MOBILE ADVERTISING FORECAST – MAY 2009
Few media have captured the passions of consumers, marketers and inventory owners alike as the mobile advertising space has. With advanced devices increasingly common, the sector is posed to almost double over the next two years.
MAGNA forecasts the US market for mobile advertising will grow by 36%, rising from $169 million in 2008 to $229 million during 2009. Although these figures represent downward revisions from our forecast in the middle of last year (prior to the subsequent escalation of the ongoing recession), we expect a re-acceleration in 2010 as the emerging mobile applications market organizes to support the sustained growth of ad-supported apps.
As a highly fragmented group of divergent advertising models collectively organized around portable (and primarily cellular network-based) media, a wide variety of trends converge to produce this total.
The prevalence of mobile subscriptions (more than 270 million at the end of 2008 according to the CTIA, the wireless industry trade association) and mobile users (more than 224 million individuals, according to Nielsen) has been the first catalyst. Although the vast majority of these individuals use their phones for voice services only, increasing numbers have adopted the use of text messaging (and virtually every device has the capability to receive SMS – also known as text message – advertising).
The second catalyst has been increased access to the mobile web. Recent data from Comscore indicates that as of January 2009, 22 million individuals accessed the mobile web daily and 63 million monthly, up from 11 million and 37 million for each frequency during January 2008.
Although the mobile web is limited by the number of consumers who will purchase mobile devices capable of accessing the web in an easy-to-use manner while concurrently subscribing to data services from a mobile carrier. Integrated or converged devices, also known as “smart-phones” are key to growth. To this end, 32% of AT&T Wireless’ contract subscribers possessed such gadgets as of the end of the first quarter of 2009, more than double the year-ago period. As carriers seek to drive revenues from data services, consumers will increasingly be incentivized to select smart-phones as their primary mobile devices. Third, Apple’s iPhone and the company’s App Store represent a driver of growth on several levels. One is the heightened interest among consumers, marketers and carriers alike for the core product, which results in exponentially higher levels of data (and mobile web) consumption. In addition, the establishment of an endemic ecosystem of software developers and consumers capable of performing “closed-loop” marketing creates real demand for marketing services inside of the platform. This segment of the market will continue to expand rapidly, especially as other mobile operating system developers create competing environments to drive similar applications to a wider range of devices.
Mobile ad networks represent by far the largest sub-sector within mobile advertising, and the greatest growth in absolute terms over the next several years. By aggregating billions of advertising impressions on a monthly basis, ad networks represent the most efficient way to sell the largest possible collection of audiences, and thus have become the primary beneficiaries of increasing mobile web consumption. At the same time, ad networks have leveraged their expertise into the application world, and can aggregate inventory to sell beyond the mobile web as the small publishers and developers dominating the application business will most typically outsource ad sales to these entities. Other impression-based inventory (such as that offered by online portals, publishers or mobile carriers) should post solid growth, but fragmentation will hinder large-scale buying except where campaigns are intended to be highly targeted or integrated with efforts on other more traditional media.
SMS advertising should perform more strongly, with long-term growth rates similar to ad networks. Text messaging platforms represents the best near-term potential for advertisers who want to use mobile devices to support broad-reaching marketing campaigns. This contrasts with slower growth rates for other more narrow-reaching types of mobile media (such as mobile search, in-call media, mobile video, mobile coupons and mobile gaming). PRESS CONTACT: Joe Benarroch, Mediabrands 773.405.1252
About MAGNA
MAGNA is the global media forecasting and investment strategy unit of Mediabrands. MAGNA is the foremost industry source on the ad-supported media economy, whose forecasts of advertising expenditures and industry knowledge are relied upon by Wall Street. MAGNA provides a complete market perspective, and with a unique model of flexible scale, MAGNA offers best-in-class client value and an unparalleled pricing advantage.
