Mobile advertising yet to convince big brands

It seems as though the mobile industry has become obsessed with advertising of late, hyping the medium up as ‘the next big thing’ in terms of revenue generation. But analysts warn that the market has become so consumed by short term hurdles that it is failing to focus on the longer term strategic issues required to turn mobile advertising into a multi-billion dollar industry.

Industry analyst and telecoms.com parent, Informa Telecoms & Media, forecasts that the global mobile advertising market will rocket from $1.72bn in 2008 to $12.09bn by 2013.

However, the analyst reveals that the majority of early adopter big brands are yet to transfer more than 0.5 per cent of their advertising budget onto mobile. While this is in part down to the much maligned issues of non-existent measurement and premium pricing associated with early formats of mobile advertising, the analyst argues that these are short term hurdles.

Instead, the mobile advertising industry would be better served concentrating on educating the consumer and providing a visible and measurable return on investment to the brands.

At present around 80 per cent of mobile advertising revenue is generated by mobile content providers.

“The mobile content market is creating the mobile advertising opportunity, while the big brands remain sceptical about the return on investment that will justify the premium rate card already associated with this emerging medium,” said analyst Nick Lane. “The situation will change, but the plethora of companies looking to get a slice of the revenues must remain patient. Releasing the big brands’ spend is key to unlocking the potential of mobile advertising.”

Lane believes there is an absence of innovation in mobile advertising that has enabled the industry to accept internet-based models devoid of the functionality and capability that mobile technology delivers. “True mobile advertising does not exist today; what we are referring to is ‘advertising on mobile’. When mobile advertising combines user profiling, location and communication with unique mobile inventory, the industry can justify charging a premium rate over existing immeasurable advertising channels,” Lane said.

Informa believes the adoption of true mobile advertising can be spurred by utilising unused mobile ad inventory such as banner ads to advertise mobile advertising itself, as well as encouraging consumers to visit a WAP site explaining the benefits of mobile advertising, such as subsidised or free mobile services, as pioneered by players like Blyk.

Blyk makes an interesting case in the mobile advertising sector. When the firm announced its plans, more than a few eyebrows were raised, but now the company claims that teh industry is coming around to the idea, largely encouraged by average advertising response rates of 29 per cent. Compared to other forms of mass market advertising, this figure is phenomenal when compared to a 0.5 per cent response rate for online advertising and 4.5 per cent from unprofiled SMS.

Something which Blyk also does and Informa encourages, is for operators to allow the consumer to control the extent of adverts being delivered to their mobile device, based on activity and location requirements.

This article is based on a new report from Informa Telecoms & Media, ‘Mobile Advertising: Cutting through the Hype‘