Mobile advertising could become a strong source of revenues for the mobile industry. The European mobile industry has extensively explored the use of advertising recently as a sustainable business model for mobile content, mobile messaging and other services. Despite being in the initial stage, these models have galvanised the industry. The level of confidence of the mobile communications and advertising industries in the potential of mobile advertising is very high.

New analysis from Frost & Sullivan - ‘Ad-based Content and Communications: A Lucrative Avenue for the Mobile Industry' - estimates that the mobile social and content advertising market revenues should reach 2.18 billion euros in 2012 in Europe. Mobile content advertising, ad-based music, video, TV and games will represent the major source of revenues.

"To achieve high revenues, the mobile advertising industry will need to successfully confront three main challenges," said Saverio Romeo, Frost & Sullivan research analyst. "What should be concentrated on is: continuously enhance the mobile user experience through high-speed connectivity and high-quality user interfaces; use ads as a transparent value to consumers' mobile experience without being intrusive; and educate the advertising industry on how to exploit the advertising power of mobile devices. If these challenges are not adequately faced, the advertising market will not grow strongly as the mobile industry expects."

From the mobile industry point of view, advertising is a potential revenue stream that can counterbalance the continuous decrease of revenues from voice and SMS services. However, advertisers and agencies, the sources of the advertising revenue stream, are, only now, gradually learning the use of the mobile device as an advertising medium.

"Agencies' budgets rarely include a specific allocation for mobile communications," said Romeo. "An intense synergy between the mobile and the advertising industries is crucial to transform today's enthusiasm into strong revenues in the future."

www.frost.com