spending on SMS will increase between 2008 and 2013.
On the whole, eMarketer agrees with The Kelsey Group about the general direction the market will take. However, for several reasons, eMarketer foresees a more gradual rise for search, from 18% ($57.6 million) of the total in 2008 to 37% ($577.2 million) in 2013. Over the same time period, eMarketer also projects a more gradual decline for SMS, from 60% of the total ($192 million) to 28% ($436.8 million), and steeper growth for display, from 22% ($70.4 million) to 35% ($54.6 million). That said, of all mobile ad formats, eMarketer believes search will see the steepest growth through 2013, yielding a CAGR of 58.6% between 2008 and 2013.
Messaging has become the primary communication method for many mobile users. SMS volumes have been rising exponentially every year and the steady proliferation of intercarrier MMS agreements has contributed to steep growth in multimedia messaging as well. Moreover, even accounting for the advance of smartphones and the accompanying growth in mobile Internet usage, a sizable portion of the subscriber population will still be using standard or feature phones or not accessing the mobile Web as late as 2013.
Messaging-based advertising and marketing will continue to be an important channel for reaching these mobile consumers. And greater diffusion of MMS will give marketers richer options for messaging-based offers.
While many marketers have been reluctant to embrace a channel that lacks proven use cases, an increasing number have begun to realize the “additive effect” of mobile on their other advertising and marketing efforts. As smartphones proliferate and marketers move beyond experimentation, budgets will steadily increase.
Find out more about eMarketer’s digital marketing and the new report “Mobile Advertising and Marketing: Change Is in the Air”