Report: Mobile Search to Ring In Ad Billions

Revenue from search-related advertising on mobile phones will crack the US$2 billion mark in 2011, according to a report released last week by a market and trend analysis firm.

Search-related advertising — which has made outfits like Google revenue powerhouses — will grow mightily worldwide during this decade, from $6.8 million in 2006 to $2.4 billion in 2011, forecasts the report from eMarketer.

During that period, the number of consumers searching for everything from the nearest pizza place to weather reports to sports scores will nearly quadruple from 220 million to 845 million, according to the report.

“The cell phone screen is the next interactive screen that’s coming into play,” John du Pre Gauntt, author of the report and eMarketer’s senior analyst for wireless, told the E-Commerce Times.

Proven Revenue Engine

Search has already proven itself in the PC world, not only as a way to meet users’ needs, but as an effective way to turn those needs into money, he explained, so that thinking is being carried over into the mobile world.

“The search giants — Google, Yahoo, Ask, MSN — have got to get into whatever screen people are gravitating to,” he said.

If you look at the number of handsets in the United States, it dwarfs the number of PCs out there, observed Markus Nordvik, vice president for business operations and strategy for 4Info, a mobile search service company.

“Mobile search is an area of focus because of market penetration,” he told the E-Commerce Times.

Poised for Takeoff

The mobile ecosystem overall is about to take off, according to Lee Ott, director for product management for mobile search at Yahoo.

“We look at 2007 as the tipping point for the mobile Internet and mobile Web usage overall,” he told the E-Commerce Times, “and search is the front door to Internet-type content.”

“It has been true on the PC,” Ott added. “It will be true on mobile.”

Hitting the Ceiling

Search has also grabbed the attention of mobile carriers who are looking for ways to beef up revenues from their data offerings, he continued.

“Unless they [the carriers] can find a better way of hooking up people to the content that they want, then they’re stuck with the screen real estate on their decks, and mobile Internet is going to be hitting a ceiling,” Ott noted.

“Even now,” he said, “for every incremental dollar of revenue they’re taking in, they’re having to spend more and more and more on marketing. There’s no easy money to be made any more.”

Hole in the Mobile Net

The carriers are caught in a dilemma, he contends.

“Unless people can find the stuff that they want quickly,” Ott said, “then all you can do is offer them the top 10. That cuts off a lot of your market because not everyone wants the most popular stuff.”

“Search and discovery is a giant hole in the mobile Internet,” he declared. “All sides — global telcoms, Silicon Valley, Yellow Pages and directory services — know they’ve got to get in there and they’ve go to get something moving in the next couple of years.”

Inent to Transact

Carriers and search engine boffins aren’t the only parties intensely interested in mobile search, Gauntt continued. Marketers are looking as well.

“The mobile channel connects people who have declared a clear intent to transact,” he explained. “It’s one of the reasons marketers prize mobile very highly and it’s reflected in the high prices they’re willing to pay for advertising.”

That intent to transact can be seen in an anecdote recalled by Sumit Agarwal, Google’s product manager for mobile. During a recent trip to Japan, a mobile user told Agarwal how Google had been an anxiety breaker for him.

The man was about to leave on vacation with his family when he realized he had forgotten to purchase travel insurance. He went to Google, searched for travel insurance and found a sponsored link for his existing financial services provider.

“He clicked through and less than two minutes later, he had purchased a $50 travel insurance plan from the provider,” Agarwal told the E-Commerce Times.

Walled Networks

Currently, marketers are caught in a tug-of-war between carriers, who have been able to manage their networks like gated communities, and search players trying to snatch the attention of mobile users when they venture outside those communities into the mobile Web.

“What’s going to be interesting is when we get into 2008, 2009, where we have fast networks and smartphones are selling for $99, because they’re running native HTML,” he said.

“Then all bets are off,” Agarwal continued. “You won’t care. It will all be the same Internet and you’ll be able to reach mobile subscribers without necessarily having to pass through the carrier’s gate.”

Display Limitations

The key to that scenario, though, is widespread use of smartphones, a development that has its skeptics.

Smartphones represent 2 percent of the market now and it’s not growing tremendously, observed Michael “Luni” Libes, chief architect and cofounder of Medio Systems.

Moreover, he asserted, the mobile search habits of today will be the search habits of tomorrow because mobile search, even on a smartphone, is limited by display size.

“These phones have screens that are quite small,” Libes told the E-Commerce Times, “so you can’t get a full Web experience on these phones.”

“Even though some claim you can,” he added, “you can’t actually do it.”