by Andrew Redfern @ 15th May 2008 10:12 pm

Spending on mobile advertising is beginning to develop worldwide, but mobile ad revenues aren’t likely to reach any significant volume until 2010, as market participants continue to wrestle with formats, standards, and pricing strategies, according to a major new report from Heavy Reading (http://www.heavyreading.com), the market research division of TechWeb’s Light Reading (http://www.lightreading.com).

Mobile Advertising: The Service Provider Revenue Opportunity defines and examines the value chain for mobile advertising and analyzes the potential benefits and challenges for mobile ad market participants, focusing on the key issues relating to mobile network operators.

The report evaluates the various mobile advertising formats available today and provides a realistic, analytic perspective on the evolution and growth of this market.

The report delivers a complete accounting of the mobile advertising ecosystem and analyzes the market positioning of 25 key participants in the mobile ad value chain, including advertising agencies, content aggregators, ad networks, search providers, network operators, technology suppliers, and mobile content optimizers.

“Mobile advertising offers some significant advantages over other media, but also has some limitations,” says Aditya Kishore, Senior Analyst with Heavy Reading and author of Mobile Advertising: The Service Provider Revenue Opportunity. “Before selecting mobile as an ad medium, advertisers, vendors, and carriers will need to identify the objectives of their ad campaign, the requirements of the creative products and cost, and the responses required.”

Once technology and business model issues are worked out, mobile advertising revenues will show significant and sustained long-term growth worldwide, Kishore says, adding that mobile network operators stand to gain a large percentage of the mobile ad revenue stream. “Mobile advertising offers carriers the greatest opportunity to insert themselves into the
advertising value chain,” he explains. “Unlike with TV and Internet advertising, which developed before the service providers got involved, carriers have been involved with mobile advertising from the start.”

Mobile advertising revenues will grow very rapidly, but initial growth will not be as rapid as many anticipate. The mobile advertising ecosystem is still very much in a state of evolution today, with a very high degree of unpredictability. This ecosystem will need more time to develop, and the industry will only exceed $10 billion in annual revenue in 2013.

Wireless carriers’ share of mobile advertising revenue will grow to $3.4 billion in 2012. While this represents less than 1 percent of total wireless service provider revenue, it is also just the tip of the iceberg. Mobile advertising revenue will ramp up steadily for the foreseeable future. Carriers now have an opportunity to enter this market at its early
stage and influence its development as it expands into a sizeable market.

Mobile ad revenues will not flow evenly to all network operators. Carriers that are aggressive in building their content, search, and advertising businesses will gain a disproportionate share of mobile advertising revenues. The market also will vary significantly by geography, with Japan, the U.S., and the U.K. now best positioned for mobile ad revenues.

Service providers that leverage their “multi-screen” advantage will have the most success in attracting advertising revenues. Advertisers are increasingly interested in “cocooning” their customers within their brand,
and thus want their brand messages to be available across device platforms.

Service providers offering wireline and wireless services have a unique ability to integrate advertising across the TV, PC, and mobile device. This could offer advertisers significant value, provided it is packaged correctly.

Mobile Advertising: The Service Provider Revenue Opportunity is essential reading for a wide range of industry participants, including the following:
– Suppliers of technologies that enable mobile advertising services: How will the growing interest of wireless network operators in mobile advertising affect your business? Where are the new opportunities for market growth? Are your products and marketing messages in line with network operator plans and expectations? Is your company clearly and
correctly aligned in the emerging mobile ad value chain?

– Mobile network operators: What is the realistic revenue potential from mobile advertising for your organization? What types of technologies will your company require to maximize that revenue potential? How will ongoing changes in the mobile ecosystem affect your plans and your ability to tap into new revenue streams efficiently and profitably?
Which technology suppliers are in the best position to deliver the products you need?

– Mobile content providers and mobile advertising enablers: What role will mobile network operators play in the emerging mobile advertising ecosystem? Will network operators be partners or competitors for mobile advertising revenues? Which operators are likely to be most aggressive in trying to tap into the mobile advertising market?

– Investors: How will the development of mobile advertising affect the overall advertising ecosystem? Which technologies and companies are emerging as the most likely leaders in this new environment? What role are mobile network operators most likely to play in the mobile advertising business, and how will that role affect other players in
this sector?

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