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Mobile marketing
Dawn of a new medium
Mobile usage is exploding and ad revenues should follow
We think 2010 marked the crux of the hockey stick for mobile marketing.
Smartphones are already 35% of the handset market in the US, Europe and
Japan, and tablet computers are now taking off. Apple and Android apps set a
new standard, and mobile is now at the forefront of marketers‟ conscience.
A $14 billion market – at least – by 2015
This report focuses on marketing, not tech or telecoms, though we
incorporate views from Macquarie‟s internet, telecoms and software analysts.
We estimate the global mobile ad market could grow from about $3.5bn in 2010
to $14bn in 2015. Mobile only comprises 1% of total ad spending today, but we
think this could rise to 3-4% in the next 5 years, and 5-8% over time. We believe
mobile marketing and services represent an incremental growth opportunity for
ad agencies of anywhere from 0.2-1.3%, and can help elevate agency organic
growth to long-term GDP-plus rates.
The ultimate targeted advertising medium
This is a different type of media, incorporating display ads through both apps
and browsers, search, messaging (sms and mms), location-based services such
as in-store couponing, and games. Mobile extends digital capabilities to a more
highly personalised, interactive and omnipresent way of communicating with
consumers, and offers exciting e-commerce (m-commerce) potential. Still, as
this is such a nascent industry, there is plenty of room for improvement.
The ad agencies’ role: integration
Mobile introduces new layers of complexity that create new demands for
agency services. Mobile campaigns cannot stand alone: mobile search links
must lead to mobile-enabled websites with m-commerce options, and any mobile
message must keep consistency with brands‟ other creative messages.
Apple or Google? Or RIM, Nokia or others?
We believe apps in a closed environment have created a great user
experience, but browsers based on open platforms will gain share over
time. With HTML5 emerging as a common language in which mobile web
programs are written, we expect browser-based devices to proliferate, attracting
consumers and hence advertisers. Google, RIM and Nokia could profit from this.
The biggest risk: data and privacy concerns
Personal data is extremely sensitive, and potential legislation such as allowing
consumers to opt out of internet tracking could throw a wrench into all this.
Key agency players
All ad companies are building capabilities in mobile. We don‟t offer specific
stock picks on this basis, but reiterate our positive view on companies with
strong digital expertise. These include Outperform-rated Publicis, Interpublic,
Omnicom and Dentsu, and Neutral-rated WPP and Aegis. In this report we
also discuss smaller-cap names like YOC, and numerous private companies.
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