Gartner Says Worldwide Mobile Advertising Revenue to Surpass $2.7 Billion in 2008

Analysts Say Ease-of-Use and Relevancy Issues Remain for Advertisers



Worldwide mobile advertising is projected to surpass $2.7 billion in 2008, up from $1.7 billion in 2007, but the market has developed slowly and obstacles remain, according to Gartner, Inc. Ease of use and relevancy to consumers are two important factors that must be addressed to help build momentum in the mobile advertising market.

“Innovative developments, such as minimizing the number of keystrokes required to access information, using the phone’s camera to improve the overall user experience and tying content or shopping location relevancy to advertisements will move the market forward,” said Tole Hart, research director at Gartner. “To encourage users to accept advertisements, advertisers must improve the way search results are managed on the handset so that the experience is painless and rewarding to end users.”

“There are a number of players that can benefit from the mobile advertising market moving forward, including brands, merchants, carriers, banks, and bill paying agencies,” said Andrew Frank, research vice president at Gartner. “An important attribute of mobile advertising will be relevancy because the device is very personal to the consumer. All parties win when greater relevancy occurs. The market and consumer will gravitate to content and advertisement messages that are relevant to them.”

The mobile advertising market has generated a lot of hype for a variety of reasons: number of handsets, capabilities of the phone and the major Internet portals entering the market. However, the industry must still overcome several problems to drive the market forward. Some of the impediments to growth include slow adoption of multimedia, lack of consumer acceptance, lack of metric transparency, immaturity of standards, diversity of platforms, form factor issues, cross-media integration priorities and the complexity of the value chain, inventory of content, privacy, education and ease of accessing content.

“Many of these issues will be resolved during the next two years, but the make-or-break question of mobile advertising is: Will customers accept advertisements, and can brands and advertisers drive revenue via mobile advertising?” Mr. Hart said.

While effective targeting can dramatically improve response rates to advertisements, Gartner analysts said this may require existing knowledge of customers’ demographics, an opt in to the brand’s advertisements, location sensitivity, or contextual relevance to the content delivered.

“Advertising often runs the risk of being perceived as junk mail or a privacy violation, so advertisers must use such targeting techniques with care,” Mr. Frank said. “However, sponsored content has proven successful in other media. There are several companies working on providing mobile content integrated with advertisements. In addition, location has long been thought of as a factor for relevancy, but to date precision has been limited as the capability and the cost of GPS has been too high, along with the low penetration of GPS phones.”

Despite challenges to the market, the industry is still poised for consistent growth. By the end of 2011 worldwide mobile advertising revenue is forecast to surpass $12.8 billion.

Additional information is available in the Gartner report “How to Move the Mobile Advertising Market Forward" In this document, Gartner analysts examine how some companies have improved the ease of use for consumers trialing advertising on the mobile phone as well as creating advertisement relevancy. Several companies that have progressed in these areas are highlighted. The report is available on Gartner’s Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=615707&subref=simplesearch.