Ad-based revenue models are going to have a profound long-term impact on the development of the mobile industry, according to a new report from the telecom analyst firm Berg Insight.
Berg Insight’s Johan Fagerberg said: “Traditionally, telecom operators have focused their attention on maximising revenues by managing network traffic.
“Now we have a different breed of players like Google who want to maximise their advertising exposure and revenues by generating as much traffic as possible.
“This force may prove formidable enough to disrupt the traditional telecom business model by shifting the focus from selling voice minutes to selling advertising space.”
According to the report, the greatest challenge facing providers of mobile advertising is the very low consumption of mobile media.
Even though Berg Insight estimates that there are close to 100 million mobile internet users in Europe and North America, the vast majority of those only access mobile media a few times per month.
“For the advertising business model to really work, there must be a massive surge in usage levels. If mobile media is to take 1% of the €230 billion EU and US advertising markets, the existing user base must become exposed to between three to ten commercial messages every day. The industry has not yet figured out how to achieve this”, added Fagerberg.
A recent forecast from eMarketer projects that worldwide mobile brand advertising will rise to $3.5 billion in 2011, up from $123 million in 2006.
Mobile music is climbing the rungs of the mass-market ladder, it add, and most importantly, there are mobile-centric tribes of users in both advanced and developing economies (see Mobile Brand Ad Market Set To Grow).
Telephia has said that location-based services such as navigation, represented 51% of the $118 million in US revenue that downloadable mobile applications (such as weather applications, chat/community, and personal organisation tools) generated during Q2 2007 (see Navigation Is Top Downloadable Mobile Application).
Meanwhile, a new study from Airwide Solutions has found that the mobile marketing industry is making significant progress, with 28% of companies surveyed having already launched live SMS campaigns and 18% having launched live MMS campaigns.
Growth in the sophistication of mobile marketing campaigns was reflected in the number of brands considering implementing both SMS and MMS mobile marketing in the next 12 months, which doubled to 28% since a similar survey in 2006 (see Mobile Marketing Industry “Making Significant Progress”).
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