Mobile Marketing's Wild Years to Yield a Gold Rush

An ABI Research report on mobile marketing refers to the industry as still being in its “wild west” years but forecasts it will settle down and become a $24 billion slice of the worldwide marketing and advertising pie by 2013.

ABI’s predictions, released yesterday, are based on a survey that found consumers will likely embrace mobile marketing efforts that can bring some benefit to their lives. “While consumers are initially leery of mobile marketing, their perspective largely depends on whether they see some advantage for themselves,” said a statement from ABI.

Although more than half of the respondents, some 54 percent, said they were “totally opposed” to mobile marketing messages, their tone changed when asked how they’d feel if the ad offered something for free. The researchers found that 70 percent said an incentive such as a ringtone or free song “might make them receptive to mobile marketing,” according to ABI.

“The general knee-jerk reaction is, `I hate the idea,'” said ABI research director Michael Wolf. “But if you give them some incentives, they really change their attitude.”

About 63 percent said a coupon to a local retailer would be the top incentive, said Wolf. Another 52 percent said they’d be open to a discount at a store, while 46 percent said free ringtones would be an incentive.

The company noted mobile marketing “born in countries such as Japan and South Korea,” is quickly gaining ground in Western Europe. Growth in North America is just beginning, bolstered by flat-rate data plans, adoption of mobile messaging services and the creation of new platforms for ad-supported search, video and gaming, said ABI.

It estimates there was about $1.8 billion spent in 2007 on mobile marketing. That’s about a billion dollars less than ABI predicted in an April 2007 report.

Wolf said the mobile marketing industry “is just taking a bit long to get going,” but he’s confident in the new prediction. “If you look today, the market consists largely around text-based messaging, text marketing, and mobile banner and text ads, said Wolf. “Certainly, we have some more innovative approaches happening in the Asia-Pacific area. That’s where we see the lion’s share of the market happening.”

Wolf said he believes mobile video and gaming will move quickly to ad-based formats. Mobile search marketing, he said, is also showing a lot of momentum.

Last year, for the first time, the ABI found many big-name companies embraced mobile marketing as a necessary part of cross-media campaigns. Mobile marketing was once seen as off-limits by advertisers but is now viewed as a good way to bring a personal touch to targeting consumers, said Wolf.

ABI cautioned that the market remains a “wild west” environment, but this free-for-all will settle down over time. “Hundreds of mobile marketing platform providers have sprung up, and larger players such as Google, Yahoo, and Nokia have made significant investments in this fast-changing market,” noted ABI.

It also pointed out that newcomers who are building ad networks and software for the industry, companies such as Admob, Enpocket/Nokia, and Millennial Media “are becoming important new players in a market that is similar to the Internet advertising gold rush of the late 1990s.”

Wolf said the industry’s newness is forcing technology platform companies to take on the role of interactive agency for large brands. But ABI believes this will change as major ad agencies and their interactive divisions or partners work with platform providers and roles become more defined.

In its 2007 report, ABI predicted the mobile marketing market value would reach $19 billion by 2011, that spending related to video would surpass SMS by then, and spending on “broadcast mobile video” ads alone will hit $9 billion.

“Mobile advertising and marketing is a risky — albeit enticing and potentially lucrative — business,” ABI Research principal analyst Judith Rosall told ClickZ back then.