YOU ARE AT:Carriers2008 could be a long walk for mobile ad market

2008 could be a long walk for mobile ad market

Advertisers are already tightening their belts as the economy downshifts into a possible recession. And the mobile ad space — which is struggling to move beyond the embryonic state — is sure to feel the pinch.
Google Inc. first reported “anecdotal” advertiser cutbacks last September as the mortgage crisis sent ripples throughout the entire U.S. economy. Recent data from comScore Inc. may buffer those concerns: The online ad-measurement firm reported a 7% decline in the number of times U.S. consumers clicked on paid-search ads from December to January; another 7% decline was reported from November to December.
While it’s too soon to tell whether those figures represent the first dark clouds of a storm on the online-advertising horizon, they unquestionably underscore a report released in January by the Chief Marketing Officer Council. That study, commissioned by Deloitte Consulting, Marketo and TechTarget, found that more than one-third of 800-plus senior marketers polled worldwide said there would be no change in their marketing budgets this year; another third expected an increase of no more than 5%.
That trepidation has surely increased in recent weeks as the economic news has gone from bad to worse. While some onlookers have donned rose-colored glasses and boldly proclaimed the interactive-ad industry to be coated with Teflon, it’s worth noting that U.S. advertising shrank 9% and Internet ads plunged 27% over two years as the 2001 recession decimated ad budgets, according to a 2004 report from private equity firm Veronis Suhler Stevenson.
And though the online ad space is surely too well established to see such a drastic downturn anytime soon, mobile marketing is especially vulnerable to hiccups in the economy. Wireless advertising is still very much in the experimental stages, accounting for less than 1% of most ad budgets. And ad execs are placing small bets on the medium while they wait for the industry to find a better way to measure the effectiveness of marketing campaigns and determine ROI.
“I think one of the first belts that gets tightened (in an economic slowdown) is the emerging media belt,” said Maria Mandel, a senior partner and executive director of digital innovation at Ogilvy, an advertising behemoth. “I think that it’s still an unproven channel. Because there are no benchmarks in place, it’s tough” to pour resources into it — especially when times are tight.
Cutting back mobile ad campaigns will lead to a “missed opportunity,” according to Mandel, as mobile is still an “uncluttered space” where advertisers can stand out from the crowd relatively inexpensively. But while mobile-specific spends may be on the wane, marketers are increasingly focused on cross-platform efforts, she said, using television commercials and print campaigns to encourage users to send text messages or photos from their phones.
“While I see budgets potentially shrinking in mobile media, I’m seeing an increased appetite in spending on SMS integration; using existing presence and starting to add that call to action,” Mandel said. “If done correctly, mobile can be an effective channel. And I think one of the lowest-hanging fruits is adding on to existing media channels.”
So there may be plenty of opportunity for carriers and messaging companies as advertisers try to find ways to integrate mobile into larger marketing campaigns. But for mobile publishers looking to sell all that excess inventory, 2008 may be a very long year.

ABOUT AUTHOR