Mobile to Become a $1 Billion Business in the U.S. Next Year

Apple's IAd Aided Growth in 2010, but Google and AdMob Will Accelerate It, Says EMarketer

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NEW YORK ( -- Mobile is red hot this year, but it still won't be a billion-dollar ad business in the U.S. until 2011, according to new eMarketer estimates.

According to a new report, U.S. mobile advertising spending will reach $743 million this year, up a whopping 79% from $416 million the year prior. Mobile spending will cross the $1 billion mark in 2011 with sustained growth, though at slower rates.

Why has mobile seen such a rush in new ad money? Thank Apple.

"IAd has served as a tremendous catalyst in the industry," said eMarketer mobile analyst Noah Elkin of Apple's rich-media mobile ad unit, which launched this year at a high-profile press conference in Cupertino, Calif.

But it is Google and its recently acquired mobile-ad network, AdMob, that are projected to propel growth.

"Over time the combo of Google and AdMob has the potential to be equally, if not more, significant [than Apple] because of the scale Google brings the medium," Mr. Elkin said.

Last week, Google made a surprise announcement that it's on track to bring in $1 billion in global mobile ad revenue. The company did not break that reporting out by country, though revenue outside the U.S. is likely sizable, because it includes markets where mobile is more prevalent than desktops, such as India. Google's head of mobile ads, Omar Hamoui, the CEO of AdMob before the acquisition, told Ad Age in September about Google's plans to bring its sophistication in online ad serving and infrastructure to mobile.

SMS messaging is still the largest ad format in mobile, projected to hit $327 million this year. However, Apple's iAd, as well as Google's bet on mobile display through AdMob and its growing suite of rich-media units, will soon unseat text messaging as the primary mobile-ad medium. Mobile search and display ads are expected to pass messaging in 2012. Upticks in mobile search and display also coincides with growing smartphone penetration; Nielsen says there will be more internet-enabled phones than basic-feature phones in the U.S. at some point next year. Search and display also rely on faster and more pervasive mobile-internet connectivity.

Within mobile spending, video is the fastest growing ad medium, albeit from a tiny base, and will continue to be through 2014.

"Apple helped show the way with iAd. Obviously they weren't the first, but they are really good at getting the market excited," Mr. Elkin said. "All of that helps advertisers realize they can do a lot more branding on this medium. That's why you're going to see more dollars flowing into richer ad units over the next four to five years."

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