There is a lot of excitement about the speed and opportunity in the mobile space. Mary Meeker in her Web 2.0 Summit clearly shows the mobile trajectory is on fire! More people in the world have wireless coverage than electricity (84% vs 80% of world population). Smartphone penetration will likely go from 15% to 30% in the next year. Mobile app market is a $12bn industry with mobile ad market adding another neat $3bn+ (most of which is Google citing a run rate of $2.5bn). All of this makes the internet revolution of the 90’s look like tricycles on the autobahn.
So with all this excitement, at whose expense will mobile dollars grow from? I personally don’t like the thinking that in order for something to grow, something else has to shrink but in the world of ads there is a very strong case.
1) Unlike search who came onto the scene and converted local SMB with a easy self serve performance based product, mobile will not be introducing new ad buyers to the mix.
2) We are facing tough economic times and marketing managers are likely reallocating their budgets vs. growing them to include “shiny object” projects.
3) With each new platform, ad dollars were repurposed from something that look like the less effective substitute. Search/Craigslist replaced classifieds and flyers. Social Networking replaced parts of PR budgets. So with mobile – direct mail looks like the less effective substitute and to some that’s a $60bn US market, equal to ad spend on TV. I can see search and social networks being cannibalized by mobile — or more accurately I see them shifting their wares to the mobile platform.
Click on my US Ad Spend Estimate by Platform to guess where Mobile Ad Growth will come from. http://wp.me/P1Wcgu-j