WIth the rise of Web phones like the iPhone, Android, Blackberry, and Palm (Verizon’s CEO says that 40% of its new phone sales are such smartphones), mobile advertising promises to be a huge growth area. The Kelsey Group, a market research firm, projects that the mobile advertising market will balloon from $160 million in 2008 to $3.1 billion in 2013.
Of course, that is just an educated guess which will turn out wrong. But there is no doubt that mobile advertising will be much bigger in four years, perhaps even ten to 20 times bigger than it is today. Where will all of that mobile ad money go to? Here I think the Kelsey group is more on target. It projects that mobile search will go from 24 percent of the total mobile ad market last year to 73 percent of the much larger pie in 2013, according to a recent research note put out by Citi analyst Mark Mahaney, which is where I’m getting all of these numbers.
Display ads are projected to go from 13 percent of the total to 18 percent, while SMS ads will decline as a percentage from 63 percent to 9 percent (see charts). So once again it looks like search is going to be the big winner. No wonder Google is so focused on mobile search as one of its major sources of growth.
Think about it. Display ads take up precious real estate on your phone screen and tend to just get in the way and be an annoyance. That’s why most people don’t like them. But when you are doing a search on your phone, you are often looking for something nearby—a store, a restaurant, a dry cleaner. You are more open to ads, especially if they are relevant to your search.
Mobile search is particularly tuned for local search ads. Mahaney writes:
Given the nature of mobile devices, local queries on mobile should, over time, be greater than local queries on the desktop.
Indeed, the Kelsey Group predicts that local searches will rise from 28 percent of all mobile searches in 2008 to over 35 percent by 2013. And as a percentage of mobile search ad revenues, local search is already half. So that is a $1.27 billion market opportunity in four years just for local mobile search.
So who would you rather be: Google or some random mobile ad network shoving display ads into apps and mobile browsers?
“WIth the rise of Web phones like the iPhone, Android, Blackberry, and Palm”
funny how you disclude windows mobile even though they sell more than the iphone.
Mobile will be anything in years to come….
I wouldn’t write off display ads on mobile so quickly though. I think the projects for display ads on mobile will be higher than stated here – if we count tablet devices as mobile devices. By 2013 tablet market will be enormous for ads.
Why would we count tablet devices as mobile devices any more than laptops?
Great question Erick!
To me it’s a little surprising- you would think that on mobile, search would be all about the in and out. You find the pizza store you were searching for, close the browser and go there. Search ads seem to work better when there is time to browse and click, which would probably happen less on mobile than on desktop surfing.
However, one way I see mobile search ads becoming this great of a share of the mobile ad market is more mature inventory. Mobile ads, now, kind of suck, and I have yet to see one that I would waste my precious on-the-go time on. Which is not to say that such an ad does not exist, but I do think in order for this to work, AdWords for Mobile MUST have a better and more targeted (ie. local) inventory.
It’s all about the major difference in mobile and non-mobile search. I would venture to guess that a much higher percentage of mobile searchers have less time to veer off onto ads, and prefer stronger search results.
Another mobile advertising method is to develop a mobile app. I believe pizza hut has a free app you can use to order pizza.
also i remember the verizin/bing deal…the only time i ever use bing is with my verizon LG env3 phone
Ridiculous story.
If Google were so preciously interested in developing and cultivating a mobile marketplace for search, why did they cop out so quickly and simply make it opt-out-only for their PC advertisers to be on mobile, many of whom have shitty experiences since their sites are flash or other complex sites non-renderable even on the orgasmic iPhone.
As for the “wah” users dont like ads bullshit, jesus – read the article you reference, this has nothing to do with mobile ads and the company behind the story has already recanted their statements. it was an apple to oranges comparison. no shit people dont click on PC ads on PC sites rendered on tiny ass mobile screens – YET mobile ads on mobile sites on tiny ass mobile screens, while agreeably occupying 10-20% of the screen real estate PERFORM VERY WELL. 3.0+% CTR WELL. MAGNITUDE BETTER THAN PC well.
Yeah, display is dead.
Great news for Microsoft and Bing, my favorite mobile search
Seriously, Google should get their adsense for mobile apps out of beta already! we wana make some money over here!
Yeah, bing is pretty cool @bob e. Anyway, the mobile web will be king but what company can one make to compete in that realm? Maybe niche search engines built into apps or on certain sites using google co-op ??
Any ideas anyone? For, I want to get in on the mobile search area
Interessting article… think I would like Google rather than some random mobile ad network.
Can you find a least known consulting firm to provide projections?
Semantic search engine http://yebol.com is better than Bing and Google.
I think you are missing the other great use for mobile search. It is connected to the small and precious real estate that the mobile screen is. Discovery of mobile sites sucks in comparison to the big screen. That is what makes mobile search extremely valuable for all parties. A content provider/publisher that is one level donw on a major carrier portal is more or less non-existing. We have run tests with mobile games and pretty much whatever we put on top of the list sells the most. No correlation to quality or general popularity of the game. When we now are entering the post-on-deck-era discovery and driving traffic to your site will be the single biggest task. Enter mobile search as a key tool.
Also, this local search on mobile I think is hyped bar for the traveller scenario. I know where there’s a pizzeria in my neighbourhood. No need to look it up and get directions. I do not know where the nearest pizzeria is when I am on the road travelling.
These articles always make me choke on my cornflakes as they focus on bought media which is essentially buying / tricking your way into people’s consciousness. Earned media is the way forward and it’s called earned for a reason.
As toddq suggests, maybe creating mobile tools and applications that people actually want to spend time with and that add value to their lives is a better way to go. But of course it’s nigh on impossible to measure the spend on this so we get back to the willy waving of my channel’s bigger than your one….
the future is about Location. studies show mobile users dont click on cpc ads. who needs to enter a keyword when gps and location based apps do everything automatically. search is blind and is not compatible with the future of location based mobile advertising. i have a feeling utility locator apps are gonna take over. sites like offenderlocator, trapster and aloqa. once someone integrates the best ones together the mobile location based ad race will be over. may the best standard win.
I don’t know why we are still talking about CPC mobile Ads… As per the above comments said it, the Ads on mobile devices are not clicked at all.
The reason is pretty simple, at the present time the mobile Advertiser platforms like Google or even Admob are simply trying to copy/paste the computer CPC Ad concept instead of finding a new way especially conceived for mobile devices.
I think the future of mobile Advertising will be more than simply display banner Ad or text Ad.
I guess it probably right with the rise of smart phone, but will it replace the use of computer? For some people mobile phone is still personal for them and they wont just agree if someone send them ads on their phone.
Yes, advertising on the phone is growing, but it still need several time to evolve and accepted by people.
Hi Guy’s,
I think creating mobile tools and games that people actually want to spend time with and that add value to their lives is better way to go.
Having spent a long time analysing mobile advertising I would say that search is probably only a smartphone thing. The smaller internet enabled phone user tends to be more focused around social networking/chat and games. On top of this Hyperlocal (i.e particular suburb) seems to be an interesting area.