International BusinessAds on-the-go
Mobile advertising: Every year for the last decade, media experts have predicted a boom in mobile advertising. But if recent acquisitions of mobile ad agencies by Google and Apple Inc are any indication of what’s to come, this year’s round of forecasts might prove more accurate.
- Google to acquire AdMob for $750 mn
Google splashed out $750 million in November for Admob, a huge 12.5 times the agency’s estimated annual revenues. Apple did not disclose the price it paid for Quattro, Admob’s privately owned rival. But it is likely to have paid a similarly handsome multiple for the business, which owns mobile websites and applications for Apple’s iPhone and other smart phones, such as those using Google’s Android operating system.
The deals are part of the race to secure a slice of mobile advertising revenues that could be worth as much $13 billion by 2013, according to technology research specialist Gartner. That"s almost 25 times the current value of a market which has so far failed to live up to the hype as advertisers have favoured tried and tested mediums such as television, radio, internet or outdoor.
Mobile advertising has always been attractive as a concept. Consumers carry their phones everywhere, offering advertisers round-the-clock access to their target audience. But old phones were too slow and small to allow much more than text message-based advertising.
Newer handsets have larger screens, are better designed for surfing the web, and have global positioning systems that enable local search.
Smartphones now account for 15 per cent of global mobile shipments, and that proportion is expected to rise to 45 per cent by 2013, according to Strategy Analytics.
But it"s much harder to predict which players will win. Despite their recent acquisitions, the tech giants won’t capture all of the pie. As people use their phones to browse the web, conventional internet advertisers will get some of the benefit. Mobile operators will profit by charging advertisers for information about where their customers are, and can sell banner ads on their own web portals. Meanwhile manufacturers like Nokia, which still controls over a third of the smartphone market, can charge for pre-installing branded applications. If mobile advertising does finally take off, the battle for revenues will be fierce.