US Mobile Advertising Trends : Smaato WhitepaperDownload

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I’ve got a vision that these mobile phones could have a greater effect thaneven television advertising. I couldn’t quite see my way through it becauseit still seems rather misty to me, but I get the feeling that these could beincredibly powerful as an advertising medium.

I must say, mobile was all ‘gobbledegook’ to me but I’m beginning to geta little bit of what mobile means and can do for me as a brand. But whatI would say to [the mobile industry] is that we need to understand moreclearly how this all works, why it works, how you use it, the best methodof use and we need somebody to talk to us in layman’s terms.

Mike GodwinManaging Director, Mövenpick Ice Creams

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© 2010 Smaato Inc. White Paper on The USmA: The United States of Mobile Advertising

Mövenpick Ice Creams is part of Nestlé, and represents the next wave of brands looking to invest in a mobilestrategy.

Mobile is a conversation that all DDB clients want to have now. And weare happy to share our experience that when Mobile is used effectively itmakes all media work harder. We believe that mobile can be an integralcomponent of a larger campaign as long as it works to connect people

with people, not just people with brands.

Jeff SwystunChief Communications Ofcer, DDB Worldwide

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”

DDB Worldwide Communications Group Inc., known internationally as DDB, is a part of Omnicom GroupInc. Omnicom is the advertising holding company with the highest revenue in the world, at US$12.69 billion,according to Advertising Age’s agency rankings of April 2008.



The US is all about numbers, big, big numbers. It has a mobilepopulation exceeding 300 million, and a mobile internet user baseon the verge of surpassing 100 million.

With this level of scale, mobile advertising budgets are high –

especially in relation to Europe – with the average mobile advertisingcampaign in the US between $75,000-100,000.

At this level, it ensures there is sufcient budget available to release

the creatives on the campaign and deliver a truly compelling, richadvertising experience.

Presently, the US is the second largest mobile advertising market inthe world, behind Japan. In 2010, the US mobile advertising marketwill be worth $797.6 million, rising to $5.04 billion in 2015.

Aligned with this increase in mobile advertising spend, will be an

increase in US mobile users engaging with advertisements on theirmobile.

Consumer research for mobileSQUARED by Lightspeed Researchreveals that 53% of US mobile users claimed not to have seen anadvert on their mobile. User engagement with mobile advertisingwill inevitably increase.

Primarily because 49 million mobile users already claim to haveactively engaged with an advert on their mobile, and if just one-thirdof that 53% start to engage with mobile advertising, that wouldcontribute an additional 50 million mobile users.

Summary

3© 2010 Smaato Inc. White Paper on The USmA: The United States of Mobile Advertising

USA Mobile Advertising Market Size

$ 5 . 0 4 B N

$ 1 . 2 4 B N

2011 2015



The US mobile advertising market is a very exciting market to beoperating in right now. It has scale like no other developed mobilemarket and that is making for a hotbed of activity.

The US has a population approaching 310.6 million, and there are

a fraction over 300 million active mobile subscriptions in the US, ofwhich, almost one-third use their mobile phone to browse.

mobileSQUARED research has highlighted that around 50% of theUS mobile internet users are doing so on a frequent basis – on adaily or almost daily basis.

The mobile internet is becoming a very popular and powerfulplatform throughout the US, and this is creating an opportunity forcontent producers and publishers to capitalize through the deliveryof creative and rich-media-based advertisements to consumers.

Because of the country’s vast population, the average mobilecampaign spend is signicantly larger than anything witnessed

in Europe, for example. In the US, the average mobileadvertising campaign spend is between $75,000-100,000. Onaverage, creatives receive 10-15% of the budget which could total$15,000 and provide the scope to develop an ad delivering a richconsumer experience. In the UK for instance, the average creativebudget would be approximately $5,000 maximum.

The richer advertising content is helping to fuel the mobileadvertising marketplace even further. In 2010, the US mobileadvertising market is expected to be worth $797.6 million, secondonly to Japan which is the world’s only billion dollar mobile

advertising economy.

The 75,000 dollar question

300 MillionUS active mobile

subscriptions


Source:mobileSQUARED, October 2010

US Mobile Ad Spend, 2010

$797.6 MillionUS Mobile Advertising

market worth

29%

46%

20%

3%

2%

Opt-in Messaging

Mobile Games/Music/Video/TV

Apps

Search

Banner Ads



For the US, this equates to a little under 8,000 mobile advertisingcampaigns, and an average of 21.8 new campaigns per day. Butthe market has to brace itself for unprecedented growth. The USmarket will join Japan next year, when revenues are forecast to top$1.24 billion, and increasing to $5.04 billion by 2015.



Total mobile banner spend (US$) of Europe’s Big Five

Yet mobile remains a fraction of total advertising spend in the US.According to ZenithOptimedia, part of the Publicis Groupe, the USis set for a 2.4% increase in advertising spend to $151.5 billion in2010 – with global ad spend for 2010 expected to be worth $449.5billion. For the US advertising industry, mobile represents 1% oftotal spend.

Aside from the phenomenal increase in mobile advertising activityduring the forecast period, as a medium, mobile is yet to penetrateover 50% of the US mobile population in terms of advertising.

