Mobile Advertising Market Has Not Kept Pace With the Rapid Growth of Mobile Media Consumption - Nielsen Mobile Report

An audience is snowballing, but a mobile advertising economy lags by comparison. The new Nielsen Mobile report examines the factors that have restricted the market’s growth.

Nielsen Mobile has published a new report "Realizing Potential: Overcoming Barriers to the US Mobile Advertising Market" on the state of mobile advertising in the United States. According to the report, although 76.8 million US mobile users recall viewing advertisements on their mobile phones in Q2, 2008, mobile advertising has not kept pace with the rapid growth of mobile media consumption and ad response rates are flat. In the past several years, mobile media services have developed audiences that present scalable advertising opportunities. Today, millions of U.S. mobile consumers turn to their phone for content.

Why has then mobile advertising not been able to keep up pace with mobile media and content?

The key findings of the report include:

• As of Q2 2008, there were 258.9 million wireless lines in the U.S. Of these, some 69 percent (178.6 million) used their phone for at least one data service.
• 76.8 million U.S. mobile subscribers recall seeing some form of mobile advertising while using their mobile phone. That’s up 81 percent year-over-year.
• Despite this growth, the majority of these mobile ad viewers, 63 percent, see mobile advertisements just once a month or less frequently.
• Mobile advertising is present on less than two-thirds of website homepage page views across leading mobile websites, and roughly half of that is unpaid house advertising.
• The three governing factors restraining the growth of the mobile advertising market: unawareness of audience size, complexity of the ecosystem and a lack of trust in the medium.
• The market can still see great growth through the demonstration of the audience’s critical mass, a greater focus for advertisers and improved targeting and tracking tools available.

As of Q2, there were 258.9 million wireless lines in the US, of which 69 percent (178.6 million) used their phone for at least one data service and 76.8 million subscribers recall seeing some form of mobile advertising while using their mobile phone, up 81 percent year-over-year. Mobile media has seen a steady growth in past year. During the period Q4 2007 and Q2 2008, the proportion of mobile subscribers subscribing to advanced data services increased by 23 percent.

With the increased subscriptions of data service subscriptions, actual usage of these services have also increased. SMS text message is the most popular. In the U.S. today; half of all wireless subscribers use text messaging on a regular basis (53 percent, or 137.8 million). Meanwhile, audience size for MMS, ringtones, mobile Internet, text alerts, instant messaging, mobile applications, location-based services and even mobile video has surpassed the 10 million mark.

Current State of Mobile Advertising

As a percentage of mobile data users, mobile advertising exposure has also risen in the states. In Q2 2007, 23 percent of mobile data users recalled seeing some form of advertisement, and by Q2 2008, that number rose to 30 percent.

Looking at users across different types of media:

• 57 percent of mobile ad viewers recall seeing mobile ads while browsing the mobile Internet, up slightly from Q4 2007 (53 percent).
• 54 percent of viewers remember seeing text ads via SMS.
• 34 percent of ad viewers saw an ad during Q2 2008 while watching mobile video, compared with 29 percent two quarters prior.

However, 63 percent of mobile ad viewers see mobile advertisements just once a month or less frequently. In addition, mobile advertising is present on less than two-thirds of website homepage pageviews across leading mobile websites, and roughly half of that is unpaid house advertising.

Overall response rates to mobile advertising also appear flat. In Q2, 13 percent of mobile data users (45 percent of those who saw a mobile ad) report responding to it in some way. This compares with 12 percent of all data users (52 percent of those who saw an ad) who responded in Q2 2007.

Although the US has witnessed a 23 percent year-on-year growth in mobile data services; phones have become more capable and robust (the proportion of 3G and smartphone handsets in the marketplace has doubled in the past year, to 28 percent and 10 percent, respectively) and media companies have made substantial developments in the sheer quantity and promotion of mobile content, there is still a stagnation in the market, according to the Nielsen report.

Barriers to the Growth

According to Nielsen, three factors are holding back the mobile advertising market:

1. Unawareness of audience size: Advertisers and agencies are not yet fully aware of the sizes of mobile content audiences, particularly at the channel level. Mobile can today be a mass medium, but advertisers and agencies are not yet fully cognizant of this.
2. Complexity of the ecosystem: Many marketers are hesitant to enter the space because they see it as a complex marketing environment with a steep learning curve and technical hurdles that reduce ad-buy efficiency. However, if approached acutely, there are fewer barriers to the activation of any one mobile media than many marketers believe.
3. Lack of trust in the medium: Advertisers are reluctant to enter into mobile because they do not trust consumer receptivity, ROI and their ability to track performance. Advertisers are also unaware of the resources available to target a campaign to efficiently reach their consumers. Further, advertisers do not inherently trust mobile advertising because they are not fully cognizant of the means by which they can track their mobile media investment, and that of their competitors.

The bottom line is that today, advertisers perceive a lot of risk in mobile advertising. However, the report says that despite these hurdles, the market can still grow considerably once advertisers understand the audience’s critical mass, achieve greater focus in their efforts and develop more disciplined ROI and measurement for the medium.

The report also contains a very insightful case study that tries to implement the industry action items to the sports footwear market in the US: "How will the mobile advertising market attract some of these sports footwear advertising dollars to the mobile medium?"

To download the full Nielsen report "Realizing Potential: Overcoming Barriers to the US Mobile Advertising Market", please visit this link -http://www.nielsenmobile.com/documents/RealizingPotential.pdf

About Nielsen Mobile
Nielsen Mobile, a service of The Nielsen Company, is the world’s largest independent provider of syndicated consumer research to the telecom and mobile media markets. Nielsen Mobile focuses exclusively on tracking the behavior, attitudes and experiences of mobile consumers; their reports also provide up to seven years of data on Internet, video, gaming, audio and advertising trends for mobile phone users. Nielsen’s technology-driven research provides unique and holistic insight into how mobile customers use their devices and what they think about brands, devices and services.

Source: Nielsen Mobile

All trademarks, trade names, service marks, and logos referenced on this site belong to their respective companies.

Mobile2Mobility has joined forces with TradePub.com to offer you a new, exciting, and entirely free professional resource. Visit http://mobile2mobility.tradepub.com today to browse our selection of complimentary Industry magazines, white papers, webinars, podcasts, and more from telecom and mobile industry. No credit cards, coupons, or promo codes required. Try it today!