BARCELONA (Reuters) - After years of hype and expectation, advertising on mobile phones is still a nascent industry and will need phones to be used in payments and other transactions before it really takes off.
Media experts have for years predicted ‘the year’ of mobile advertising and most have in general remained disappointed.
But expectations have risen again in recent months after Google’s $750-million acquisition of one of the largest mobile phone ad networks, Admob, and the purchase of mobile ad company Quattro Wireless by Apple Inc.
Analysts say the medium, which offers the ability to send highly targeted ads based on a consumer’s behavior and location, will really take off if and when a mobile phone is able to make payments via text messages or the mobile Internet.
“Mobile advertising is really closely linked with payments, effectively m-commerce,” Mobile Squared telecoms analyst Nick Lane told Reuters. “So the issue we’re seeing from our research is that there’s no end product.
“A lot of the spend from the big brands is all about brand awareness on mobile and when that migrates to (the promotion of) a transaction then the money being spent on mobile will just rocket, and that is likely to be another 12 or 24 months.”
Andrew Bud, co-founder and Executive Chairman of the world’s largest mobile transaction network, mBlox, said the spend on mobile advertising had been held back by the fact the only transactions currently conducted on mobile phones was to buy mobile entertainment.
“Mobile entertainment is worth more than 30 billion pounds worldwide,” he said, referring to services such as games, music and ringtones. “It’s not small. But the commerce engine that is powering the Internet is a trillion dollars of commerce.”
Advertising executives and telecom operators gathered in Barcelona for the Mobile World Congress trade fair said despite limitations, the medium was starting to mature. Big name brands such as Nike, BMW and McDonald’s have all launched campaigns.
“More and more clients are asking us to work on their mobile strategy,” Alexandre Mars, the head of mobile for Publicis, told Reuters at the fair.
“We are seeing more and more demand because for the first time we have seen all the components of the ecosystem fall into the right place.”
Richard Metcalf, the business development officer for Joule, a WPP mobile marketing agency, told Reuters content companies had originally been behind most of the mobile advertising to promote content but said big brands were now also getting in on the fray.
“The question is have we moved beyond the trial period and have we seen strategic investment in mobile advertising and I think we’re getting there,” he said. “We’re seeing brands doing repeat bookings.”
According to IT researcher Gartner, global mobile advertising revenues likely reached about $530 million last year and could jump to $13.5 billion by 2013.
The Kelsey Group research firm estimates that the majority of advertising spend has previously gone on text messages but expect this to move to search services in the next few years.
One company which has seen strong growth in mobile advertising is Shazam, which helps customers identify music that is being played and then buy it through their phones.
Chief Executive Andrew Fisher told Reuters they had sold out their entire advertising space for the last 5 months as brands target their more than 50 million customers.
“Mobile was seen as experimental a year ago and I think what people are seeing is that the audiences have grown significantly,” he said. “It is now easier to put targeted campaigns together and buy enough inventory together to make it meaningful.”
Another aspect which has helped the mobile advertising industry in Britain is a move by mobile phone operators to team up with the digital market research firm comScore to measure mobile Internet usage, which the telecom trade body, the GSMA, hopes to role out in other markets.
The ability to measure usage and the increasing interest from major lifestyle brands has led to the belief that mobile advertising will become a key platform, but it is unlikely to happen overnight.
“I believe that the mobile phone, because of its intimacy, its timeliness, because of the focus of attention that you have on it and because of the quality of its screen, could become a fantastically powerful new medium for creative visual advertising,” Bud said.
Reporting by Kate Holton, Editing by Sitaraman Shankar