SmartReply August 2008 column for MobileMarketer.com Analysts and agencies predict doom and gloom in the ad world, while mobile ad spend is on the up and up Eric Holmen, SmartReply It’s said that advertising spending is like the proverbial the canary in the economic coal mine; when the national ad spend goes down, it’s time to worry about the prospects of the economy as a whole. This year, however, national ad spending has been buoyed by the Beijing Olympics and a hotly contested primary and general election cycle, both yielding spend figures that are too artificially high to be effective barometers of the market. It is only now, as 2008 crests and begins to shuffle toward the holidays that major analysts are beginning to revise their estimates for advertising growth for the rest of the year and 2009. And just like the canary in the coal mine, they are going down, down, down. 1
EMarketer recently cut its forecast for 2008 online advertising growth down slightly from 23%, and announced that its growth 2 forecast for 2009 (16%) might also be a high estimate. Two months ago, in a report citing research by TNS Media Intelligence, Advertising Age described the overall US ad market as “sluggish” despite a slight 0.6% year-over-year ad spend increase in the first quarter. These estimates (and the many others not cited here) would indicate that non-traditional media is the engine of growth in the national ad market, outstripping traditional channels in terms of incremental increases and approaching giants like print and television in terms of total spending. Indeed, it seems that advertisers prefer cost-effective online, mobile and voice strategies in a slowing economy, as those channels provide quantifiable results with shorter turnaround and lower overhead than their traditional mass-media counterparts. This assessment and the modest shift in advertiser and marketer perception is a strong marker for the mobile channel. Mobile, the epitome of non-traditional media and the only channel with the ability to interact and integrate with all other channels, has both the greatest potential for advertising growth and one of the best current growth profiles in the near term, surpassing even 3 the online segment which may come as a shock to many marketers. So what does all this mean? Even as IDC reports slower growth in the second quarter for online spending (18.9%, compared to 25.9% in 2007Q2), mobile will continue to grow. The health of the mobile channel correlates to the astounding number of users it can claim: 2.4 billion subscribers worldwide, with 4 between 80% and 49% actively using SMS on a regular basis , depending on region (Western Europe boasts 80% usage, the US lags at 49%, though usage here is growing steadily). Advertising spending on mobile is slated to approach $1 billion by the end of this 5 year, according to Juniper Research , and surpass $7.5 billion by 2013. China and the rest of developed Asia represent the largest 6 regional market for mobile ad spend growth, projected to increase from a 2008 level of $414 million to $2.1 billion by 2012 . China alone saw mobile and online revenue growth of 65% between 2007 and 2008, with a corresponding ad spend increase of 7 20%, according to mediabuyerplanner.com . Mobile is undoubtedly poised for further growth within the US and across the globe, a trend which advertisers and marketers are rapidly recognizing. Even as traditional mediums are flagging, and even as online growth estimates are subsiding, few forwardthinking marketers are willing to cede their mobile positions. They are unwilling to abandon a channel that represents such incredible growth potential worldwide with such enviable adoption rates (51% of mobile users who encounter a SMS 8 advertisement respond in some way, according to Nielsen ). Mobile is, in any climate, the channel of the future. Eric Holmen, President SmartReply Inc Eric Holmen is president of SmartReply Inc., and has spent the better part of his marketing career seeking to redefine the nature of marketing messages and assist the industry in resisting the status quo. His company’s opt-in mobile and relationship marketing campaigns have revolutionized businesses’ relationships with consumers and energized their existing customer bases. Reach him at email@example.com.
http://www.bloomberg.com/apps/news?pid=20601204&refer=technology&sid=adDS4Qj5KYcI http://adage.com/datacenter/article?article_id=127746 3 http://www.portfolio.com/views/blogs/the-tech-observer/2008/08/13/online-ad-spending-its-ugly-out-there 4 http://mmaglobal.com/modules/article/view.article.php/1907 5 http://www.fiercemobilecontent.com/story/mobile-ad-spending-to-surpass-1-billion-in-2008/2008-04-15 6 http://www.fiercemobilecontent.com/story/mobile-ad-spending-to-surpass-1-billion-in-2008/2008-04-15 7 http://www.mediabuyerplanner.com/2008/08/13/group-m-mobile-and-online-to-lead-strong-ad-growth-in-china/ 8 http://www.nielsenmedia.com/nc/portal/site/Public/menuitem.55dc65b4a7d5adff3f65936147a062a0/?allRmCB=on&newSearch=yes&vgnextoid=6681d 9aa1e388110VgnVCM100000ac0a260aRCRD&searchBox=spec 2