Thursday, July 8, 2010

Mobile advertising : slow growth rate or normal growth ?

Today, ABI research publishes new figures about mobile advertising. Worldwide market would reach 1.2 B$ in 2015. In 2006, analysts were announcing 12B$ for mobile advertising in ... 2011.

According to the same "ABI research" study, yearly market would reach today 313 M$, a bit more than 40 times less than expectations of 2006, 4 years ago. Last year, other analysts were predicting 5B$ for 2014.

Should we burn all analysis and even do the same with analysts ? What will be the actual figure in 2015 ?

Nobody actually knows. Figures published today sound much more accurate and realistic. On one hand, online has become much more mature, draining budgets from other media. On the other hand, mobile advertising starts to represent something, not necessarily the formats thought in 2006 but new formats, focusing more on respect of consumer. Moreover, start-ups and some big players started to grasp some requirements to build a scalable market.

Why is this so slow - reaching 10% of initial forecasts 5 years after initial target ?
The crisis probably did not help, directly hurting the amount put in the advertising envelopes. Moreover, analysts are sometimes paid by people expecting hockey stick shapes and thus tented to grow the figures.

But the main reason probably concerns the complexity to move an ecosystem and to understand the consumer expectations, complexity certainly underestimated by analysts. It took nearly a decade before Google generated decent revenues with significant volumes from search.
Some will argue that Facebook appeared on the market in 2006, now federating a bit less than 10% of "planet earth inhabitants". But Facebook had the chance to grow organically with no regulatory constraint (until now !), no need to make agreements with thousands of telcos worldwide (each with a different strategy), no need to align with local partners. And Facebook generated around 800M$ in 2009, mainly from advertising.

Will Facebook revenues continue to grow significantly ? At the end, it's a question of impact and volume. Does a "social ad" on Facebook prove the same impact as a permission-based targeted mobile ad ? Can Facebook compensate a possible lower impact by higher volume of "automated optin" ?

Will telco seriously engage in the race or will they passively wait for over-the-top players and device manufacturers to take the whole cake ? Will another Facebook or I-Phone phenomenon emerge in the mean time, keeping mobile marketing as a "second life" or "MySpace" ?

Considering all these constraints and resistance, if mobile advertising market reaches this 2015 figure, it's perhaps not so bad. But it could turn to be much more. It all depends on all of us - consumers.

To be continued ...

Benoit Quirynen

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