What Kelsey Group sees in the crystal ball for advertising
Rating: five years’ from now
By Annie Turner
This is what the Kelsey Group thinks will happen concerning mobile advertising in summary:
Often-cited statistics about how many more mobile phones there are versus computers suggest we are on the verge of a market transformation akin to the early days of the Internet’s growth. While forecasters and pundits have touted the potential of mobile advertising for years, the US market has failed to materialise. We believe this is about change. Why now? We believe the market is converging around several important themes that will drive mobile ad adoption.
1. Top-line search growth is slowing. Portals and search companies must move their monetisation products into markets where they can utilize existing ad products (for example, paid search links) to promote top-line revenue growth.
GoMo and BKI Media have been arguing this for a long time, so well done Kelsey Group for catching us up – well, sort of.
2. Google, the largest search engine in terms of share and revenues, has considerable ad overhang, meaning advertisers want to spend more money than current traffic levels can support.
No, the problem frequently is a lack of ad inventory, actually.
3. The mobile and search markets are linked, and we believe market share in one could affect the other. Therefore, Microsoft will push hard into mobile, and Google will attempt to retain its dominant search position. Meanwhile, US carriers understand the market position that Internet search dominance affords and will not allow their products to be relegated to a secondary market position.
US [and all other carriers] do need to be jolly careful – the big Internet search engines are all working on operator-independent strategies while signing non-exclusive deals with them. The good news is that, so far, Google, Yahoo! and Microsoft have failed to make an impression in mobile search. On the other hand, the suggestion that the operators can control the mobile ecosystem indefinitely is nuts. Anyone heard of the iPod Touch?
4. GPS handset devices are shipping in mass this year, and 50% replacement is expected within five years, allowing improved mobile applications.
Yeah, except GPS might not be sufficiently accurate to know exactly where you are, such as the lingerie dept on the second floor. I’m a GPS-free zone on the grounds in can read a map and often get to my destination faster than people with them (our anomaly of a post code sends people miles out of their way), plus they screw up often, as far as I can see. GPS will play a big role, but let’s not get hysterical about it.
5. Apple’s iPhone represents a transformative device, and many manufacturers will enter the market with similar form factors driving down prices.
Yeah and it would be even better if the operators supported all of its functionality – Apple is far more likely to have far-reaching consequences for operators than Google.
6. Finally, Yellow Pages companies, such as AT&T, are executing on a mobile channel ad business. Mobile represents a critical market that these companies will try to dominate.
OK, get ready for a slew of mergers and acquisitions aka consolidation.
Over the next five years, we will see tremendous innovation and investment in mobile platforms. Numerous large players will work to define this market in an effort to consolidate their market position or drive meaningful changes in competitors’ share.
The next five years will also see people getting far more adventurous in their use of the mobile Internet and the likes of WiFi and WiMax will play an increasingly serious role. Now Google that.
For more about the Kelsey report, see http://www.kelseygroup.com/services/view-ILM-Summary.asp?DocID=1701&SFlag=No
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