Mobile Advertising: Off Like a Rocket or Just a Damp Squib?

Some market-watchers are predicting mobile advertising is the next Big Thing and they’ve issued wildly exaggerated figures to back their claims. In our latest Hotline, Don’t Believe the Hype about Mobile Advertising, we explain why we think the market will be much slower to take off. I believe that by the end of 2010 mobile advertising revenue in Europe will be less than 430 million euros — a fraction of the billions spent on other forms of advertising.

So there’ll be no fireworks for a while yet — it’ll be more of a slow burn. I’ve looked at revenue from across the mobile advertising spectrum — text and picture message ads, advertising on mobile Web portals, mobile search and ad-funded content — and I’ve found little evidence of massive growth over the next two years. I think anyone hoping to become the next Google on the back of mobile advertising is going to be very disappointed.

I have found a couple of small sparklers, though: ad-funded content and mobile search. Revenue from ad-funded content will do well because people don’t mind viewing an advert if they can then watch a video for nothing. And mobile search ads (like those that surround a Google search result) advertise a service related to their search terms. Mobile phones are very personal items, so people will respond to adverts that aren’t too intrusive and promote something that’s relevant to them.

The personal nature of phones means they hold great potential for advertisers. An advert at the start of a mobile music video is much more likely to be watched, for example. Despite the huge potential, the mobile advertising industry should be realistic when planning for the next few years. Spending will certainly increase as agencies dip their toes in the mobile market. I’m sure the credit crunch will force advertisers to reduce spending on traditional media, and push them to explore cheaper and more targeted avenues, such as mobile devices.

In the long run, I think revenue from mobile advertising might rival that on other channels. Until then, the industry will have to knock a few zeroes off those inflated forecasts.