The Next Frontier For Mobile Ads? In-App Advertising

Mobile Fan

Photo: Robert Scoble

At the end of 2010 there were over 5.2 billion mobile connections globally – more than 3 times as many connections as there are PCs in the world.Mobile phone subscriptions continue to rise, making mobiles the most rapidly adopted technology in history.

With such incredible growth and reach, it is no wonder that attention is now being focused on using mobile technology as an important method of customer acquisition.

Traditionally, mobile advertising opportunities have been limited to text or ‘lite’ banner based link outs appearing on limited functionality WAP sites. This has been largely due to part to slow data speed, proprietary platforms and the limitation of connectivity to the internet due to walled gardens. With the changing face of technology and the shift from voice to data, all of that has dramatically changed.

To understand the magnitude of this – mobile data traffic surpassed voice traffic in 2009 and exceeded 1 Exabyte (1 million Terabytes) of data transfer. In 2010, the US and Western Europe alone were expected to both exceed 1 Exabyte in such data traffic.

Not only that but the data speeds are increasing rapidly with the estimation that by 2014, nearly half of mobile users will be using some combination of 3G and 3.5G+ technologies and about 33 per cent will be using 3.5 G+ technologies such as WiMAX and LTE (often referred to as 4G) . This gives rise to graphically rich content availability and high definition video capabilities which can be leveraged to previously unseen levels.

 Complemented to the increase in data speed is the mainstream adoption of the smart phone. 270 million smartphones were sold in 2010, a 55% increase on the 174m sold in 2009[i]. According to Gartner, Inc., smartphone sales grew 96 per cent in Q3 2010 compared to the same quarter last year, and smartphones accounted for 19.3 per cent of overall mobile phone sales[ii]. It is expected that smartphones sales will now exceed PC sales in 2011 with over 500m predicted to be sold.

 Apple have revolutionised the industry mainstreaming Smartphone adoption with their iPhone and dominating the application space with their app-store facilitating over 200,000 applications being distributed over their network and achieving over 10 billion downloads. Adding to this the increasing popular and successful uptake of the hardware agnostic Android and their app store means a whole new world of opportunities opens us.

 The adoption of this technology and huge distribution capabilities has wide scale implications on the mobile advertising landscape stemming from not only global coverage but the potential of targeting not only the mobile web but applications as well. Add to that the integration of location based global positioning systems, I predict that along with the conventional advertising that will occur on re-purposed mobile websites, there will be a huge push into the in-app advertising space where all of this functionality can be leveraged to full extent.

The ubiquitous text and banner ads from the likes of AdMob and Quattro will continue to be the main form of advertising until app developers become comfortable with the inclusion of other types of formats including video from and Leadbolt ads. All of these will be personally targeted to the user. In app purchases are already becoming an effective way of monetizing applications and I see applications being built around the ad-component integrating location, personalisation and stickiness causing users to return to a newly generated social aspect which is sure to pervade the space.

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