Mobile - The next advertising frontier?

Mobile advertising is one of the big discussion points within the mobile industry these days. The debate is not whether mobile advertising is going to be big – that’s a given – but just how big. Last year, PWC’s Global Entertainment & Media Outlook 2005-2009 predicted it would capture a 4.3pc share or $20 billion of total advertising spend by 2010. Research group Informa, though not quite as optimistic in its forecasts, nevertheless estimates that worldwide advertising on mobile devices will reach $11.4 billion in 2011.

We all remember how web advertising was similarly talked up before market realities dampened down all the hype, so is such optimism justified or is it a case of commentators losing the run of themselves again?

There are firm reasons to believe mobile may be different. While it may have been a fanciful idea a few short years ago, mobile advertising has real momentum now. Driving it forward is the potential for new revenue streams for a number of parties, including content companies, media owners, media agencies and particularly mobile operators, which are seeing their margins being eroded by intense competition and falling voice revenues. In short, the mobile and media industries have swung strongly behind the potential of mobile advertising.

For advertisers, the mobile medium presents some unique opportunities. It allows their brands the means to reach a crucial market segment and target them in a very precise way. For example, that fact that the location of the mobile phone can be tracked by an operator means that advertising messages can be sent to subscribers that offer discounts in a nearby department store or flag up a show playing at an adjacent theatre.

According to its advocates, the conditions are right for mobile advertising to take off. On the technology front, big displays, user-friendly interfaces, 3G technology – all these help to bring content alive on the mobile device and engage users. Second, the content is finally there (or getting there). Music and games are two of the content channels that are of huge interest to advertisers keen to tap into the youth market. To add to these two, mobile TV is also coming of age: there are now 40 plus operators right across the world that have launched commercial mobile TV services over 3G networks, including O2, Orange, 3 and Vodafone. And where TV goes, advertising usually follows.

But nobody should underestimate the challenge of making advertising work on mobile phones. There are many parties involved in a mobile transaction – from mobile operators to application providers, from media agencies to media owners – and all need to be working harmoniously as a team to make it happen. There’s more: 3G handsets will need to become far more common, mobile TV services will need to be attractively priced and mobile ads will need to be of high quality and tailored to the medium. The biggest challenge of all, perhaps, will be persuading users, many of whom have a personal attachment to their mobile handset, to receive advertising along with good content.

While there is no guarantee that all of these conditions will fall into place, the commercial benefits are such that that all the parties involved have a strong incentive to make mobile advertising work. And past experience tells us that when the mobile industry makes a concerted effort to do something, it usually succeeds.

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