$5.04 BillionUS Mobile Advertising

revenues by 2015

Opt-in Messaging

Mobile Games/Music/Video/TVApps

Search

Banner Ads




US Mobile Populations’ Propensity to Mobile Advertising


The consumers are coming: millions of themA nationally-representative survey of US mobile phone usersconducted by Lightspeed Research for mobileSQUARED, revealedthat one-sixth of US mobile users (49 million), have engaged with anadvertisement of some description on their mobile phone.

A breakdown of those users reveals that 12.3 million mobileusers “have clicked on the advertisement and went on to purchasean item,” 28.86 million users have “clicked on the advertisementand looked at the item advertised but did not buy it,” while a further7.82 million mobile users have “clicked on the advertisement andlooked at the item advertised on their mobile phone and ended upbuying it online using their PC/MAC.”

Not only does this highlight that an increasing number of mobileusers are willing to commit to a purchase there and then over theirmobile phone than those opting to delay until in front of their PC,the total number of mobile users engaging with mobile adverts in

the US is incredibly high. But it has to be said, that that gure willonly increase.

The consumer survey revealed the now expected naysayers, with21.6% of users “doubt they will ever click on an advertisementon their mobile”, or 64.9 million mobile users. However, 53.1% ofespondents claimed to have “never seen an advertisement on theirphone.” This suggests a little over 50% of the US population is yetto form an opinion with regards to mobile advertising. Put anotherway, 159.63 million mobile users in the US are yet to experiencemobile advertising. Realistically, it is only a matter of time until theydo.

Therefore, the number of mobile users in the US that will engagewith mobile advertising can only increase. Even if one-third of the159.63 million indulge in engagement, that will deliver an additional53 million mobile users, taking the total number beyond the 100million mobile user mark.

49 MillionAlready engaged with

an advertisement

12.3 MillionUsers clicked on the adand purchased an item

28.86 MillionUsers clicked on the ad

but did not bought it



Following years of promise, the US mobile advertising marketplacehas sprung into life, and will become the second billion dollar marketafter Japan – during 2011. Yet the true potential of mobile, andthe market realisation of advertising on the medium, remainssome distance away. By the end of 2010, mobile advertising will

represent 1% of total ad spend in the US. And although mobile isgrowing faster than online, that is only to be expected given digitalwas an entirely nascent medium 10 years ago, and has laid downthe foundations for mobile to orish. And orish the United States

of mobile Advertising will.


The American Dream

Nick has been described as “the leading commentator on UKmobile media (Adam Smith, Futures Director at GroupM). But Nick’s

experience extends well beyond the UK. He specializes in mobilemarket intelligence and heads up the research and analysis atmobileSQUARED (www.mobilesquared.co.uk).

Prior to launching mobileSQUARED, Nick was Head of ResearchServices and Principal Analyst at Informa, where he oversaw thegroup’s leading industry newsletters, reports and forecasts thathave helped shape the mobile industry.

In this role, Nick established himself as one of the leadingauthorities on the mobile content, services and advertising space,regularly speaking and chairing at conferences and events around

the world. While in this role at Informa, Nick wrote a number of re-ports, from consumer behavioral analaysis to mobile advertising.

Nick Lane, Chief Analyst, mobileSQUARED

Chart: Fill Rate of Mobile Ad Networks (USA), September 2010

The State of Mobile AdvertisingAccording to the data collected by Smaato choosing theright ad network is a complicated decision, as publishersshould consider ll rates, operating systems as well as

response times of ad networks, to name a few criteria.Smaato’s metrics are published monthly to show the state of themobile advertising ecosystem according to data from over 50 adnetworks globally & inventory of 9,000 registered publishers.

The metrics demonstrate theperformance of mobile adnetworks globally and thell rate is measured as the

percentage of ads delivered perad request and varies by differ-ent factors like country, deviceand content type.

Smaato Mobile AdvertisingMetrics are published monthlyat: http://metrics.smaato.com



Smaato White Papers

http://www.smaato.com/downloads

Smaato is a pioneering mobile advertising company that operates the mobile ad optimization platform calledSOMA (Smaato Open Mobile Advertising) and partners with mobile publishers, developers, ad networks andoperators.

Smaato’s SOMA mobile advertising platform aggregates more than 50 mobile ad networks worldwide andoptimizes mobile advertising revenues according to automated rules overseen by an experienced adoperations team. More than 9,000 publishers have signed up with Smaato as a partner to monetize theircontent in 220+ countries and Smaato is managing 16 billion ad requests per month.

SOMA’s unique feature is the aggregation of multiple leading ad networks globally to maximize mobileadvertising ARPU. SOMA can be easily integrated with ad networks, ad inventory owners (publishers, developersand operators) and 3rd party ad technology providers.

Smaato is an active member of the Mobile Marketing Association and the German Digital Media AssociationBVDW. Smaato received a Top 100 Private Company Award by AlwaysOn Media (2009 & 2007) and was recentlynamed a „company to watch 2010“ by Financial Analyst company GP Bullhound, among other awards.

Smaato Inc. is based in Redwood Shores, California. The privately held company was founded in 2005 by anexperienced International management team. The European headquarters are in Hamburg, Germany and theAsia-Pacic presence of Smaato has been established in Singapore.

Redwood Shores, CAT: +1 (650) 286 11 [email protected]

www.smaato.comwww.smaato.mobi

Hamburg, GermanyT: +49 (40) 3480 [email protected]

smaato.com/blogmetrics.smaato.com

Singapore, [email protected]

twitter.com/smaatofacebook.com/smaato

About Smaato

www.smaato.com [email protected]

open mobile advertising

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