IAB Canada’s First Canadian Mobile Advertising Revenue Survey

Gail Chiasson, North American Editor

Mobile advertising revenue in Canada grew from $1.1 million in 2006 to $2.7 million in 2007, and is expected to almost double again in 2008 to $5.2 million, once final figures are compiled.

The figures were generated from the first survey on the Canada’s mobile advertising industry, compiled by Ernst & Young and sponsored by the Toronto-based Interactive Advertising Bureau of Canada. The survey covered three years, in order to establish baseline values for the Canadian mobile advertising market from the industry’s practical inception.

The figures do not include French-Canada. Once critical mass is achieved in the French-Canadian mobile market, IAB Canada plans to provide separate mobile advertising revenue breakouts for French-Canada as well.

The comprehensive survey – which garnered a 60% response rate – included all major mobile carriers and mobile marketing companies including mobile aggregators, online publishers offering mobile advertising solutions (including mobile search advertising), mobile application developers and mobile advertising networks.

“We had to identify every known mobile provider and carrier,” says Steve Rosenblum, director of research for IAB Canada. “And the questions were ultra-detailed, clear and concise. It took months to develop and pull together as detailed report as possible and to be sure that there would be no duplication of figures.”

Among the many findings were that standard SMS advertising programs currently generate 75% of the total Canadian mobile advertising revenue, with the remainder divided across premium SMS, mobile content, mobile (display) advertising, mobile search and mobile applications. All forms of mobile advertising are growing rapidly year-over-year, with the exception of mobile search, which is virtually non-existent. At 8%, mobile content represents the next largest share of 2007 revenues, followed by mobile (display) advertising and mobile application development, both at 5%.

While mobile advertising revenue is growing exponentially compared to other major media – 143% between 2006 and 2007, compared to the 5% growth rate of all major media and online’s 38% growth over the same time period -this is to be expected, given mobile’s relatively small and nascent advertising revenue base.

Of all mobile advertising revenues, 25% is currently being derived from the telecommunications sector, followed by revenue from the packaged goods sector at 19%. Retail and media/entertainment categories were tied for third place at 12% each.

The top 10 mobile advertising earners took in almost 81% of the total mobile revenues earned in Canada in 2007. (This represents a slightly higher degree of concentration than in the online market, where the top 10 earners currently earn approximately 77% of all online advertising revenues.)

Peter Vaz, vice-president director, digital communications, M2 Universal Digital, and vice-president of IAB Canada‚s Emerging Platforms Council, says, “The results show not only the rapid growth of the market to date, but beyond that, the fact that mobile marketing is poised to move from one-off experimental campaigns to becoming an important part of the overall Interactive marketing mix.

“Moreover, as multimedia and network capabilities evolve within the channel, the nature of the advertising offer will evolve as well, moving well beyond current SMS programs, into more sophisticated and personal mobile content, video and application campaigns across an even wider range of advertiser categories.”

Yet there are obstacles to overcome. Mobile marketers cite their main challenges in the next 12 months are: the small size of the Internet-enabled mobile audience; constraints posed by the current carrier/provider business model; low levels of advertiser/agency understanding and comfort with mobile as a viable advertising medium; and, the ability/need for mobile marketers to demonstrate mobile’s return on investment. There is, naturally, concern about the current economic downturn and the impact it could have on mobile advertising growth in 2009.

“Fortunately, like all other Interactive media, one of the key strengths of the mobile channel is its inherent measurability,” says Adrian Schauer, managing partner, Vortex Mobile, and chair of IAB Canada’s Mobile Committee. “Add to that the very immediate, targeted and opt-in nature of the advertising, and you have a golden triangle of opportunity for accountability and future growth that is of paramount importance to all clients, regardless of economic climate.”

Robust operating systems, new developer tools, the proliferation of smart-phones, expanding services and more attractive consumer mobile phone and pricing plans, are all seen as central to growing mobile’s active user base, in order to draw greater advertising revenues to the medium.

“Drivers will be such items as the iPhone and the Blackberry Storm,” says Rosenblum.

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