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The next big thing

Marketers hail the mobile phone as advertising's promised land

Oct 4th 2007 | From the print edition

ADVERTISING on mobile phones is a tiny business. Last year spending on mobile ads was $871m worldwide according to Informa Telecoms & Media, a research firm, compared with $24 billion spent on internet advertising and $450 billion spent on all advertising. But marketing wizards are beginning to talk about it with the sort of hyperbole they normally reserve for products they are paid to sell. It is destined, some say, to supplant not only internet advertising, the latest fad, but also television, radio, print and billboards, the four traditional pillars of the business.

At the moment, most mobile advertising takes the form of text messages. But telecoms firms are also beginning to deliver ads to handsets alongside video clips, web pages, and music and game downloads, through mobiles that are nifty enough to permit such things. Informa forecasts that annual expenditure will reach $11.4 billion by 2011. Other analysts predict the market will be as big as $20 billion by then.

The 2.5 billion mobile phones around the world can potentially reach a much bigger audience than the planet's billion or so personal computers. The number of mobile phones in use is also growing much faster than the number of computers, especially in poorer countries. Better yet, most people carry their mobile with them everywhere—something that cannot be said of television or computers.

Yet the biggest selling point of mobile ads is what marketing types call “relevance”. Advertisers believe that about half of all traditional advertising does not reach the right audience. Less effort (and money) is wasted with online advertising: half of it is sold on a “pay-per-click” basis, which means advertisers pay only when consumers click on an ad. But mobile advertising through text messages is the most focused: if marketers use mobile firms' profiles of their customers cleverly enough, they can tailor their advertisements to match each subscriber's habits.

Source: economist
http://www.economist.com/node/9912455