The whole IT industry has high hopes for mobile advertising, but it's still in its infancy and has many hurdles to overcome before it can deliver on lofty promises of billion dollar revenues, according to analysts and ad agencies. Vendors are more upbeat.
Estimates vary widely for how much the mobile advertising market will be worth. M:Metrics found that mobile display advertising was an approximately US$200 million industry last year. In 2011 the global mobile advertising market alone will be worth over US$12 billion if you ask Gartner, or US$19 billion if you ask ABI Research, whose figure includes both mobile search and video advertising.
But if mobile advertising is to take off on such a large scale, the vision being laid out for it has to be realized, according to Nick Lane, lead analyst at Direct2 Mobile.
"If you have been to industry events in the past two years it's the same people saying the same things, but the industry hasn't delivered on what we have been promised: a personalized, contextualized, real-time location-based mobile advertising platform, and the industry is still a long way from delivering it," Lane said.
The market is current on a Internet-based advertising model using mobile phones with few advantages, according to Lane.
"Probably the only additional benefit that I can see is that potentially you've got a connection from the brand to the handset, so you can see how the handset responds, but that doesn't really tell you much about the user," Lane said.
Mark Newman, chief research officer at Informa Telecoms and Media, agrees: "The market is still very immature; all that we are looking at is companies dipping their toes in the water. At the moment all that's really happening is that some adverts that might be on the Internet are on the mobile phone."
Newman is also convinced that the next step must be to add more segmentation and also location-based ads to take advantage of the benefits of the mobile phone. "But that is probably still a good three, four, five years out," Newman said
The fact that there are still relatively few mobile Internet users and a fragmented market isn't helping either. Advertisers have to turn to multiple sources to get a large enough footprint and ads have to be customized to different phones. "To actually buy the inventory on mobile is incredibly difficult and takes a long time. So when people say that a lot of companies don't get it, they don't get that companies can't be bothered with the drawn-out process," Lane said.
Pricing is also far too high; it's still a trial medium and should be priced accordingly, according to Lane.
His advice is to simply go where the traffic is, which is voice and messaging, not data. Companies like Smaato and Blyk have the right idea, according to Lane.