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Mobile Commerce - not iAds - Will Drive Growth in Mobile Advertising

Mobile commerce sales more than doubled this year, writes Bill Siwicki of Internet Retailer. Reaching 3.4 billion dollars by the end of 2010, it's already bigger than mobile advertising, estimated to be less than a billion dollars per year.

This is great for online retailers and also means that we're about to see a major shift in the way ad dollars on mobile are spent. There's a good chance that pay-for-performance ads, placed by online and brick-and-mortar retailers, will dominate mobile ad spending in a few years' time.

The beauty of e-commerce is in direct measurability of how advertising and marketing perform. As online retailers go mobile, enabling new revenue streams, they'll have a strong incentive to figure out the best performing mobile marketing channel (whether it's mobile SEM, display or retargeting) and spend as much as possible on customer acquisition. Their competitors will follow, driving demand for mobile inventory in a way that expensive branded iAd campaigns can't.

Then there is the local aspect. In his interview on Charlie Rose's show, Groupon's Andrew Mason talked about his vision of "the holy grail of local" - bringing pay-for-performance online advertising to millions of boutique businesses around the globe. Today's Groupon is doing just that, but in a very desktop-centric way with insufficient targeting (most of the business I get Groupons for in Vancouver are simply too far away). Not too long from now, Groupon and its clones will get into a bidding on war for highly targeted mobile inventory on behalf of their client SMEs. This will bring yet another monetization opportunity for developers & publishers.

The future is bright for mobile advertising and commerce as the market grows rapidly while geting more tech-savvy. Without a doubt, 2011 will be the most exciting year yet!

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