Spending on mobile advertising is about to take a sharp upturn, according to a report by Telecoms.com's parent Informa Telecoms and Media.
In its latest study 'Mobile Advertising Services: generating revenue through subsidised content' the analyst predicts that worldwide spend on mobile advertising will be worth US$11.35bn within five years. The report suggests that consumers will learn to live with adverts on their phones, lured by the offer of free content.
The potential economies of scale that the mobile channel offers advertisers will prove a powerful draw, according to the analyst firm which predicts there will be over 2.1 billion mobile subscribers worldwide by the end of 2006, rising to nearly 4 billion in 2011. Reaching that audience, however, will mean operators will have to work hard to achieve consumer acceptance.
At the same time, operators are still reeling from the ongoing realisation that consumers are reticent about downloading content to their mobiles as highlighted by the recent warning on the full music track download market. New business models - such as that of Spiral Frog - give content away for free to consumers after they have listened to or watched adverts. The advertising companies pay the music firms for the cost of the tracks and, hypothetically, everyone wins.
Nicky Walton, principal author of the report and senior research analyst at Informa said: "There are now more users with advanced multimedia handsets and the number of subscribers who connect to mobile broadband via 3G and HSDPA is growing significantly. Consumer interest in multimedia mobile content is also growing and areas like mobile TV, and 'off-portal' search are becoming more popular."
Informa reckons the mobile advertising market will be worth $11.35bn in 2011, an impressive jump from an estimated $871m in 2006. The analyst says mobile search advertising and display advertisements on mobile web pages will be worth around $3.1bn by 2011. Text and picture messaging advertising will be worth approximately $2.7bn the analyst firm said.
Key to its success, according to Walton, are teens anxious to impress their friends with the content they own on their mobiles. "It's very important to this audience," she says. "Much of their status is increased when downloading something essential, such as the latest ringtone or music track. One of the challenges faced by the industry, is to ensure both the pricing and the quality of that download encourages the customer to come back."
Mobile TV is tipped to bring in the lion's share of the profits with Informa estimating it to be worth almost $4.4bn.