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Mobile Media Advertising Optimistic Forecast

Advertisers will spend $1.4 billion on mobile media this year, rising to $14.4 billion by 2011, according to a new Strategy Analytics report entitled "Global Mobile Advertising Update: Outlook Bright as Inventory Expands."

Strategy Analytics predicts that mobile media advertising will account for a fifth of global spending on Internet advertising by 2011. However, given the current rate of mobile advertising within the U.S. market, I believe that this predicted growth will likely continue to come from the Asia-Pacific and European markets -- where value added services (VAS) have greater market penetration.

Phil Taylor, Director, Global Wireless Practice, notes, "The outlook for mobile advertising spend has significantly advanced in the past 12 months. The supply of advertising inventory is rapidly increasing as mobile publishers look to develop advertising as a revenue stream. Major mobile network operators like SprintNextel, Verizon Wireless and Vodafone have all accelerated plans to sell advertising within their mobile media channels and advertisers appear to be responding positively."

This report highlights advertising value chain dynamics and growth for emerging mobile media categories, including game downloads, mobile broadcasting and video on demand. David Kerr, Vice President of the Global Wireless Practice, adds, "Google and Yahoo continue to drive mobile advertising initiatives to market. The recent acquisitions of Third Screen Media by AOL and ScreenTonic by Microsoft, illustrate the importance that global Internet solutions players now attach to advertising on the third screen."

Regardless, the fact that the trailblazing U.S. MVNO, Amp'd Mobile Inc., recently filed for bankruptcy protection is troubling news. They blamed rapid growth, back-office systems and collection problems as the reasons for the need to reorganize under Chapter 11 bankruptcy, and said that nearly half of its predominantly young customer base were not paying their bills by early 2007.

Amp'd uses the Verizon Wireless network to deliver mobile phone services to its customers. Amp'd apparently tried to raise more money, hoping to delay the bankruptcy, but a last-minute effort fell through when Verizon Wireless demanded a $4.5 million payment and accused Amp'd of defaulting on its wholesale agreement.

Ironically, Amp'd was previously considered a market leader in media-oriented VAS by most U.S. mobile sector analysts. In fact, Vivendi/Universal Music Group is the company's largest single investor, according to the filings.

Theoretically, Amp'd has the best access to the addressable market for advertising of all the U.S. mobile service providers. The company's active users consumed more than 4 million videos, songs and mobile games in the first quarter of 2007, doubling the MVNO's fourth quarter 2006 figure.

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