Studies: Mobile Ad Market to Grow, Amid Risks

The wireless marketing and commerce space is posed for sizable growth, but only if marketers treat it respectfully, according to a spate of new studies.

Potentially, the gains could be huge when mobile advertising and marketing are properly implemented, with the Boston-based Yankee Group concluding in a recent study that by 2006, 50 million wireless users would be willing to buy products, services and content subscriptions via their phones.

Those 50 million mobile users (about 26 percent of the total wireless population) could be spending up to $15 billion annually, representing about 2 to 3 percent of all electronic transactions.

Similarly, a recent survey conducted by the Wireless Advertising Association — an industry consortium — and ARC Group, a London-based consultancy, saw similarly rosy prospects for the industry. More than 90 percent of that study’s respondents said they predicted global wireless ad spending to rise to above $40.4 million within three years, with more than half of those pegging it in the $50 million-and-higher range.

But marketers and carries must tread carefully to get to that stage, warn analysts. According to a recent study by Cahners In-Stat, consumers’ concerns over privacy and invasiveness could threaten the entire enterprise, at least in the short term.

A survey by the firm revealed major concerns on the part of consumers regarding wireless advertising, with 64 percent of the study’s respondents saying they were unhappy at the prospect.

Still, Cahners said those that panned wireless ads outright did suggest that they’d be more open to receiving marketing messages if there was an immediate, recognizable benefit to them — such as via special offers or discounts. The study also found that consumers would be more likely to accept advertising if they were allowed to opt-into it.

“Just as sales drive consumers to stores, special savings will lure consumers in, and will make the whole process of receiving mobile ads more palatable to users,” said Becky Diercks, director of Cahners’ wireless research.

Fortunately, the industry appears both aware of and receptive to such concerns. More than 56 percent of the respondents in the WAA/ARC study said they categorized opt-in marketing models as “critical” to the industry’s growth, while about the same number said that they viewed concern about privacy as the biggest hindrance to its spread.

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