30 billion reasons to say mobile

In a recent post on the Nielsen Wire blog the senior VP for Research and insights, Telecom Practice, Roger Entner takes a very good stab at why Google Apple etc are after the mobile marketing market.

The reasons are clear to Entner, it’s the – as yet – hugely untapped revenue that exists in mobile. The internet advertising market is slowing, the growth we have seen over the last ten years just isn’t there any more. There are no more untapped web browsers, if you sit in front of a big screen then chances are Google is already sending you adverts. However there are 4 billion – and growing – mobile screens out there that are still advert free and that’s a huge potential market.

Entner argues that because Google currently generates $9.40 per month per unique user in revenue from advertising to Internet users. They “should be able to get at least the same per month for a mobile customer that uses the device longer, more often, more intensely, and more personally than the computer and the Internet.” We’d argue that they should actually get more than the internet rate, which is quite frankly derisory.

Entner then extrapolates out the $9.40 to the untapped 280 million wireless subscribers in the US, and calculates a potential mobile advertising market of more than $2.5 billion per month, or more than $30 billion per year. Which makes the $750 million Google paid for AdMob seem like small beer, and it is.

If you then extrapolate and add in Europe, Africa, India and Asia then the market is theoretically worth way more than the $30 billion, it’s probably closer to $100 billion. But – and it’s a big but – there’s a catch, mobile ad rates are already low, much lower than the web, and although mobiles are more personal we don’t use them to surf in the same way or for anywhere near as long as we do on the net.

To get that $30 billion we need to push up ad rates, and mobile users need to be on their mobiles more hours than there are hours in the day and that’s just not possible. So let’s not all get carried away, just yet. Let’s work with what we have, and maybe one day we may hit the dizzy heights of $30 billion, but it’s not going to be any time soon.