Small publishers dominate the growing mobile advertising market but several trends are helping to attract more and larger brands into the space, according to a new report on mobile advertising from The 451 Group.

The ?State of the Market: Mobile Display and Search Advertising? report points to the growth of smartphones and the resulting opportunities for targeted advertising and better engagement as leading reasons why brands are showing interest in mobile advertising.

?Brands with large campaign budgets often end up spending a tiny fraction of their budgets on mobile,? states the report from The 451 Group, New York. ?What they do not realize is that mobile is not just another channel but a convergence tool owing to its multimedia and contextual capabilities.

?Smaller businesses with limited budgets have a much bigger need for these kinds of unified campaigns, which give them a single, integrated view,? he said.

The shift towards better mobile browsers, faster mobile Internet speeds and tablets are causing brands to consider richer and more engaging advertising formats than SMS and MMS. These include advertising on mobile Web sites, mobile apps and via digital publications.

Display advertising gains traction
Display advertising is showing significant growth, per the report, prompting device manufacturers and carriers, publishing and service delivery platforms to take a closer look at mobile advertising.

The relative reach for some of the largest ad networks has grown significantly in the past year. AdMob is tracking 150 million unique visitors per month in 2010 compared with less than 90 million in 2009.

Inmobi?s monthly unique visitors jumped from a few million in 2009 to over 90 million in 2010. Jumptap, Millennial Media and Mojiva also all saw significant increases.

Looking ahead, location-based ad networks stand to gain from the interest in mobile advertising.

The cost of location-based advertising is several times higher than typical mobile advertising. This has to do with the fact that location can make a big difference to the relevancy of the ad served. Location-based ad networks use this to offer sponsored search results, placements on maps and click-to-navigation features.

?At the moment, [location-based advertising] is a relatively small piece of the overall mobile advertising ecosystem, but with growing realization and interest, these networks will hugely benefit,? the report states.

The effective cost per thousand impressions for mobile advertising can range between $0.30 to as high as $40, per the report.

Complexity hinders growth
There are several factors, however, that stand in the way of some brands embracing mobile.

One is the growing complexity of the industry. There are an estimated 200 mobile advertising networks, including independent ad networks, proprietary ad networks, location-based ad networks, video ad networks and affiliate ad networks, per the report. In addition, there are publishers and developers and ad-creation platforms.

There is also hesitancy on the part of brands to spend in the mobile space because of a lack of independent mobile-specific analytics. However, given the amount of money at stake, several third-party mobile analytics providers are looking to serve the market.

Concern over privacy issues is another hindrance.

For example, federal prosecutors are investigating the privacy and data-collection practices of Google and Apple, which could have implications for the entire industry. 

?While larger players may get away with little more than a scratch, it is the small publishers that will bear much of the impact of the outcome of these investigations,? the report states.

Final Take
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