Fixed Mobile Convergence

U.S. mobile advertising revenues will grow from $491 million in 2009 to $2.9 billion in 2014, representing a compound annual growth rate of 43 percent, according to researchers at BIA/Kelsey. The forecast comprises advertising placed in mobile search (text advertising applied to search queries on mobile devices), display (display advertising applied to app and mobile Web inventory) and SMS (commercial SMS messaging).

BIA/Kelsey expects U.S. mobile local advertising revenues to grow from $213 million in 2009 to $2.03 billion in 2014 (57 percent CAGR). This represents 44 percent of total U.S. mobile ad revenues in 2009, growing to 69 percent in 2014. BIA/Kelsey defines mobile local advertising as that which is targeted based on a user’s location and/or actionable locally. Local targeting occurs to varying degrees and with different methods within each of the advertising formats examined in the forecast (search, display, SMS).

To keep things in perspective, JupiterResearch forecasts that advertisers will continue to increase the share of total budget they spend on online advertising between 2006 and 2011, with the online spend reaching $25.9 billion, or nine percent of total U.S. advertising spend in 2011. In other words, all online advertising is less than 10 percent of total advertising, and mobile advertising is only several percent of online advertising. 

Also, some might say that local media is in trouble, suggesting the local advertising could also be in trouble. And if local advertising is in trouble, shouldn't local mobile advertising be limited? Some are not so sure. In fact, some would argue that people are spending more on local media, even if advertisers do not seem to be matching that increase in engagement, while others would see unusually robust gains for local mobile advertising. 

Borrell is forecasting that local mobile advertising in the U.S. will grow from $285 million in 2009 to over $11.3 billion by 2014.

"Local media is actually in a boom," says Harvard professor Clay Christensen. The amount that people are spending for information is 10 times more than the amount that advertisers are spending.  His argument essentially is that consumers are spending more on cable TV, Internet access and apps and subscriptions to websites.  The main problem is that traditional media companies continue to see the Internet as a way to promote their own products, whether it’s broadcast or print.

The big opportunity is providing news and information, he notes. Local media such as Examiner.com, Patch.com, Craigslist.com, and Autotrader.com are being used by consumers as new and relevant sources of information. Meanwhile, legacy local media companies are focusing on preserving their existing business models, not on the job that their customers are trying to get done.

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