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Mobile is everywhere, and while it might not be everything, one need look no further than Facebook to recognize that for many companies, figuring mobile out is crucial.

But despite the obvious opportunities being created by the mobile explosion, many questions remain. One of the biggest: just how big is the mobile ad market going to be?

There are billions of mobile devices in use around the world, but even in the world's largest advertising market, the United States, spending on mobile ads is still in the single digit billions. Contrast that with spending on television ads in the U.S., which exceeds $130bn each year.

Many believe that the mobile ad market is in its infancy and that we haven't seen anything yet. Razorfish's Paul Gelb, for instance, has suggested that mobile ads will eventually overtake their television counterparts, and he's not alone.

Matt Cohler, a former Facebook executive who is now a partner at venture capital firm Benchmark Capital, also believes that "mobile will grab TV advertising's crown."

In a guest post on TechCrunch, he explains:

People are going to spend more time staring at mobile screens than television screens (and certainly more time than staring at computer screens, especially when you exclude work applications). Your smartphone is with you pretty much all the time. Smartphones are also inherently social devices, which explains the deep emotional connection people feel to them. The society-wide reach and social context that mobile smartphones will provide advertisers leaves other media in the dust.

Using a mobile device is also a focused, immersive experience. Like watching TV, the screen focuses the user’s attention on one thing at a time and “changing the channel” is even less distracting than with a television.

So what is holding mobile ads back? According to Cohler, the current size of mobile ad market is "simply an issue of time and of product and market development."

Theory versus reality

Few doubt that the market for mobile advertising is going to grow significantly. But can it really overtake television, which still generates more than double the revenue produced by all web advertising?

Cohler's faith in mobile is based on his belief that mobile beats television in "frequency, reach and engagement." But does it? In practice, mobile advertising suffers from a number of challenges, including:

  • Size. One of the most attractive characteristics of mobile devices -- consumers always carry them because they fit in a pocket or purse -- is also one of mobile's most problematic characteristics. Put simply, creating effective mobile ads is a challenge with smaller form factors and even Apple
  • Efficacy. Mobile ads are often seen to deliver higher CTRs, but does that mean they're effective? In some cases, advertisers are learning that their higher-than-average CTRs are the result of fat fingers, not interest, something that's reflected in a lack of ROI.
  • The annoyance factor. Mobile devices are intimate devices. They connect us to our most important friends, family members and colleagues, and they are our lifelines when we need information in a hurry. While Cohler sees this as a benefit, it's actually arguably a limitation: mobiles are tricky devices through which to advertise because they give advertisers the ability to annoy at least opportune times.

    So it's not exactly surprising that many consumers seem to be tuning out mobile ads much as they do display ads. According to a new study conducted by Azullo, just a fifth of users polled could recall seeing an ad on their smartphone, either in an app or via the device's browser, within the past six months. Of the minority who did, over half couldn't recall the brand the ad was for.

  • Inventory glut. Advertisers pay hefty premiums for television ads and one of the reasons is that inventory is tightly controlled by networks and purposely sold in a fashion that limits the efficiency of the market. With mobile, there is effectively no limit to the amount of inventory that can be created, and much of that inventory is sold very efficiently. As such, it is likely that mobile ads will face the same downward pressure on price as their web counterparts.

Can these challenges be addressed? Yes, some more easily than others.

But there's no reason to believe that they'll be addressed sufficiently enough any time soon to produce the time of shift that would be required to propel mobile advertising to television-like heights. Advertisers and publishers still have a lot of work yet.

Patricio Robles

Published 28 September, 2012 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2364 more posts from this author

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Dean Marsden

Dean Marsden, Digital Marketing Executive at Koozai Ltd

I don't believe mobile advertising can be compared to TV advertising directly, but it a large market and has the potential to grow to TV like figures.

My concerns are that Mobiles are personal...our diaries, our photo libraries, our music collections. TV is just a medium like Newspapers. Most advertising is brand based on TV. I think mobile brand advertising needs to be clever, app and service sponsorship for example.

