Mobile Ad Revenues Set To Explode, To Reach USD 3.3 Bn In 2011!

With the exploding growth in smartphones and tablets, it was only a matter of time that mobile advertising took off in a big way. Well, the time seems to have arrived as the mobile ad revenue market is slated to reach a phenomenal $3.3 Bn this year. The number may not alone reveal the arrival of mobile advertising in a big way but compare it with the mobile ad market last year and the picture becomes crystal clear.

The overall mobile advertising revenues are expected to hit $3.3 Bn in 2011, more than double the revenues earned in 2010 ($1.6Bn), according to Gartner.

The report has forecasts till 2015 by which time the mobile ad revenues are expected to touch $20.6 Bn. Well, all forecasts are to be taken with a pinch of salt and this may not be different.

However, with the kind of growth in the smartphone / tablet and the application ecosystem around it, there is a clear possibility that a mobile advertisement could become critical for marketers.

As far as geographic growth is considered, there is a surprise in store too. Traditionally, US and Europe are the biggest markets for digital advertising and I assumed the same in case of mobile advertisement. Well, I was wrong and how.

Asia-Pacific and Japan are the biggest markets for mobile advertisements and are expected to maintain their lead upto the forecast period of 2015. However, in terms of growth rate US and Europe are expected to grow the fastest and catch up with the Asia-Pacific and Japan market. Though, I fail to think of a single reason as to why this particular trend exists for mobile advertising?

What Could Be The Driver For High Growth In Mobile Ad Market?

To a certain extent, the explosive growth in the mobile ad market is not surprising and follows a traditional pattern of either print or digital (internet) advertising.

Have the infrastructure (websites / blogs in case of internet advertising), gather demographic data and then advertisers come running. This is how print and internet advertising works but the target audience data is where internet advertising beats print and the richness of user data is what could lead to mobile advertising setting new benchmarks going forward. I may not have gotten the terminology right with either demographic data or target audience data but here is what I mean with a basic example,

• In print advertising, newspapers/magazines have with them the total circulation, region wise circulation and to a certain extent the segmentation by age of their readers. This data is then used by the advertiser to decide on what-where and how much to advertise. The data points for decision making are limited to a large extent making it difficult to serve contextual/customized ads
• In internet advertising, the data set becomes much more richer. There are search keywords, demographic targeting, social recommendations allowing for a much finer segmentation. Advertisers can fine tune their ad serving much more efficiently thereby ensuring better conversion

It is the richness of data where mobile advertising has the potential to trump all other advertising mediums. Mobiles come with a very powerful data point in terms of Location Awareness.

Almost all phones now have geo-tagging / location features inbuilt and in most cases mobile application developers are able to capture the user’s location data (I assume). This data then becomes a gold mine for any potential advertiser.

Location data can help the advertiser make the ad serving as targeted as it gets. Playing Angry Birds in a particular street and you get served an advertisement featuring a restaurant running a promoting in the same street. This may not be the best example but you get the idea.

Real-time location data could prove instrumental for the growth of mobile ad market across the globe. Moreover, the ability to target a user at this level is what will allow the publishers to extract top dollar from advertisers.

If the developments in mobile space are anything to go by, it is an ecosystem with a potential to dominate the near future be it information creation, consumption and even advertisements. As technological advancements continue at a break neck pace and innovators pursue mobile centric initiatives, sky seems to be the only limit for mobile advertising.

What are your thoughts on the fast rising mobile ad revenues? Do you think the forecasted numbers are well within reach or there is a possibility of the mobile ad revenues plateauing faster than expected?