Revenues limited by small screens and low online usage
Marketing managers should not expect mobile advertising to match the returns that can be achieved from advertising to PC users online, analysts have warned.
In spite of predictions that 80 per cent of mobile handsets sold in the UK will be internet-enabled by 2012, the effectiveness of mobile advertising will be limited by several key factors, according to Enders Analysis.
Even with the boom in smartphone sales, Enders Analysis predicts that in 2015 mobile usage will still only account for less than one-third, 28 per cent, of all the time spent online.
"There isn't the inventory in media to have substantial advertising revenues - you need the audience, you need the views," said Enders analyst James Barford.
The small screen size of mobile devices will also continue to limit the size of adverts compared to what is possible when targeting PC users.
"Ultimately, if you're trying to put your brand to someone, if you've got more space and a more interactive advert [as on a PC screen], then that should result in more revenue," Barford said.
The relatively limited amount of time spent browsing the web on mobile devices will also restrict the take-up of retail over mobile devices (m-commerce), an area that search-based mobile advertising could exploit.
Barford said the purchasing of more expensive products - such as financial services and holidays - is likely to remain PC-based, meaning the potential of m-commerce and associated advertising is limited.
"The search revenue on mobile will be considerably less than fixed line. Because of these big ticket items, the majority of ecommerce will still be taking place within a PC environment," he said.
Enders analyst Ian Maude agreed there are still several obstacles to overcome before mobile advertising can match the revenues generated by other forms of advertising.
"[The mobile advertising market is] just very nascent. A lot of the creative agencies want to get into it to be seen to do the latest thing but the problem is there's not very much money in it. And there's certainly not much profit in it for a lot of the interactive agencies," Maude told silicon.com.
Other factors currently holding mobile advertising back include the lack of standardisation between mobile platforms and the comparatively few ways of measuring how users are responding to mobile ads. Barford is confident these are issues that can ultimately be overcome as the mobile advertising market grows.
Despite these limiting factors, Enders predicts the amount of money spent on mobile advertising will hit £419m by 2015, up from £46m in 2009.