NEW DELHI: Mobile advertising expenditure is due to rise by 40% in India next year, but the industry remains at a nascent stage, a report has stated.

The Mobile Marketing Association, the industry body, and exchange4media, the industry publication, estimated that the revenues generated through this medium should hit $33m in 2012 and $50m in 2013.

Digital adspend in India is currently running at some $327m per year, while the advertising market as a whole is worth roughly $5bn annually.

"Mobile is an exciting, fast-growing category, but it's still a very small piece of the overall ad pie. Mobile advertising is growing at a fast pace and will soon challenge other channels," said Rohit Dadwal, the MMA's managing director, Asia Pacific.

Paid search and SMS are the most important formats in terms of facilitating revenue growth at present, especially as they allow for targeted advertising where "no dollar is ever wasted".

"On one hand, mobile gives the opportunity for massive scale and on the other hand, it has the ability to target down to the individual, who is right for your brand," said Mohit Beotra, head of emerging business at Airtel, the mobile group.

Today, however, many large advertisers only dedicate between 10% and 25% of their budgets to new media, not least because traditional channels offer superior reach and audience metrics.

"It is not enough to just mobile optimise your website. The medium needs to independently deliver a brand experience and going forward an opportunity to do a mobile brand campaign," said Rameet Arora, senior director of fast food chain McDonald's India, South & West.

One trend working to support the growth of mobile will be the rising number of consumers going online via this route. This user base already stands at more than 120m people, the MMA suggested.

The roll out of a diverse range of smartphones and tablets, retailing at prices varying from $36 to $545, will also play a key role.

Figures from Nielsen, the research firm, have shown that smartphones now make up 9% of the mobile category in urban India. In smaller tier two cities, this total has reached 6%, according to the company.

Viral Oza, marketing director at Nokia, the handset manufacturer, said: "Mobile phones have gone beyond delivering voice communications. This provides monetisation opportunities for operators, partners and app developers – who help us reach a wide base."

Data sourced from exchange4media; additional content by Warc staff