Mobile Ads: Fad Or The Next Big Revenue Opportunity?

When it comes to revenue, some statements are not only worth thinking about, but are worth re-reading several times. The first quote came a few days ago from Eric Schmidt, CEO of Google, who said,

“Trust me that revenue is large enough to pay for all of the Android activities and a whole bunch more.”

That “whole bunch more” should lead readers to take a closer look at the mobile ad market. Of the four largest smart phone OS providers: RIM (Blackberry), Google, Apple, and Nokia, Blackberry appears to be the only one without a clear profit plan in mobile advertising. It’s no surprise then that Blackberry is looking to buy their way in, as reported in the Wall Street Journal here.

It’s old news that Google paid $750 million to acquire AdMob and that Apple scooped up Quattro Wireless Mobile for $275M. But few know that Nokia launched its own mobile network back in 2008. Although Nokia may be in the game it has not had the same smartphone success in the United States, the hottest mobile advertising market.

AdMob, acquired by Google, is currently the largest mobile ad network, estimated by International Data Corporation (IDC) to control 21 percent of the market, with Millennial Media, the apparent target of Blackberry mobile ad growth plans at 12 percent. Yahoo and Microsoft are in the game, but trail at 10 percent and 8 percent respectively.  AOL, which bought former market leader Third Screen Media in 2007, is no longer a factor.

If there is any trend, it’s that mobile advertising is less of a web portal game, and more of a mobile OS game.

One key reason that mobile OS providers are more relevant in this market is that they can change the economics of the carrier phone relationships. What if, instead of carriers paying a subsidy for phones on their networks, the carriers were paid, not once, but over and over again for the life of that phone on their network? Wouldn’t that be more attractive? That’s exactly how Google has changed the game – by sharing revenue with carriers.

This could be lucrative for carriers and could easily influence device selection and promotion. Who has the most to lose, is Nokia and RIM as they dominate smart phone unit sales, but Nokia already owns an ad network, they just have to execute. Blackberry, then, better get its act together, and soon. Not only do they risk missing out in revenue, but their distribution channel with the carriers could be negatively impacted.

To put the opportunity into perspective, I’ll close with the second quote made on CNBC’s Mad Money, where in 2008 Google CEO Eric Schmidt said that,

“Mobile computing alone will bring in more money than the company’s desktop business.”

If he meant what he was saying, Schmidt sees mobile advertising as larger than the approximately $6 billion a quarter that Google currently earns from web-based advertising. Now that’s a quote worth thinking about.

About Duane Kuroda

Business ninja, deal hunter, Internet marketer, and technology fiddler obsessed about growing companies and launching products. Currently at Peerspin, Duane’s past lives include Vice President of Marketing roles at companies leading micropayments, Internet video, and online communities as well as research and consulting for mobile advertising. Duane has spoken at conferences including Digital Hollywood and Digital Video Expo on topics covering monetizing online content and online video, has appeared on TechNowTV and KNTV, and has been quoted in various magazines. Follow Duane on Twitter: @dkuroda.

One Response to Mobile Ads: Fad Or The Next Big Revenue Opportunity?

  1. Brett Burky says:

    That is big time what Eric said about the mobile industry. I'm keeping this article and giving it to some people that I know that think this is too early to know if it is going to work.

    The way I see it is, that currently we are 1998 of adwords. I'm getting 5cent clicks. Granted the traffic is decent, I just have to figure out how to convert it better with better offers.