The explosive sales of smartphones and tablets, combined with the arrival of location-based services, is creating a ‘golden age’ for online and mobile advertising. James Robinson reports.
Mobile advertising is finally beginning to come of age as phones transform the relationship brands have with their customers in new, and sometimes unexpected, ways. The rate of growth is astounding, and the pace of change so rapid it is now difficult to believe that many companies greeted the predicted inexorable growth of mobile advertising with barely disguised scepticism a decade or so ago.
The UK market was worth £83m in 2010, according to the Internet Advertising Bureau (IAB), up from £37.6m the previous year, an 116% like-for-like increase. Online market research company comScore says that in 2010 there were 19.1 million monthly mobile internet users in this country, up by 4.6 million from the same month the previous year. US investment bank Morgan Stanley said this year that “online advertising may finally be entering a golden age”.
The bank believes that the mobile advertising market in western countries is set to reach the recent growth rates seen in Japan, where mobile ad spend rose threefold from 2006 to 2009, to stand at $1bn (£610m). FirstPartner, a consultancy company, predicts that the UK market will be valued at £992m by 2015.
Much of that growth has been driven by the mobile internet and, latterly, by smartphones. Jon Mew, head of mobile at the IAB, points out that 41% of the population already have a smartphone. “By next year that should be half of the population,” he says, “and it shows no sign of slowing.”
Rik Haslam, chief creative officer at leading digital advertising agency RAPP, says: “Clients sometimes ask me whether mobile advertising is really something they should focus on. I tell them that right now more smartphones are being built than laptops and desktops combined, that mobile internet use is ramping up almost 300% faster than desktop internet access did, and that more than 50% of people use a mobile device while watching TV. So yes, it’s something clients should focus on.” He adds: “If the internet revolution disrupted business norms, then the smartphone revolution is devastating business norms.”
Analysts at Morgan Stanley estimate that by 2020 there will be about 10bn mobile internet devices worldwide – 10 times the number of PCs currently in use.
But the story can’t be told by statistics alone, as compelling as they are. The arrival of tablets, Apple’s iPad in particular, and the popularity of location-based services, which use the GPS functionality of a smartphone to offer users services based on their location, have transformed the user experience – and the aesthetics – of mobile advertising. Put simply: it has become sexy.
“Traditional brands didn’t do much on mobile, but it’s changed dramatically in the last year,” says Mew.
In recent years, around two thirds of online advertising spend has traditionally been on ringtones and downloads, but 12% of spend last year came from companies that sell fast-moving consumer goods.
The look, feel and size, of the iPad, one of the fastest-selling new computer devices in history (it took just one month to sell 1m iPads; the iPhone reached the same target in 74 days), has prompted fashion brands and car companies to create sumptuous online campaigns that were only seen in glossy magazines or expensive television adverts until recently.