U.S. Mobile Advertising Set to Surpass $1 Billion in 2011

The U.S. is the world’s second largest mobile advertising market behind Japan, which currently boasts the only billion-dollar mobile advertising economy. In 2011, Japan will no longer be able to claim that distinction, since the U.S. mobile advertising market will grow to become the world’s second billion-dollar mobile market, according to a white paper from Smaato, utilizing consumer research for mobileSQUARED by Lightspeed Research. In 2010, the U.S. mobile advertising market will be worth $797.6 million, and is estimated to rise to $5.04 billion in 2015.

With such strong projected growth, why does mobile represent only 1% of the total advertising spend in the U.S.?

According to Karen Bleier, MDG’s media director, “People in the U.S. seem to be more resistant to any new type of advertising message, period. Introducing a new delivery system for advertising, such as a mobile device, can create a disconnect between ads and their links to a web page, causing drop off. Mobile advertising may be perceived as interfering with usage of their device, which has a small screen to begin with. And people have concerns about fraud and security.” Bleier would like to see more statistics regarding positive vs. negative experiences for those who have actually noticed and clicked through the mobile ads. “Mobile advertising is still in growth mode due to text opt-in e-blasts, which we find to be successful, especially at point of sale. I’d like to see more publishers provide mobile web pages that are easy to use, for a more positive experience,” she adds.

As the U.S. population approaches 310.6 million, the nation’s mobile population is exceeding 300 million and its mobile Internet user base is on the brink of surpassing 100 million. Given such a remarkably high proportion of mobile usage, mobile remains only a fraction of the total advertising spend in the U.S. In fact, the research reveals that 53% of U.S. mobile users claimed not to have seen an advertisement on their mobile. This is especially revealing considering that mobile advertising budgets are high, with the average U.S. mobile advertising campaign between $75,000 to $100,000, which could easily provide the scope to create an ad delivering a rich consumer experience.

According to a national survey of U.S. mobile phone users conducted by Lightspeed Research for mobileSQUARED, 49 million U.S. mobile users have engaged with an advertisement on their mobile phone, as detailed below:

  • 12.3 million mobile users “have clicked on the advertisement and went on to purchase an item”
  • 28.86 million users have “clicked on the advertisement and looked at the item advertised but did not buy it”
  • 7.82 million mobile users have “clicked on the advertisement and looked at the item advertised on their mobile phone and ended up buying it online”

The survey also revealed that mobile is facing some consumer resistance:

  • 21.6% or 64.9 million mobile users “doubt they will ever click on an advertisement on their mobile”
  • 53.1% of respondents claimed to have “never seen an advertisement on their phone”
  • 50% of the U.S. population is yet to form an opinion with regard to mobile advertising, according to the report

While mobile’s 1% share of today’s total ad spend may sound underwhelming, it’s important to remember that digital was just emerging ten years ago, and this slow, yet steady, growth has established a foundation for mobile to boom in the billions.

Karen Bleier is media director at MDG. MDG, a full-service Florida advertising agency, with offices in Boca Raton and New York, NY, specializes in developing targeted, Internet marketing solutions, exceptional creative executions and solid branding and media buying strategies that give clients a competitive advantage. To view MDG corporate identity projects, collateral design, signage, TV and Web design, click here.