More Good News For The Mobile Economy

A few months ago, I noted the attempts various companies, Google and Yahoo in particular, were taking to accelerate the growth of the mobile economy and mobile advertising in particular. You can read about it here. This week brought news of the latest development in this effort: the release of new guidelines by the Interactive Advertising Bureau (IAB), the Mobile Marketing Association (MMA), and Media Rating Council (MRC) governing the measurement of in-app advertising.

Earlier in the week, the IAB also issued a report proclaiming that worldwide mobile ad revenue increased 82.8% to $8.9 billion last year from $5.3 billion in 2011. In the context of nearly triple digit growth, a cynic might note that it’s not obvious what problem this constellation of industry activists is trying to solve.

The challenge is that ad spending in mobile is still a drop in the bucket. Kantar Media estimates that total U.S. advertising expenditures in 2012 totaled $140 billion. So while U.S. mobile ad revenue doubled, it accounted for just $3.4 billion of this total, or 2.4%. Meanwhile, Mary Meeker, a venture capitalist whose forecasts many of us in the industry watch carefully, notes that based on the time we Americans spend on our mobile devices, the mobile ad revenue number should be closer to $20 billion here in the U.S. (You can view her latest report on Internet trends here.)

While I wouldn’t necessarily peg advertising valuations to time spent, Meeker is correct to note that the mobile advertising business has not realized its potential. That’s why this week’s guidelines are important. They bring structure and credibility to a nascent business. This is critical to its viability in the long term. They are especially valuable to companies who are compelled to shift their ad dollars to mobile web and apps.

You’ll find the guidelines here, and while mobile ad tacticians may quibble with some of them, the weight and orientation of their sponsors alone should make everyone take notice. First, the IAB, MMA and MRC represent three top industry top trade groups, and all have endorsed the guidelines. Second, a review of the member companies who took an active role in shaping them reads like a who’s-who in mobile and digital advertising. Third, the guidelines themselves are specific and address many of the concerns advertisers have about their mobile investments.

About the only gap I can see is the dearth of mobile app titans who represent the developer community and therefore the group that ultimately sells in-app advertising inventory. These guidelines will succeed or fail based on how (or if) developers embrace them. Though a few notable publishers, such as Pandora and The Weather Channel, have contributed to the report, the guidelines clearly are written for and by the buy-side of the advertising business. That’s not necessarily a bad thing, but how developers and the sell-side react will be telling.

The optimist in me believes that developers will embrace the guidelines. Even if they aren’t perfect, they represent an informed improvement over the status quo that should move the mobile economy closer to its full potential.

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