Mobile advertising business: exploding soon?

As mobile news increasingly hits the front page, mobile advertising looking like a really good idea

Ten years ago, mobile phones were merely phones on-the-go, that’s it. Text messaging quickly became popular and some people even started playing basic games on their phones, supplementing the dominant feature of plain old phone-calling. These days, more and more consumers expect their phones to be address books, date books, music players, game devices, newspapers, social networking hubs, GPS trackers, email checkers, and more. Oh, and they should still make phone calls.

With the phones reaching desktop computer-like usability, it doesn’t take a genius to see that there’s advertising money to be made in future of smartphones.

Big players like Microsoft sat side-by-side with mobile advertising businesses like AdMob at the Internet Advertising Bureau’s Mobile Conference this week, where companies discussed a year in mobile advertising studies, and what it means for the future.

An April 2008 study by Dynamic Logic, for example, revealed that mobile campaigns defeated online campaigns in advertising, when it comes to raising user knowledge of a brand. The research concluded that the greater real estate on the smartphone, in addition to the possibility of narrowing down a target audience, created the effect.

Even more striking, industry analyzer MAGNA released predictions this past May that mobile advertising, which was at $160 million in 2008, will expand by 36% to $410 million by 2011—an astonishing growth rate by anyone’s standards.

But again, we should not be surprised at this, in the face of daily news announcing the explosion of the utility and popularity of smartphones.

Foster City-based startup Qik just raised $5.5 million in Series C funding for its mobile video upload service. Likewise, the Toronto-based mobile TV service provider QuickPlay Media closed a Series D round of financing, totaling up to $12 million. Just yesterday, Apple announced its having reached the 1.5 billion download mark in its online App Store. People are clearly starting to go online on their mobile devices in droves.

Seemingly small stories like these demonstrate a flow of money increasingly aimed at mobile media markets. Though the two rising companies mentioned don't have completely obvious revenue models at the moment, it is clear advertising will play a big part, as it already does on those ever-popular iPhone apps.