UK mobile adspend to rise

07 January 2011

LONDON: Mobile advertising expenditure is set for rapid growth in the UK during the next five years, according to a forecast.

Research firm Enders Analysis predicted the revenues generated by this channel should soon begin to accelerate dramatically after several previous false starts.

It estimated spending levels could hit £419m ($647m; €498m) in 2015, measured against the figure of £46m recorded in 2009, and equating to an average annual improvement of 45%.

As a result, the medium's share of online advertising is pegged to jump from 4% in 2010 to 9.5% at the end of the period covered by the study.

Primary contributors to this shift include the rising popularity of smartphones, which are fuelling the adoption of a range of new habits.

Devices like Apple's iPhone and alternatives utilising Google's Android will make up 75% of active handsets by 2015, Enders Analysis said.

Moreover, surfing the net via handheld devices may deliver 28% of all time dedicated to this type of media consumption in five years.

"The difference now is that the explosion in smartphone sales and even faster growth in mobile internet usage is driving commensurate growth in advertising inventory," Enders Analysis argued.

Looking more broadly, it suggested the rise of the wireless web would assist in "driving the overall online ad market to further growth" rather than leading to the transfer of budgets away from traditional digital sources.

"We expect the majority of this usage to be incremental to PC-based consumption, as users find new things to do and buy on the mobile web," the report continued.

Search will assume the dominant role in terms of mobile advertising share, taking between half and two-thirds of marketers' outlay.

However, the wider search sector might not enjoy substantial benefits, given m-commerce tools remain at a highly nascent stage.

Conditions may also prove mixed for display ads, because mobile screens host fewer banners, skyscrapers and similar formats than larger PCs and laptops.

"If a significant proportion of mobile browsing replaces existing PC-based browsing, the overall effect could be negative due to the lower display yield on mobile internet pages," Enders Analysis said.

Additional challenges relate to a lack of established methods for determining return on investment, and the absence of standardised formats.

Despite this, competition is quickly intensifying, as demonstrated by Apple's roll out of the iAd platform and Ericsson launching its AdMarket service.

Google's purchase of specialist network AdMob and Microsoft's introduction of the Windows Phone 7 operating system shows big online players are also becoming increasingly engaged.

Data sourced from Financial Times; additional content by Warc staff