The mobile advertising sector is posed to almost
double over the next two years. MAGNA forecasts the US market for mobile advertising will grow by
36%, rising from $169 million in 2008 to $229 million during 2009.
Although these figures represent downward revisions from their forecast
in the middle of last year (prior to the subsequent escalation of the
ongoing recession), they expect a re-acceleration in 2010 as the emerging
mobile applications market organizes to support the sustained growth of
ad-supported apps.
As a highly fragmented group of divergent advertising models
collectively organized around portable (and primarily cellular
network-based) media, a wide variety of trends converge to produce this
total.
The prevalence of mobile subscriptions (more than 270 million at the
end of 2008 according to the CTIA, the wireless industry trade
association) and mobile users (more than 224 million individuals,
according to Nielsen) has been the first catalyst. Although the vast
majority of these individuals use their phones for voice services only,
increasing numbers have adopted the use of text messaging (and
virtually every device has the capability to receive SMS - also known
as text message - advertising).
The second catalyst has been increased access to the mobile web.
Recent data from Comscore indicates that as of January 2009, 22 million
individuals accessed the mobile web daily and 63 million monthly, up
from 11 million and 37 million for each frequency during January 2008.
Although the mobile web is limited by the number of consumers who
will purchase mobile devices capable of accessing the web in an
easy-to-use manner while concurrently subscribing to data services from
a mobile carrier. Integrated or converged devices, also known as
"smart-phones" are key to growth. To this end, 32% of AT&T
Wireless' contract subscribers possessed such gadgets as of the end of
the first quarter of 2009, more than double the year-ago period. As
carriers seek to drive revenues from data services, consumers will
increasingly be incentivized to select smart-phones as their primary
mobile devices.
Third, Apple's iPhone and the company's App Store represent a driver
of growth on several levels. One is the heightened interest among
consumers, marketers and carriers alike for the core product, which
results in exponentially higher levels of data (and mobile web)
consumption. In addition, the establishment of an endemic ecosystem of
software developers and consumers capable of performing "closed-loop"
marketing creates real demand for marketing services inside of the
platform. This segment of the market will continue to expand rapidly,
especially as other mobile operating system developers create competing
environments to drive similar applications to a wider range of devices.
Mobile ad networks represent by far the largest sub-sector within
mobile advertising, and the greatest growth in absolute terms over the
next several years. By aggregating billions of advertising impressions
on a monthly basis, ad networks represent the most efficient way to
sell the largest possible collection of audiences, and thus have become
the primary beneficiaries of increasing mobile web consumption. At the
same time, ad networks have leveraged their expertise into the
application world, and can aggregate inventory to sell beyond the
mobile web as the small publishers and developers dominating the
application business will most typically outsource ad sales to these
entities. Other impression-based inventory (such as that offered by
online portals, publishers or mobile carriers) should post solid
growth, but fragmentation will hinder large-scale buying except where
campaigns are intended to be highly targeted or integrated with efforts
on other more traditional media.
SMS advertising should perform more strongly, with long-term growth
rates similar to ad networks. Text messaging platforms represents the
best near-term potential for advertisers who want to use mobile devices
to support broad-reaching marketing campaigns. This contrasts with
slower growth rates for other more narrow-reaching types of mobile
media (such as mobile search, in-call media, mobile video, mobile
coupons and mobile gaming).