Study: Mobile Shifting to Ad-Supported Base

By 2011 mobile advertising will rocket to $4.8 billion according to a new study from eMarketer, a boost to about 12% of the entire United States ad spend. In 2006, advertisers spent about $421 million on mobile ads, 2.6% of the whole ad spend. What is behind this massive jump?

by Kristina Knight

According to the report the boost will be the product of high conversion rates. Mobile marketing already has a high rate of click-throughs and conversions and as the industry begins to shift to an ad-supported model those conversions and click-throughs will continue to increase.

For example, the report highlights a Dunkin’ Donuts campaign using mobile coupons to promote a new latte drink. 4% of people responded to the ad which brought about a 21% increase in store traffic.

High conversion rates also mean high CMPs. In 2006, the CPM was $41 for mobile display ads. Experts say by 2011 the CPM will have dropped to $23, still a rather high amount.

Still there are hurdles to be faced. In the U.S. the public has been slow in turning to mobile advertising because of the cost. Many consumers don’t want to increase their mobile bills to subsidize the cost of ads, text messages and other content.

The current mobile model, a transactional model, is expected to bring in about $878 million this year. Much of the income will be cross-media campaigns that use mobiles for direct response marketing. By 2010, these kinds of campaigns are expected to bring in about $1 billion.