Coda Research Consultancy in a new report forecasts mobile broadband search and display ad revenues in the US to grow to $4.2 billion in 2015, up from $1 billion in 2010.
The firm predicts that 70% of those revenues – or nearly $3 billion – will come from search advertising, and sees a bright future for local search in particular. SMS revenues on the other hand are forecasted to drop to a mere 3% in the next 5-6 years, down from 55% in 2010.
As we’ve noted before, most reports from research agencies predict a steep rise of revenues from mobile search in the coming years, and I’m bullish about that too, but Coda seems overly optimistic about the general growth curve in its forecasts. I also don’t believe revenues from SMS, which continues to be one of the cheapest, quickest and easiest to use form of peer-to-peer mobile communication, will really decrease so rapidly. Mobile advertising isn’t a zero-sum game.
A couple of weeks ago, eMarketer reached more conservative conclusions based on its own research, estimating that mobile ad spending, including messaging-based formats, will reach $416 million in 2009 and $1.56 billion by 2013. The Kelsey Group forecasts U.S. mobile advertising revenues (search and display) to grow to $3.1 billion by then.
The consensus, however, seems to be that SMS revenues are set for a decline in the next five years, and that the increase in mobile advertising revenue from search and display will compensate for that decline and continue to make the segment grow faster than regular Internet advertising.
It will be interesting to see which players make money in this tough space, more curious will be to see if anyone can make money with mobile display advertising?
Sure the mobile advertising segment may grow faster than regular internet advertising, but just because a group of marketing companies are dumping their money into it, doesn’t mean that it’ll be a lucrative market or show any signs of return.
Rising unemployment, etc. Reality needs to be considered at some point along the journey.
It’s really very interesting.
It seems as if mobile search would far overttake SMS as smartphones get cheaper.
Use Opera for your mobile phones and you will have better experience I guess. There are few good softwares like this one for mobile phones.
That’s very very interesting, great article Robin. Should I want to build a new startup, Bang: Mobile local niche search: flowers, sportshoe, with geolocation…..I won’t annoy peoples with Ads, here 2 Business models:
1- I will charge small Business to have their pages indexed, let us say a very small fee/year: 5~10$ * a bunch of small businesses in a special niche = plenty of $$$$$
2-I will run an affiliate with them: If they receive a customer from me (geolocation tracking)==>$$$
Sounds great to earn some money.
Mobile search with the potential of LBS should be able to take off, but I’m surprised to see SMS revenues drop off the table like this. There’s a natural inclination to write off SMS b/c it isn’t as sexy and it was long discounted as a gimmick for the kids. Yet, companies are successful in reaching their customers with SMS and the audience is open receiving the communication– they opt-in. In a year-plus of working at Keynote I’ve come to realize that our monitoring services are often a leading indicator for the direction of the market. Customers invest in monitoring when there’s growth on the horizon and are inclined to pull back when they’re on the downhill. Our shortcode monitoring service continues to grow and I’d confidently predict that SMS will continue to surprise and be no less than flat at the end of 2013. I also believe that mobile and search advertising can follow the CAGR above– but don’t fall in the trap of following the hot dot and take your eye off a proven commodity.