Rapid growth in mobile marketing has been predicted for years. And this year, finally, spending on this format will exceed the $1 billion mark. The lofty projections stem from growing evidence of increasing smartphone use by consumers and marketer acceptance of the mobile channel.

A new report from J.P. Morgan values the mobile advertising market at $1.2 billion for 2011. In 2010, analysts believe that marketers spent somewhere between $550 to $650 million on mobile advertising.  J.P. Morgan analysts are so bullish on mobile marketing they predict that it “could ultimately become larger than web-based advertising.”

Given that 73 million consumers can access the Internet with mobile devices in the U.S., industry revenue can be calculated at somewhere between $7 and $8 per user. Analysts say that during the early days of online advertising, providers were earning $35 per user (in 2002).

The lower ad revenues for mobile are not deterring industry operators who see a bright future. For one thing, mobile providers have unique advantages over the Internet pioneers. They do not have to convince marketers of the value of online advertising. However, they do face challenges. These include working with smaller screens  and producing credible ROI statistics.

The following percentages of brand marketers are targeting specific devices with their mobile campaigns:

  • Smartphones 60%
  • Tablets 31%
  • Feature phones 22%
  • E-books 10%
  • Game consoles 3%

For now, 35% of marketers plan to increase significantly their mobile ad budgets in the next 2 years. Anna Bager, vice president and general manager of the mobile marketing center of excellence at Interactive Advertising Bureau, points out that marketers need to understand that mobile should not be used alone. The format is most effective when combined with other platforms like TV and print.

[Source: Tode, Chantal. Mobile to grow to $1.2B. MobileMarketer.com. Jul. 2011. Web. 20 Jul. 2011]