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Mobile Phone Ads Generate $1.9B in Revenue

By the end of 2006, advertising delivered via mobile phones will generate revenue of $1.9 billion worldwide. Compared to the $60 to $70 billion spent annually on broadcast television advertising in the United States alone, it is insignificant.

However the clear benefits of well-executed mobile advertising are so compelling that over the next five years this market is set to enjoy double-digit growth rates, according to a new study from ABI Research.

"There are very good reasons to use the mobile phone to reach consumers," says senior analyst Ken Hyers. "Unlike a TV or a PC, a mobile device is truly unique to the end-user. That allows a more customized relationship with the recipient of the advertisement. Advertisers can obtain a lot of information about end-users, through the websites they visit and the purchases they make, helping them construct tightly targeted campaigns."

There is another reason advertisers love the mobile format: the typical click-through rate for a regular Internet banner ad is about 0.2 percent, while the rate for mobile banner ads is in the range of 2-3 percent. "I think that performance will go down over time as the novelty wears off," says Hyers, "but for now, it represents sensational performance."

However, mobile advertising must be done well to be effective. The last thing advertisers, or mobile service operators, want is a consumer backlash. That means ad creative that fits the format, and no spamming. Hyers believes that "Sending SMSs to customers that are either obnoxious due to their frequency, or because people didn't opt in, or because they are poorly targeted, is counterproductive."

To that end, the Mobile Marketing Association has developed 'codes of conduct' to which the major, reputable mobile marketing firms and brands are signing on.

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