Microsoft exec sees mobile ad growth

By Cyril Altmeyer

CANNES, France (Reuters) - Mobile phone advertising will account for 5-10 percent of global media ad spending within five years, a leading Microsoft executive said on Wednesday.

"Five years from now mobile will be 5-10 percent of media spend but it won't happen all at once, it will happen gradually," Scott Howe, corporate vice president of the advertiser and publisher solutions group at Microsoft, told Reuters in an interview.

Howe added that advertising would also be driven by demand from retailers and emerging markets.

Microsoft, the world's largest software group, recently launched its Bing search engine in a bid to counter the dominance of Google in the lucrative Internet search sector and its related advertising market.

One key feature of Bing is that users search with only one click, making it more mobile phone user-friendly.

Howe did not give details on market share targets for Bing.

"As long as we continue to make progress we will get where we want to be," he said at the Cannes Lions 2009 advertising festival.

Bing has been winning market share from rivals, according to industry data released earlier this month, but still trails market leader Google by a long way.

The new search engine grabbed 12.1 percent of U.S. Internet searches for the June 8-12 week, up from 11.3 percent in June 1-5 but behind Google's 65 percent of U.S. searches in May.

SECTOR SET FOR RAPID GROWTH

As more consumers embrace new technologies and devices such as smart phones, personified by Apple's iPhone, mobile advertising is projected to grow at an annual average of 45 percent to reach $28.8 billion within 5 years from a current $3.1 billion or 0.6 percent of spending, according to Ineum Consulting.

The development of third-generation mobile phones has led to better connection speeds and a rise of mobile Internet browsing.

"Mobile phone advertising is going to be one of the fastest growing segments this year because it is growing out of a small base. The question is when does it really hit mainstream? That's probably still a year or more away," Howe said.

"The biggest bottleneck is going to be having enough case studies where major advertisers have done something really interesting in the mobile space," he added.

Mobile advertising could in the meantime attract interest from a niche of advertisers, such as small "mom and pop" local retailers which did not routinely embrace the mainstream online advertising, he said.

These advertisers could decided to shift their ad budgets away from local newspapers to mobiles for local highly-targeted campaigns.

Emerging economies such as Latin America and Africa, where people were likely to own a mobile phone before a wired PC, also looked promising, he added.

(Writing by Dominique Vidalon; Editing by James Regan and David Cowell)