About Mediabrands
Mediabrands will enhance the communications offering and performance across its network of media agencies. With more than 6,500 communication specialists in 90 countries, Mediabrands is the media holding company for Initiative, Universal McCann, Magna and the diversified service groups. Mediabrands is part of Interpublic Group (NYSE: IPG), one of the world's leading organizations of advertising agencies and marketing services companies. For more information, please visit www.interpublic.com
MAGNA forecasts the US market for mobile advertising will grow by 36%, rising from $169 million in 2008 to $229 million during 2009. Although these figures represent downward revisions from our forecast in the middle of last year (prior to the subsequent escalation of the ongoing recession), we expect a re-acceleration in 2010 as the emerging mobile applications market organizes to support the sustained growth of ad-supported apps.
As a highly fragmented group of divergent advertising models collectively organized around portable (and primarily cellular network-based) media, a wide variety of trends converge to produce this total.
The prevalence of mobile subscriptions (more than 270 million at the end of 2008 according to the CTIA, the wireless industry trade association) and mobile users (more than 224 million individuals, according to Nielsen) has been the first catalyst. Although the vast majority of these individuals use their phones for voice services only, increasing numbers have adopted the use of text messaging (and virtually every device has the capability to receive SMS – also known as text message – advertising).
The second catalyst has been increased access to the mobile web. Recent data from Comscore indicates that as of January 2009, 22 million individuals accessed the mobile web daily and 63 million monthly, up from 11 million and 37 million for each frequency during January 2008.
Although the mobile web is limited by the number of consumers who will purchase mobile devices capable of accessing the web in an easy-to-use manner while concurrently subscribing to data services from a mobile carrier. Integrated or converged devices, also known as “smart-phones” are key to growth. To this end, 32% of AT&T Wireless’ contract subscribers possessed such gadgets as of the end of the first quarter of 2009, more than double the year-ago period. As carriers seek to drive revenues from data services, consumers will increasingly be incentivized to select smart-phones as their primary mobile devices. Third, Apple’s iPhone and the company’s App Store represent a driver of growth on several levels. One is the heightened interest among consumers, marketers and carriers alike for the core product, which results in exponentially higher levels of data (and mobile web) consumption. In addition, the establishment of an endemic ecosystem of software developers and consumers capable of performing “closed-loop” marketing creates real demand for marketing services inside of the platform. This segment of the market will continue to expand rapidly, especially as other mobile operating system developers create competing environments to drive similar applications to a wider range of devices.
Mobile ad networks represent by far the largest sub-sector within mobile advertising, and the greatest growth in absolute terms over the next several years. By aggregating billions of advertising impressions on a monthly basis, ad networks represent the most efficient way to sell the largest possible collection of audiences, and thus have become the primary beneficiaries of increasing mobile web consumption. At the same time, ad networks have leveraged their expertise into the application world, and can aggregate inventory to sell beyond the mobile web as the small publishers and developers dominating the application business will most typically outsource ad sales to these entities. Other impression-based inventory (such as that offered by online portals, publishers or mobile carriers) should post solid growth, but fragmentation will hinder large-scale buying except where campaigns are intended to be highly targeted or integrated with efforts on other more traditional media.
SMS advertising should perform more strongly, with long-term growth rates similar to ad networks. Text messaging platforms represents the best near-term potential for advertisers who want to use mobile devices to support broad-reaching marketing campaigns. This contrasts with slower growth rates for other more narrow-reaching types of mobile media (such as mobile search, in-call media, mobile video, mobile coupons and mobile gaming). PRESS CONTACT: Joe Benarroch, Mediabrands 773.405.1252
About MAGNA
MAGNA is the global media forecasting and investment strategy unit of Mediabrands. MAGNA is the foremost industry source on the ad-supported media economy, whose forecasts of advertising expenditures and industry knowledge are relied upon by Wall Street. MAGNA provides a complete market perspective, and with a unique model of flexible scale, MAGNA offers best-in-class client value and an unparalleled pricing advantage.
About Mediabrands
Mediabrands will enhance the communications offering and performance across its network of media agencies. With more than 6,500 communication specialists in 90 countries, Mediabrands is the media holding company for Initiative, Universal McCann, Magna and the diversified service groups. Mediabrands is part of Interpublic Group (NYSE: IPG), one of the world's leading organizations of advertising agencies and marketing services companies. For more information, please visit www.interpublic.com
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