Mobile ads coming, but patience required

Market research firms seem to be falling over themselves in an effort to cram the most zeroes into their projections for mobile advertising revenues. But for traditional advertisers – you know, the ones with really big budgets – 2008 will be much more about watching and learning than about spending.
The Kelsey Group predicts the U.S. market for wireless advertising will grow from $33.2 million last year to $1.4 billion by 2012, marking an impressive 112% annual growth rate. ABI Research this week issued its own sky-high forecast, claiming that worldwide mobile marketing is expected to explode from $1.8 billion in 2007 to more than $24 billion in 2013.
A handful of other firms peg today’s global market at $2 billion to $3 billion, exploding into revenues of $14 billion or so by 2011. And IDC stated breathlessly a year ago that “The potential actually exceeds the hype” for mobile ads.
Maybe.
Don’t look for the cash spigot to open up this year, though. For now, at least, U.S. advertising agencies are unconvinced about mobile.
Fifty-nine percent of ad executives at the 2007 iMedia Agency Summit in December said they had no plans to move “a meaningful portion” of their online marketing budgets into mobile marketing in 2008; 38% said that such a move would depend on the client.
Only 2% planned to pour resources into mobile marketing. Half that many – a mere 1% – said they were already investing heavily in wireless.
Instead, established agencies are leaving the high-dollar chips in their pockets, opting to watch more mobile-savvy advertisers (read: smaller shops with far less money) blaze a trail through the wilderness.
“In 2008, it’ll be hard for classic vertically integrated ad agencies to make money off mobile marketing, because 97 cents of every dollar spent will be experimental budget,” eMarketer’s John du Pre Gauntt noted last week, citing the iMedia results. “Real profit and loss budget will be required to get classic agencies interested.”
That hesitation is easy to understand. Advertisers and carriers are still terrified of annoying consumers by delivering pitches on their mobiles, and the industry continues to struggle with the most effective way to market to on-the-go users. Just as importantly, a massive disconnect remains between mass-market ad agencies and pure-play mobile players, who – unlike, say, ESPN, don’t have the luxury of including mobile in a broader sales package.
All of this is not to say that there won’t be some impressive – and expensive – mobile marketing campaigns this year. Even eMarketer predicts substantial growth in U.S. mobile advertising spending this year, with general (non-multimedia) revenues increasing 76% over last year.
That means, of course, there will be plenty of opportunities for mobile-focused shops to tinker with business models and marketing tactics – and to cash in while the big boys dip their toes in the water. For the market to approach the jaw-dropping revenue forecasts, though, those established advertisers are going to have to dive in.