Back in October Google announced that Mobile Advertising was on target to add an additional $1 Billion to it annual revenues (See Business Insider - Sorry, But Google is still a one trick pony). This figure puts Google’s mobile advertising at around 3.7% of their 2010 advertising revenues which suggests that Google has achieved very strong growth in this market over the past year. After all earlier industry estimates placed the Mobile Advertising market at $1.7 Billion in 2007.
A presentation published by Morgan Stanley earlier this year demonstrated how Mobile Advertising in Japan had grown by a factor of 11x over the post 6 years.
These two growth statistics are widely quoted when the industry is forecasting strong growth for Mobile Advertising.
But while no one is disputing Google’s capabilities to become a market leader in Mobile Search Advertising no one is asking the question: Will Mobile Advertising prove to be a growth market for the rest of the web?
The folly of Ad-Supported Mobile Apps is exposed even further when we compare it directly to SMS. To match the monthly revenues generated by SMS usage the ad-supported application would have to be 100 times more engaging than SMS is today. - Why advertising to people on the move won’t be the next killer Mobile App
Today there are an estimated 234 Million Web Sites scattered around the globe. However you may recall the calculations we ran earlier that proved the global online advertising can only support 19,285 web sites or about 0.01% of the available web inventory.
There are now more than 3 Million mobile web sites. This suggests that even if all the global online ad spend was pushed into mobile tomorrow the available Mobile Web inventory is already 10x to 15x larger than what the Advertising industry can support. Indeed these figures suggest the Mobile Web economy passed its optimal figure back in 2008.
Today the ARPU per mobile web site is estimated at $1000 which is already about a 1/3rd less than what the ARPU per web site was at the birth of the web.
Of course the growth in the number of mobile web sites is essential to the long term success of Google’s Mobile Web strategy. The more choice in the network the more opportunity there is for Google to leverage its PPC advertising model as the primary vehicle to connect searchers with providers. If mobile search was as easy as making the Yellow Pages available to mobile subscribers the Telcos would have already locked the market in.
The Mobile Web will be big – it already is – but will it be profitable?
History suggests it will be… but only for those vendors who find an alternative strategy to putting ads on the menu (See How important is the Internet to the US economy?).
December 30th, 2010 → 2:03 pm
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