It’s seen a number of false dawns, but with the activation of every new smartphone or tablet, the world’s digital media advertising inventory gets a little bit bigger.

Today, mobile is still a small if fast growing part of the advertisers’ arsenal. But forecast figures from Informa Telecoms & Media predict that annual revenues generated by mobile internet display advertising will grow strongly over the next four years, from $779.4m in 2009 to $7.54bn in 2015, at a CAGR of around 46 per cent.

So towards the latter end of the forecast range, the future gazers can finally herald the ‘year of mobile advertising’ with confidence.

Will King, head of product development at Unanimis, joined the internet and mobile advertising network when it was four years old, which was five years before it was acquired by France Telecom in 2009. Unanimis now incorporates Orange’s UK network and Orange Mobile Portals, which in turn incorporates the Blyk-powered Orange Shots initiative, into its own ad network offering.

“When you consider the (traditional) web versus the mobile, it’s clear that mobile is still nascent,” he says. “There’s a certain nervousness with advertisers, because you have an advertising schedule that makes use of established channels and brands. But look at mobile and you need some convincing. At this stage in the market we need to do a good job of explaining these benefits to brands, by helping them to understand what the channel looks like for them and how we can help them extend their digital activity. Mobile is a very natural extension of the web and brands are very comfortable online now.”

Rather than digitalisation swallowing up other advertising budgets as expected, brands now appear to want to play the strengths of different channels against the audiences they want to communicate with.

“Mobile advertising is growing very quickly but it’s still at a very early stage,” says Rob Jonas, VP & managing director for Europe & Middle East at mobile ad network InMobi. “The core advertising business in mobile is still around relatively straightforward text and display advertising and maybe a bit of search. Advertisers are still understanding how to make this work for them at scale in order to harness the power of the mobile device.”

Jonas picks up on the often referenced blue skies advertising techniques portrayed in the likes of the film Minority Report and calls it out as just that—science fiction. “Everything around location-based targeting, timeshifting and the multi screen advertising experiencing are all really interesting discussions, but it’s still too early for advertisers to have an appetite for this. They are still learning the basics,” he says.

“The core advertising business in mobile is still around relatively straightforward text and display advertising and maybe a bit of search. Advertisers are still understanding how to make this work for them at scale in order to harness the power of the mobile device.”

Even the hype about in-app advertising needs some tempering. InMobi claims the second placed spot in terms of mobile display advertising network size behind Google, with almost 105 billion ad requests during the second quarter of 2011, up 23 per cent sequentially. Although smartphones and tablets were the driving force behind this increase, delivering 39 billion requests, in- app advertising, while growing quickly, still only represents 17 per cent of all ads. By and large, mobile web browser advertising is still the favoured medium and WAP-based web browsing is still going strong.

“Browser-based ads are still the global, high-level leader versus in-app ads. And we still see a clear distinction between the mobile web and traditional web. Publishers may not have a mobile app strategy but they may well have a mobile web strategy as the mobile web gives you freedom across more platforms,” Jonas adds.

But that’s not to say adverts aren’t evolving beyond basic buttons and banners, with location enablement at the forefront of that evolution. Jonathan Milne, general manager of Europe at Celtra, a web-based platform for creating and tracking mobile ads, believes that location has the opportunity to be seen as “the most important thing in rich media advertising, its purpose is to make the ad relevant to the consumer.” Milne identifies the biggest problem with most advertisements as the lack of relevancy to the viewer, and as a result claims that his business is seeing unbridled appetite and demand for location capabilities. “We get involved in around 50 per cent of campaigns created on our platform and use our own tools for embedding store finders and dealer locators and we’re seeing growing interest in check-in functionality too.

“Brands are using the web to seed and distribute good content globally to their consumers as well as using the traditional ‘user interruption’ model.”

“In the future, most ads will be location aware in some sense, either by GPS or through triangulation of the user’s location. We can look inside the advert and add location services like a map to find your nearest store or check in services like Foursquare. The big questions are ‘where am I right now and what can I do here?’ Or ‘how can I get there?’” Milne says. In another example, he highlights the popularity of location sensitive content, in that ads are dynamic and able to show different content based on location, such as an automotive advertisement for a car with an image gallery that shows a user in California a cabriolet but a user in Alaska a 4×4.

