Independent Startups Vying for Share of Mobile Advertising Market

Mobile advertising has grown at an astronomical 500% in the last year, and the market is expected to triple over the next three years.  Although Google is currently the top player in the space, a number of smaller rivals are competing for their share of the pie.

Baltimore-based Millennial Media is a six-year-old, independent mobile display advertising firm and has grabbed the No. 2 position, behind Google and ahead of Apple.

Millennial Media isn’t the only startup competing for market share. Other independent players in the space include Jumptap, as well as India-based InMobi, and U.K.-based Velti.

Speaking at the Smarter Mobile Marketing (SM2) conference in New York earlier this month, Millennial Media CEO Paul Palieri predicted that the mobile market will reach $13.5 billion in 2015. He attributed the market’s exponential growth to the increasing amount of time people are spending on their mobile devices and the ubiquitous nature of the medium.  “It’s the only advertising medium available continuously all day for advertisers,” he said.

InMobi CEO Naveen Tewari says specialization is another advantage the independents have over the industry Goliaths.  “We only focus on mobile,” says Tewari. “Google on the other hand has many different things to worry about. Yes mobile is important, but is it the most important? Probably not.”

Another key component in the success of these small, independent players is their ability to reach prospects regardless of the operating system they use.  In contrast, Apple is limited to offering mobile advertising to users of the Apple iOS platform.  And Google focuses on delivering mobile ads to users of its Android platform, although it has the ability to deliver ads across all platforms.

According to Gartner analyst Andres Frank, “Advertisers want to be able to reach the broadest population they can and in the mobile world, where the platforms are fragmented, this gives an opening to the providers who are truly platform neutral.”

Investors Jumping in on Mobile Ad Companies

Advertisers aren’t the only ones embracing independent mobile advertising technology companies; investors are flocking to them as well. Millennial Media’s shares have risen 76 percent since falling to a low of $9.00 last summer, and Velti has seen its stock price increase by 59 percent since hitting a low of $4.99 just a few months ago.

Still, the mobile advertising industry as a whole is not without its detractors.  Among the obstacles facing the industry are the limited real estate available on mobile devices and a lack of industry-standard measurements.  Frank says, “I think it’s still a struggle. Most of the advertising that you see on mobile devices today is still predominantly not very well targeted.”

Tewari, however, says mobile ads offer benefits not available through other media.  “You can touch the ad, flip the ad, move the ad, you can do things that you cannot do on a PC. Your interactivity levels are very high,” he argues.

Resources:

Sayantani Ghosh.  “Analysis: Smaller firms grab big slice of mobile advertising”.  Reuters.  10/12/2012.

Jim Edwards.  “Millennial CEO Paul Palmieri Describes How Mobile Advertising Will Grow To $13 Billion” Business Insider, Advertising.  10/2/2012.