Mobile advertisers treading a fine line

Mobile advertising could provide an additional revenue stream for operators

Mobile operators stand to gain by investing in mobile advertising, but only if it is implemented correctly, according to a new report from Analysys.

The analyst firm's Mobile Advertising and Marketing Revolution report follows news of major mobile advertising deals in Europe and the US.

Nokia recently announced the acquisition of mobile advertising firm Enpocket, while Google has launched a version of its AdSense programme for mobile phones.

A new mobile service called Blyk aimed at 16 to 24 year-olds offers users a monthly allowance of minutes and texts in return for receiving up to six MMS adverts a day.

"Mobile advertising could provide an additional revenue stream for operators, but it must be implemented carefully," said report author Martin Scott.

"Flooding mobile phones with advertising would destroy consumer confidence and the potential value of the mobile advertising market.

"If operators and advertisers focus on delivering mobile ads that are unobtrusive and relevant to the target audience, they may be able to create a mutually beneficial cycle of revenue and reward."

The motivation for operators to develop mobile advertising has been limited so far, as voice services have historically yielded the quickest return on network investment.

However, core voice revenues in mature markets are no longer delivering the growth they once did.

Analysys forecasts that mobile voice revenues in western Europe will grow at a compound annual growth rate of only 2.3 per cent between 2006 and 2012.

This means that mobile operators will need new sources of revenue to provide future growth, and mobile advertising is being seen as one such source.

"Obstacles to mobile advertising are now beginning to fall, making it more feasible for operators, handset manufacturers and advertising agencies to exploit the revenue potential," explained Scott.

The report concludes that operators, handset manufacturers and content providers will need to work hand-in-hand to realise the full potential of the market.