Andrew Walmsley on Digital: Dip into mobile's money pot

A combination of developments is allowing advertisers to realise the true potential of the platform.

In a tradition stretching back over almost years, the 'this is the year of the mobile' article makes regular appearances whenever someone notices a commuter using their phone to watch TV on the bus.

We have all been waiting for the moment when the centre of gravity for online media shifts from PC to pocket, but it hasn't happened yet. Last year, according to the IAB, the UK mobile advertising market was worth £39m; and it expects it to be £50m this year.

This would not be a bad amount of cash if you put it in my holiday fund, but as advertising markets go, it's not even small change - it's the mark small change leaves on the tablecloth after someone has left a derisory tip.

The IAB's study is confident, though, with a predicted £86m in 2011 rising to £285m by 2014. Such bullishness is not without foundation; smartphone sales are surging, with the global market increasing 50% faster this year than last. The smartphone market itself is changing, as Google's Android mobile operating system has overtaken iPhone in the US and is closing fast on the market-leader, BlackBerry.

Apple's new iPhone, announced this month, will try to grab some of that growth back, but between them they are making the mobile internet a reality. Of course, for anyone with a conventional handset, despite the claims, getting online is like looking round a house by peering through the letterbox.

Getting online while out and about is, however, set to get much faster. With analogue TV switch-off across Europe by 2012, bandwidth will become available to launch 4G - fourth-generation mobile, with speeds faster than we currently get on home broadband.

This combination of a boost to network capacity and healthy competition in the handset market will accelerate growth further; when you add the booming tablet market, including Apple's iPad, HP's Slate and Dell's Streak, we start to see the emergence of an array of devices that aren't intended to be connected to anything by wires, least of all a keyboard.

However, it is a mistake to think of this as an inherently out-of-home market. Studies show that the majority of internet use on mobile devices takes place at home, mainly via the user's own wi-fi network, often while they consume other media, such as TV.

This brings us back to advertising, where three key drivers will drive growth in spending.

The Guardian's brilliant iPhone app, shows how tablets will start to eat into the printed-media marketplace, making richer and more compelling forms of display advertising possible, and breaking the medium away from the tyranny of the humble banner.

Google's amazing voice-search facility and, on Android phones, its Goggles application, which allows users to find out about products by photographing them, show that search is going to continue to be a powerful medium as computers get unplugged.

Finally, location brings an extra dimension to targeting. Using cell information and GPS to identify your position is going to create a fresh competitive arena for brands as they fight for your business in the last few feet.

Factoring in these drivers, the IAB's predictions start to look conservative. However, the biggest use of mobile internet is the real clue to why they are a gross underestimate of value.

Social media has taken mobile by storm. The average Facebook user spends 31 minutes on the site daily on a PC, but 41 minutes on a mobile device. Twitter, Foursquare and Facebook are tailor-made for mobile, but they're not advertising media. They're much more valuable than that, meaning that, for brands, getting social will be the key battleground for conquering mobile.

- Andrew Walmsley is co-founder of i-level.

30 SECONDS ON ... GOOGLE GOGGLES

- Google Goggles is an image-recognition application that performs web searches based on pictures taken using mobile devices.

- It was launched last December and is currently available in a beta version from the mobile section of the Google Labs website, where the search company presents products for testing.

- The application is capable of recognising a wide range of subjects, including books, DVDs, landmarks, branding logos, contact info, works of art, local businesses, products, barcodes and plain text.

- If a user performs a search using a product barcode, for example, the app will return information on prices and similar products.

- Google plans to add further functions, such as identifying plants from pictures of their leaves and suggesting moves in chess games.

- The application runs only on devices that use the Android operating system but Google has indicated that it intends to produce versions to run on iPhone and BlackBerry handsets in future.

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