Recently, Razorfish's Paul Gelb suggested that the spend on mobile ads could soon surpass the spend on television ads, even though television advertising currently has a hundred-billion-dollar-plus lead.
There is, of course, good reason to believe that mobile advertising's best days are ahead. Mobile penetration is significant, and smart phone penetration is growing rapidly.
But there are challenges. As I previously noted, "Mobile ads, on the other hand, may have some theoretical advantages, but it's clear that advertisers aren't yet ready to throw tens of billions of dollars at them annually. The inventory (not the medium) simply isn't that attractive right now."
A new study conducted by Relevancy Group on behalf of Pontiflex sheds some light on the value of the inventory. In surveying advertisers, it found that a sizable 43% won't increase their mobile spend in 2011 because the ROI simply isn't there. If it was, 93% would feel comfortable increasing their spend.
Where's the ROI? According to the study, mobile advertising is failing advertisers because "advertisers have not been respectful of consumer behavior." Click-based ads stand out, but they produce errant clicks. That upsets users, and also drives up the cost of advertising.
The solution: "with the high incidence of accidental clicks, marketers cannot continue to use traditional online ad units and measurement models." To this end, Pontiflex is marketing "signup ads" which employ the pay-per-signup, not pay-per-click, model.
Will CPA prove to be the model that works on mobile? That remains to be seen. The big problem all mobile ad units will face is balancing usability and user experience without watering down ads so much that they're totally ineffective. On this note, advertisers will need to better understand the mobile channel. Yes, the mobile is a powerful device through which massive audiences can be reached. But advertisers should keep in mind that the mobile is also a very personal device, making the potential to annoy far, far greater.