Prospects for mobile advertising in 2009 are promising despite the economic downturn, but realism is called for, says Analysys Mason, the global telecoms adviser during Mobile World Congress in Barcelona.

The current economic downturn is placing significant pressure on the global advertising market. Consumers will be spending more time at home, and looking for free and inexpensive entertainment and information. Advertisers require high-impact media that are highly engaging and highly personal in order to deliver the best value for money. Mobile advertising has the potential to address both of these needs effectively.

“For mobile, the downturn creates a conflicting set of pressures. On the positive side, mobile advertising will benefit indirectly from the accelerating shift of advertising spend from traditional to digital media, particularly as consumer take-up of mobile entertainment services grows in line with greater take-up of 3G,” explains Alexandra Rehak, Principal Analyst at Analysys Mason.

Analysys Mason forecasts that, by 2012, mobile advertising will account for over 4% of total advertising spend in European countries that have relatively high mobile penetration and 3G network coverage, and for as much as 2% of advertising spend in emerging Central and Eastern European economies.

“However, for most players in mobile content markets, it is unrealistic to expect significant amounts of revenue from mobile advertising in the short-to-medium term,” explains Rehak. “The current economic environment will restrict investment in new technologies and services, and limit advertisers’ appetites for untested propositions, as well as potentially constraining consumer spend on new mobile content services that could support advertising, and on higher-spec mobile devices that support richer mobile entertainment applications.”

In order to survive the difficult economic conditions, mobile operators and their advertising partners should bear in mind the following trends.

• Search advertising will become a key platform on mobile. Major online search players, such as Google and Yahoo!, are better placed to attract mobile advertising spend than new entrants or mobile-only players, at least in the short term.
• Producers of highly popular branded content will look to capitalise on brand by selling mobile advertising directly. For example, UK pay-TV provider BSkyB began offering mobile display advertisements in November 2008, served on its mobile sports and news syndicated services.
• Developing markets and 16–25 year-old users will be particularly responsive to mobile advertising. Attention has centred on targeting advertisements by subscriber interests or behaviour, but simpler targeting (by consumer age or level of market development) can be very effective as a lower-cost starting point.
• Ad-funded services and applications will be a significant growth area. As consumers tighten their budgets, ad-funded or ad-subsidised games, music, video and even messaging services on the mobile present excellent opportunities for advertisers to reach targeted audiences.

“The market will experience something of a breathing period now, as advertising buyers reconfigure advertising budgets to suit the new economic conditions, and mobile operators focus on keeping subscribers on board and happy. To the extent that mobile advertising can help facilitate this, in a manner that is both attractive and highly cost effective from the advertiser’s perspective, all parties will benefit from its growth,” explains Rehak.

For more information and analysis of the mobile advertising and mobile content markets, please visit our website at www.analysysmason.com. Relevant work includes:

• Service Provide Strategies for Mobile Advertising: Case Studies – Analysys Mason Research Report
• Consumer Content and Applications Research Programme – Analysys Mason Research Programme