Likewise, if businesses want to advertise offers, they need to be clever. Perhaps Geo location pop ups notifying users of a local deal, or a special offer on the DVD box-set of the TV program they just posted about on their mobile social networking app.

Adverts need to have a personal touch in my opinion. this way it fits with the way Mobiles are used, not viewed (like TV).

over 3 years ago

Oliver Ewbank

Oliver Ewbank, Digital Marketing Manager at Koozai

Great post I think the mobile ad market going to be massive. In 5 years time they will be by far the biggest source of advertising.

over 3 years ago

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Web Design Oxford

Whether you look at it as a glass half full kind of thing mobile marketing won't kick off to the astronomical figures it has threatened to, until the arrival of augmented reality.

over 3 years ago

Andrew Tonks

Andrew Tonks, Senior SEO Account Manager at Red Blue Blur Ideas

the continued growth in mobile advertising I think is going to be a big breakthrough for our industry, away from a very static form a advertising when you can hit someone when sat at a PC to a far more effective way of getting people when they're more likely to purchase - such as offering a deal on something when a user is in a particular GEO location.

As Oliver has said, in a few years from now this is going to probably be medium for online advertisers - with this growth, it's making more and more sense for mobile to be a key element is everyone's online marketing plan and just not an extension of it.

Looking further down the line and in particular with regard to PPC - I can see average CPC rising significant as more and more advertisers start to bid online, which makes it even more important to be segmenting your advertising in AdWords by device now and implementing appropriate bidding strategies.

over 3 years ago

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Matt Lovell, Group Head of Customer Insight & Analytics at Thomas Cook AirlinesEnterprise

I think Dean's point is probably the most accurate here as at the moment here is a fundamental problem with everyone assuming that based on reach, frequency and engagement, Mobile advertising should be huge. What they are forgeting is the way in which consumers engage with content on their mobiles and as a result, the limitations within this.

Ultimately, as Dean mentions, Mobile phones are a very personal thing and they're also often something people use for very short bursts of time to check a piece of information or look something up which they wait for a person / means of transport / meeting or event. As such, to actually engage users you've got to be truely compelling and to do this, you've got to know who you're targeting.

This is obviously complicated by the way Mobile devices are tracked (not to mention the restrictions that DNT and the ePrivacy directive are trying to put in place) and opens up the question of whether Mobile will ever really achieve it's potential!

over 3 years ago

Dean Marsden

Dean Marsden, Digital Marketing Executive at Koozai Ltd

I hadn't considered the privacy issues Matt. Mobile advertising has a long way to go to be ultra effective, but then again how effective is TV advertising, sometimes not very!

over 3 years ago

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Matt Lovell, Group Head of Customer Insight & Analytics at Thomas Cook AirlinesEnterprise

@Dean - Too true. I still find the fact that in the UK TV advertising is entirely based on a panel of 5,100 households (11,500 viewers) ridiculous given the technology that is available these days to improve on that!

over 3 years ago

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Jose Simoes

What if there is a way to make mobile advertising not annoying? And what if you can experience it cross device? These are not the concerns.. Advertising will definitely go mobile, but don't forget, so does Television :)

over 3 years ago

Patrizia Pilosi

Patrizia Pilosi, Senior Project manager at Travelfusion

What is most attractive and interesting about Mobile advertising is how accurate a campaign will be able to be tracked, especially now that cell phone can function as credit cards + all other reasons already listed in the previous comments.

Projecting Mobile growth might be inaccurate at this stage but the shift of funding is inevitable from TV ads. We are comparing apples to oranges as the experience and context of such ads are very different from one another. Specific ads will benefit more than others at least at the beginning or until more successful campaigns will be marked.

over 3 years ago

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Safdar Imam

Great post. In my opinion, Mobile Multimedia Ads is a great opportunity for Telcos with 4G deployment. Hope Omantel realizes the potential asap.

over 3 years ago

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