Informa Telecoms & Media believes that the global mobile advertising market was worth US$2.3 billion in 2009. Over the next five years, the market is expected to show strong growth and generate revenues of around US$24.1 billion in 2015.
In 2010, the Asia Pacific Developed region (which includes Japan and South Korea) is expected to account for the largest share (43.6%) of the global mobile advertising revenues, but this will fall to 21.7% by 2015. The mobile advertising revenue share of all other regions is expected to grow during the same period.
In 2015, the largest share (30.9%) of mobile advertising revenues is expected to come from the Asia Pacific Developing region, driven by strong growth in China and India. North America’s share of the global revenues is expected to grow from 16% in 2010 to 18% in 2015 and Western Europe’s is expected to grow from 4.9% to 8.6% during the same period.
Key Market Trends
- Mobile advertising is not yet a high‐volume high‐revenue business but there is an increasing number of successful mobile advertising campaigns.
- Market fragmentation – with respect to devices, operating systems and lack of a globally accepted standard platform – continues to restrict market growth.
- Ad agencies at present don't find the mobile platform attractive enough as the revenues from designing a mobile banner/display ad are very small compared with working for TV, magazines and online advertising campaigns.
- Mobile app stores present a huge opportunity and, as the subscriber base with apps‐capable mobile phones grows, in‐app advertising will become more and more attractive for advertisers.
- Companies are now coming out with branded mobile applications. This trend will continue to grow over the next five years as brands will increasingly use mobile apps for CRM purposes.
- The launch of Apple's iAd will force its rivals to speed up their own mobile advertising strategies, particularly Google, which has completed its acquisition of AdMob.
- The strong growth of mobile search is a key driver with Google reporting a 500% growth in mobile search queries between 2008 and 2010.
- The growth of m‐commerce is also making the mobile channel more attractive for advertisers and will act as a key driver for mobile advertising in the coming years.
- Many brands have started using mobile coupons with offers and discounts as part of their mobile advertising campaigns. Consumers are more willing to receive mobile coupons and, from the brands' perspective, coupons generate actual commercial transactions.
- Mobile advertising platforms need integration of ad tracking for post‐click analysis so that media executives can track the effectiveness of campaigns across different ad networks and publishers.
- The use of AR (Augmented Reality) technology plus the user's geo‐relevant information, including location‐based search, are likely to make the AR‐based ad networks more attractive to brands – and ad networks will be able to charge higher CPC and CPM rates because of it.
In terms of generating substantial revenues for value‐chain participants, 2010 will not be the year of mobile advertising. However, there is now an increasing number of successful mobile advertising campaigns and a lot of market activity including in‐house innovation, partnerships, mergers and acquisitions. Media and FMCG brands are also experiencing growing consumer engagement on mobile. These developments are starting to provide the much‐needed momentum that the mobile advertising industry needs, which will no doubt lead to accelerated growth in mobile advertising in 2011 and beyond.
The major players in the mobile advertising value chain are strengthening their position through strategic acquisitions and partnerships with other leading and innovative mobile advertising companies and technology providers; resulting in a lot of recent market activity.
Market Drivers and Barriers
Growing number of brands and advertisers are now actively spending on the mobile medium. In the past, the majority of spend on mobile advertising usually came from the amount left in contingency budgets and advertisers using that to try experimental campaigns. However, the mobile advertising industry has now moved beyond the trial and experimental phase and many advertisers and brands are now spending significant sums on running mobile campaigns every month.
Mobile technology is capable of collecting significant amounts of personal data on consumers, which is a potential risk to their privacy. Data protection rules must be continuously scrutinized to ensure that developments within digital media for accumulation and usage of consumer information remain within the law.
Informa Telecoms & Media believes that mobile advertising growth in the coming years will depend a lot on how well the industry can address subscriber privacy concerns through effective governance and opt‐in policies that protect personally identifiable consumer data.
Permission‐based advertising – getting the subscribers to opt in for receiving ads – should be adopted as a mandatory practice. Also, the mobile advertising industry players should ensure that subscribers are firmly in control of their consumption of the mobile advertising that appears on their device.
Mobile Advertising Ecosystem and Value Chain
The mobile advertising ecosystem and value chain has become complex with the entry of large number of players in the market in recent years. Now we have a range of companies from the different mobile sectors, as well as big media and Internet brands offering products and solutions for mobile advertising.
The major players in the mobile advertising value chain are strengthening their position through acquisitions and partnerships with other leading and innovative mobile advertising companies and technology providers. The two highest‐profile acquisitions in 2010 so far have been Apple and Google snapping up mobile ad networks Quattro Wireless and AdMob, respectively.
The big players have been on the acquisition trail for companies that seamlessly integrate with their own platforms to ensure they have that end‐to‐end mobile ad‐serving capability. Informa Telecoms & Media believes that the successful companies that have unique and attractive technology and solutions for mobile advertising, as well as for mobile location, social networking and personalization are becoming attractive acquisition targets for the likes of Google, Apple, Nokia and Yahoo.
Informa Telecoms & Media believes that mobile will become an integral part of the advertising mix of more and more brands over the next five years. Due to the high level of interactivity possible on mobile phones, brands will increasingly depend on mobile advertising to boost customer retention and loyalty, and to drive m‐commerce transactions.
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