The Holy Grail Of Advertising

February 23, 2011

mobile, advertising, smartphones, apps

‘Mobile apps are the holy grail of advertising.’

-Sir Martin Sorrel, founder and chief of world’s largest advertising company in revenue, WPP PLC

With the rapid growth of the smartphone and tablet market, there is little doubt that mobile advertising is the future.   

According to ad forecaster Magna, mobile advertising currently represents approximately $2.7 billion of the global $500 billion dollar market.  Certainly not a formidable chunk but as is everything else in the mobile world, you can count on it to grow.  

eMarketer predicts that mobile advertising spend in the U.S. market alone will double from 1.1 billion this year to 2.6 billion by 2014.

Mobile advertising is considered ‘the holy grail’ for multiple reasons -including the ability to target advertising based on location.  

Additionally, advertising on mobile devices provides users with an interactive experience never seen before on any sort of platform.  Users can immerse themselves in ads due to advances in rich media as well as experiment with the new types of formats.

Opt-in advertising will allow users to receive targeted ads based on what they are interested in and tell advertisers when and where users want it.   It’s less intrusive or aggressive than traditional media and with the emergence of location-based apps (hello, Foursquare) marketers will be able to infiltrate the social circles of mobile users to better target their audiences. 

So why hasn’t mobile advertising completely exploded?

It’s not that the party is too crowded, it’s that developers are still trying to figure out a way to serve everyone.

According to Gartner analyst Stephanie Baghdassarian, “Advertising inventory - the amount of traffic or impressions that a publisher can sell to advertisers interested in targeting users that visit a publisher's site—is too scattered.

Before advertisers can truly capitalize on the mobile opportunity, the market must become more consolidated.  

Even Apple has hit a speed bump in this new landscape.  Two days ago they lowered their minimum iAd spend from $1 million to $500,000 to better secure market attention.  

According to tech blog Fierce Mobile Content, Apple is still determining how to best way to play this game.

“Apple is still figuring out how to sell advertising. You don't just become a sell-side media company overnight. The infrastructure is missing at Apple right now.”

In short, the biggest hurdle standing in the way is simply that we are in unchartered territory as mobile expansion happens so quickly.

According to Yahoo! Investor Day, although consumers spend 28% of their total media consumption time on the Internet/mobile devices, advertising spending on the Internet/ mobile devices is only 13% of total amount spent in the U.S. in 2009.

inMobi CEO Naveen Tewari, quoted in the Wall Street Journal, explains the current status of the mobile ad network.

“We're at the tip of the Iceberg in terms of what can be done with mobile.”