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Will Mobile Advertising Really Work?

Get ready for advertising on your cell phone. According to AOL CEO Randy Falco the mobile advertising market could be worth $5 billion in the next five years. Is this just a move to defend AOL's decision to buy Third Screen Media? And does mobile advertising really have a chance?

Probably so for both questions. All signs right now indicate that the mobile advertising market is poised for some real growth.

The success of mobile advertising, though, is by no means assured. Right now the mobile advertising market is pegged at between $500 million and $900 million. Ad agencies are certainly testing the third screen and big name brands seem willing to spend on their tests.

Despite this, mobile advertising could still flop. As I see it there are three solid reasons why mobile marketing could be DOA.

First, there is the issue of display advertising (i.e. banners). It's not apparent that display advertising will work on mobile devices. Why? Simple. The screen size limits the ability of most mobile browsers to work as well as desktop browsers. If you add the demands of a display ad on top of this already limited real estate of a mobile phone screen, the chances of success are limited. I suspect that initial campaigns with display ads are doing well due to the novelty factor, but I don't know if it will work in the long-term. Then again, I don't know if the mobile browser paradigm, much less the display ad one, will work either.

The second issue surrounds SMS. Thanks to short codes and other marketing premiums, SMS as a marketing channel has already taken off. But it's a channel with limits. Thanks to the dump truck of e-mail marketing, I don't see consumers putting up with text message marketing unless it delivers real value. Text marketers are already gun shy about using this channel to pester consumers who have little patience for messages they don't want (and, in many cases, have to pay their carrier for receiving). These limits could severely hamper the growth of text message marketing.

The third challenge is mobile search -- or the lack thereof. I have had several people try to talk to me about mobile search marketing. This is kind of a challenge since mobile search is still very much an emerging category, much less mobile search marketing.

As we all know the bulk of successful online advertising these days is search-based. It's simple, text link ads on Google and search-based ads are just more relevant. Obviously, marketers are eager to replicate this success on the third screen. But for that to happen, mobile search has to, you know, actually take off. Without viable mobile search, there won't be any mobile search advertising. In a sense, predicting the growth of mobile advertising before mobile search has had a chance to develop is putting the cart before the horse.

There is also one other issue. The overall challenge for mobile marketing will always be the channel itself. People have very personal affiliations with their cell phones. They don't want their devices modified or messaged without explicit permission.

And unlike the desktop, the mobile universe doesn't give people that much time or space to explore or play around. When you combine this with the personal nature of the mobile medium that means that mobile ads are going to have to be even more relevant than their desktop cousins and marketers are going to need even more permissioning. That's a tall order to fill.

What do you think? Will mobile advertising become a $5 billion market? Or will it flop?

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