Ads on cell phones have long been hailed as the next big thing. But flipping through industry forecasts, Didier Kuhn says, “I don’t believe the figures I am seeing.” And he doesn’t mean that in a rah-rah kind of way.
Kuhn, CEO of a mobile advertising company acquired by Microsoft in May, views most analyst predictions as way too rosy. Gartner expects $11 billion in global revenue from ads on mobile devices by 2011, up from less than $1 billion a year now.
Strategy Analytics sees an even bigger $14.4 billion revenue pie by then, accounting for a fifth of all online ad spending. These forecasts are “incredibly steep,” says Kuhn, relieved that his company, ScreenTonic, has Microsoft to watch its back as the market develops. “It will take slightly more time for the industry to grow.”
Wireless Carriers: Not So Eager
Mike Baker, vice-president in change of Nokia’s ad business, also sees a longer wait, suggesting it will take at least five years for the industry to surpass $10 billion in annual revenue. “The near-term visibility is cloudy,” he says.
Realistically, no matter how often you see people checking e-mail on a BlackBerry or surfing the Web on an iPhone, the vast majority of consumers are just beginning to use their phones for functions, other than calling, that are conducive to ads. Today, only some 16% of U.S. wireless users access the Web on those devices at least once a month, according to JupiterResearch. It doesn’t help that the U.S. economy is being buffeted by the mortgage crisis and housing slump.
Wireless carriers, meanwhile, have been slow to embrace ads, fearful their customers will be driven away by floods of text-message spam or banners and pop-ups crowding such a tiny screen. As a result, only 10% of nearly 2,000 Americans surveyed by Jupiter earlier…