Smartphone Boom to Boost Mobile Ad Revenue

By Janet Maragioglio | Tue Feb 14, 2012 3:01 pm
One billion people will own smartphones by 2016, giving tech companies a reason to ramp up mobile advertising strategies to boost revenue.
A new report from Forrester Research examining mobile trends and their implications also predicts mobile devices will account for a third of dollars spent in the tech economy in four years, and consumer spending in the mobile app market will reach nearly $60 billion.Increased mobile spending and proliferating devices represent good news for companies looking to rake in more mobile advertising dollars. Each of those one billion mobile screens means app use, ad clicking and an effective way to reach consumers with precisely targeted marketing efforts.Technology companies are already jumping on the trend. Display ad pro Google ramped up mobile advertising efforts last year, resulting in major revenue gains.The company’s new privacy policy also ties in closely to its future mobile advertising aims. As of next month, Google will unite all its services and sites under a single privacy policy, allowing it to share user data and information across its ecosystem. This unification will allow the company to advertise to mobile users across all products. For example, a user might see ads for skateboards on Google+ after watching a YouTube video of Tony Hawk.

Mobile use is also a social experience, as people do more with their smartphones than talk and text. They use share photos and videos, play games and use a host of apps to shop, search and stream entertainment. Through use, mobile apps become microcosms of users’ individual tastes and preferences, making their data attractive to advertisers.

Social network leader Facebook is capitalizing on users’ app activity to gain advertising revenue as its long-awaited IPO gets underway.

As part of its targeted ad efforts, Facebook will soon put “sponsored stories” in newsfeeds. So, if users “like,” “want” or “read” a product from a particular company, a post from that advertiser could show up in their newsfeed talking about a product or service that will interest them.

The social media site will likely create more targeted efforts using its Open Graph platform to keep ad revenue rolling in as it attracts investors to its IPO.

Mobile ads represent potential gains for other players as well. Apple has lagged behind Android in mobile advertising in recent years. The company promoted iTunes chief Eddy Cue to oversee iAds last fall, hinting it plans to ramp up its mobile ad strategy to compete with Google in 2012.

The infant partnership between Microsoft and Nokia will also benefit from increased mobile ad penetration. Nokia improved its social location applications and commerce services to further mobile ad efforts on upcoming Windows phones. The handset maker receives a cut of mobile ad revenue, according to its partnership agreement with Microsoft, hinting it will prioritize advertising-related efforts as the new Windows phones continue to launch this year.

Companies need to proceed with caution, however, with their direct advertising efforts. Users invite companies right into their pockets with their mobile use, and with that intimacy comes an expectation that companies will respect and protect their personal information.

As recent debates over mobile data demonstrate, consumers and lawmakers are highly sensitive to using data collected on phones, and mobile companies will likely need respect these expectations in order to capitalize on the boom in mobile phone usage.

As mobile use continues to grow, people will also have more choices in which companies they decide to do business with on their phones and tablets. If users feel pressured or distracted by too many ads, mobile advertising strategies may backfire.

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