Justin Davidson, senior analyst at FirstPartner, outlines some key mobile trends to look out for in the year ahead.
2009 proved a challenging year for advertising as a whole, with many types of media struggling for revenue. At the beginning of 2009 the difficulties facing mobile advertising looked formidable as it was a small sector attempting to grow in a wider arena that was shrinking. However, while there have been a significant number of challenges for mobile media owners there has been growth and the potential for 2010 is looking even better.
Mobile advertising will see growth of 38% in 2010
FirstPartner has forecast that UK mobile advertising will be worth £61 million in 2010, having grown from £44 million in 2009. This growth will be fuelled by a number of factors. Firstly, the growing number of smart phones and how they change consumers’ use of mobile internet. Secondly, brands are beginning to grow in their understanding of mobile advertising and how it can be used. The growth will not come from one advertising format but from across the board, strengthening mobile advertising as a whole as it is not dependent on one sector. Further education of the market and a stronger sales capability of media owners will help reinforce this growth.
2010 is looking a brighter year than 2009, and Google is helping growth on two counts
A significant factor that will further drive growth in 2010, presuming it is approved, is the purchase of AdMob by Google for $750 million. This has demonstrated Google’s intentions with mobile and Google’s sales reach will help bring on board many advertisers who were previously apprehensive or unaware of mobile. Another significant event that will help growth in 2010 has been the introduction of the Android platform, which will help fuel the overall growth of smart phones, through its PR and own sales. As more smart phones come on the market the amount consumers use mobile internet increases, fuelling the growth.
Paid for searches will continue to be the largest advertising format
The largest ad format, that will also see very strong growth, is paid search. As with the fixed web these are paid listings displayed in response to entry of a search term in a mobile search engine. We forecast UK revenues will grow 33% and will grow from £21 million in 2009 to £28 million in 2010 the number of users seeking to find services when out, partly through the growth smart phones, will drive this growth.
While mobile applications grow, the advertising revenue they will bring in still remains a question
There is no doubt that mobile applications are popular on the iPhone, and are likely to be just as popular on Android, and other smart phones. But can they drive significant revenues? How individuals choose to use applications is the biggest question being raised, as this will have an effect on future revenues. Essentially users might download many applications but then fail to use them, hence large revenues will not be achieved. Crucial to the success of applications from an advertising perspective, and mobile advertising as a whole, is ensuring that relevance of adverts for the consumer is maintained.
Work is needed to ensure continued growth
During 2010 there are some potential stumbling blocks that could hinder the growth of mobile advertising. The main stumbling block is persuading brands that mobile advertising can bring them a ROI, though the upcoming GSMA release of metrics will help. Another potential hindrance to mobile advertising’s development is a mobile divide, between those who have easy access to the mobile internet and smart phones, and those who don’t. As a percentage, iPhone penetration is still relatively small, and while new smart phones appearing on the market will help the situation, there is still going to be a significant number of people who aren’t easily able to access mobile internet. Not reaching all of the population could stint growth as brands are apprehensive about investing in a medium that has limited scalability. Agencies and operators need to ensure that they develop means of reaching all types of consumers on mobile, not just through applications or sophisticated mobile internet sites. However, progress is being made and the industry continues to strive forward by educating the market and media owners are refining their sales strategy.
