Mobile advertising, marketing need new business models: ABI

For mobile advertising and marketing to reach its highest revenue potential, new business models still have to be worked out by carriers, advertisers and marketing companies, according to a study by ABI Research titled “Mobile Marketing and Advertising: Mobile Messaging, Short Codes, Web Browsing, Video, Games, LBS, Search and Social Networking as Vehicles for Emerging Business Models.”

ABI forecasts the total market for mobile marketing and advertising will reach $3 billion by the end of 2007. The research estimates that the mobile marketing and advertising total market – including search and video advertising – will reach $19 billion by 2011.

“[Carriers, advertisers and marketing companies] are still testing the water,” said Judith Rosall, p rincipal analyst of digital media/mobile content at ABI Research. ” Major brands and agencies that have dominated the general media markets are also moving cautiously into mobile.

“Their slow pace to exploit opportunities in mobile marketing and advertising has opened the door for a number of specialized agencies, aggregators and other enablers,” she said. “These companies can serve as useful partners for brands and established agencies as they make their first forays into mobile.”

The study also found that some of the highest levels of spending would come in the broadcast mobile video space. It should exceed SMS as a source of mobile marketing spending and mobile broadcast networks should be present in all major markets by 2011. ABI Research estimated that spending for broadcast mobile video advertising would reach $9 billion by 2011.

Ms. Rosall said that a big challenge to mobile marketing and advertising was poor management. Sending SMS or other types of mobile marketing campaigns to customers often may be considered invasive by consumers “due to their frequency or because people didn’t opt in or because they are poorly targeted.”

“In an attempt to curb mobile marketing and advertising spamming, the Mobile Marketing Association has developed codes of conduct that the major, reputable mobile marketing firms and brands are signing on to,” she said. “But if companies and mobile carriers don’t adhere to them, there could be a striking backlash by consumers. If this happens, we expect to see operators quickly pull back because they don’t want to alienate their customers.”

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