US mobile adspend to surge

18 July 2011

NEW YORK: Mobile adspend levels in the US should double the total recorded last year, according to new figures.

JP Morgan, the financial services provider, forecast the revenues delivered by this channel could reach $1.2bn across 2011 as a whole, measured against around $600m in 2010.

Douglas Anmuth, an analyst at the company, also stated the mobile medium would be the biggest contributor to online growth in the coming few years.

"We believe mobile smartphone adoption has played a critical role in accelerating key industry trends including social and local," he said.

"As smartphone penetration moves beyond the current ~30% global penetration rate, we expect mobile to have an even bigger impact on Internet business models."

Further factors supporting this trend will be rising mobile traffic, already three times the amount registered by the web in 2000, and the introduction of networks offering faster connection speeds.

Despite this, Anmuth suggested mobile adspend may still only come in between $7 and $8 for every mobile subscriber.

This can be compared with the $35 figure witnessed by the web in 2002, shortly after the dotcom crisis, JP Morgan argued.

Among the obstacles holding mobile back at present are the limited inventory available due to smaller screen sizes, alongside concerns related to creativity.

In a sign of the increasing integration between the mobile and online arenas, JP Morgan predicted several big players from the retail, electronics and social media sectors could enjoy impressive growth.

"We believe Amazon, Apple, Google, Facebook, and to a lesser degree eBay, are emerging as primary platforms on top of which large amounts of online/mobile communications, advertising, and commerce are likely to be conducted," said Anmuth.

"Notable characteristics of these major platforms include global reach, large and developing ecosystems, strong network effects, and revenue generating toll-booth capabilities."

"Importantly, these platforms grow stronger as the rest of the internet increasingly relies on them."

Google reported earlier this year that it had yielded $1bn from its collective mobile activity in annualised terms, and JPMorgan estimated the category would provide 5% of the firm's turnover in 2011.

Online video, apps, virtual goods and cloud computing tools were the other technologies identified as potentially stimulating industry-wide growth by JP Morgan.

"While broader macro data remains mixed, we believe the Internet economy is quite healthy, and 16 years into the consumer internet, we believe in many ways it is still early days," said Anmuth.

Auction specialist eBay was also anticipated to see mobile transactions hit $4bn in 2011, with PayPal, its payment service, responsible for an additional $3bn.

Data sourced from MediaPost; additional content by Warc staff