Mobile ad revenues wildly exaggerated

Predictions and claims about the roaring success of mobile advertising in European markets are hugely inflated, according to analyst research released Monday.

Research firm CCS Insight predicts that advertisers will spend fairly insignificant amounts trying to reach people through their mobile phones over the next few years.

By 2010, the firm forecasts that mobile advertising revenue in Europe will total less than Eur430m – a fraction of the billions devoted to advertising budgets annually.

“The reality is that no one’s making huge sums from mobile advertising in Europe, and this won’t change in the near future,” said Paolo Pescatore, director of applications and content at CCS. “Some analyst houses are predicting we’ll see a massive surge in mobile ad revenue, but our research shows the sums involved are still relatively small. Anyone expecting to become the next Google on the back of mobile advertising is going to be disappointed.”

Nevertheless, the analyst believes that people take more notice of a mobile ad than advertising on TV or on a PC screen, and with a billion new phones being bought every year, the potential market is huge. Pescatore sees ad-funded content and mobile search as two big growth areas, especially as more people access the internet on their phones. “Placing ads at the start of a video or adding them to the results of a mobile search are less intrusive forms of promotion. I think we’ll see people responding well to this kind of ad,” he said.

Jeremy Miles, chairman of advertising agency Miles Calcraft Briginshaw Duffy, confirmed the research, saying that while mobile advertising holds enormous potential for brands, the platform needs to emerge from the technology foothills and develop media experiences and advertising solutions that satisfy real consumers’ needs and wants.

As a result, CCS cautions the mobile advertising industry to be realistic when planning for the next few years. “Spending will certainly increase as agencies shift some of their budgets to the mobile market and the credit crunch will force advertisers to reduce traditional outlets like print and TV, and push them to explore cheaper and more targeted avenues, such as mobile devices. Eventually, 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,” the analyst said.