Due to the increasing digitalisation of parts of the market, video makes for an obvious companion to marketing and is another content channel experiencing explosive growth—just look at YouTube. “Stuff like VOD (video on demand) set the agenda for digital marketing around video, and now we’re starting to see it grow,” says King from Orange’s Unanimis.

In July, Orange announced an exclusive partnership with online video provider Dailymotion to deliver integrated display functionality allowing advertisers to target specific audiences with localised content on Dailymotion’s platform. With 20,000 videos added daily to the site, the Orange advertising network will have the exclusivity to monetise Dailymotion’s video advertising inventory across the UK, Spain, Poland and Latin America.

“Video inventory is finite and the situation is maturing and developing to include new kinds of marketing. Dailymotion gives us a strong window into selling video display advertising to video advertisers against Dailymotion content, and gives us the opportunity to distribute content,” says King. “Brands are using the web to seed and distribute good content globally to their consumers as well as using the traditional ‘user interruption’ model. Dailymotion encourages user generated content and virilisation. It’s how advertisers have embraced the social environment to distribute their content. It’s part of their schedule.”

Indeed, larger brand advertisers are doing more cross-platform campaigns, using the PC, the web, offline and increasingly, mobile as well. It’s not uncommon for brand performance campaigns to have multi channel capability. And while there are experiments with NFC and Bluetooth-enabled advertising schemes, the high spend today in terms of mobile is about using the scale of the channel to deliver compelling ad formats, according to InMobi’s Jonas. “Smartphones increase the intensity with which users browse the web and give us the ability to serve more rich media capable advertising to consumers, such as the market’s first 3D advertising campaign we did for Samsung with CoolIris.”

As Celtra’s Milne adds, on a wider scale, the greater use of smartphone capabilities are around messaging, so advertisers can craft a call to action to the local culture, making for more effective and efficient ads. Unless brands can specifically target the right content relevant to each market, it’s like dropping a needle into a haystack. But as the guys who sell the ad inventory concede, the ad-buying market is only just getting to that point.

“We have the capability to do hyperlocalisation, but we’re led by advertisers and they’re not there yet,” says Jonas. “The most granular level of targeting is the major metropolitan area. Urban residents behave differently to non-urban residents and that’s about as granular as we get today. Yes, we have conversations about being able to target a male in a certain postcode who’s done these three things on their phone in the last six months. This is all theoretically possible, but it’s not really the reality for where the majority of advertising spend is going today.”

Orange’s King is in agreement: “As the market matures, we will see a mobilisation of peoples’ digital activity overall and there are very specific benefits that mobile can bring around hyperlocalisation, next generation services and point of sale. But today it’s about educating people about how mobile can be used so it can become a natural and obvious channel for digital marketing.”

There are of course, exciting opportunities involving the oft mentioned treasure trove of subscriber information the operators have access to, with regards to more granular targeting of adverts. “Operators have a very rich amount of information that could be layered into the advertising network to help with targeting, but historically they’ve been reluctant to allow access to this,” says Jonas. “Although there does seem to have been a change and we’ve seen more movement in that direction over the last six months. It’s an observation that appears in several conversations beyond the advertising sector operators are simply coming to terms with the fact that they need to work with third parties. “Effectively the operator is a media owner so they have inventory and, depending on how effective they are on selling that inventory, there’s potential to work with them. We’re seeing this more in markets in the Middle East and Asia where operators are more open to third parties,” Jonas adds.

But some operators, like France Telecom, are keen to keep their advertising initiatives in house through the acquisition of specific skill sets, as was the case with Unanimis, perhaps giving them more control over the very careful steps that must be taken through the minefield that is user privacy.

“The key thing with localisation is that mobile is personal and localisation is key to advertising growth, but there is also the question around users opting in to these services,” says King. “You have to bear in mind what it is appropriate for advertisers to know about users. Hyperlocalisation is a capability unique to mobile, but it needs tempering. In the web space we are in the middle of a process of legislation around privacy, about what can and can’t be used to deliver an advertising message. So a similar code of conduct should be expected for advertisers in the mobile space,” he says.

Several acquisitions, including Google’s $750m purchase of AdMob, appear to have validated the case for the mobile ad industry, but the case for more granular targeting of adverts through localisation and hyperlocalisation is still yet to be proved. “Location is still a small part of the market today but it has huge potential for the future,” says Jonas. “It’s just that you can’t force a new advertising format on a market that is not ready for it. You need to wait to introduce it at an appropriate time or in an appropriate way.”

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