Mobile Market Spending to Reach $150 Billion in 2012 (T, VZ, VOD, ZNGA, P, AAPL, GOOG, MM)

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The global market for consumer spending on mobile content, apps and games, and services totaled $121.8 billion in 2011 and is expected to grow to $138.2 billion this year. The advertising spend on mobile media is expected to rise from $6.3 billion in 2011 to $11.6 billion in 2012. The annual total this year is forecast at virtually $150 billion. The data comes from research firm Strategy Analytics.

The main beneficiary of the consumer spending will be the service providers like AT&T Inc. (NYSE: T) and Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD), with expected revenue of $82.8 billion in 2012. Games and apps makers like Zynga Inc. (NASDAQ: ZNGA) are expected to post revenues of $26.1 billion in the year, while music services like Pandora Media Inc. (NYSE: P) are expected to pull in about $16 billion and mobile video services lag with just $2.8 billion in projected revenues.

Spending on advertising is expected to help companies like Apple Inc. (NASDAQ: AAPL), Google Inc. (NASDAQ: GOOG), and Millennial Media Inc. (NYSE: MM) with advertising platforms.

In the US, mobile advertising is expected to produce about a third of all global ad revenue, about $4.2 billion. Amazingly perhaps, in-app advertising is expected to account for $1.2 billion in 2012 revenues, compared with just $556 million in mobile Web display advertising. US consumers are expected to spend $6.7 billion on mobile apps in 2012, about 20% of the total that US consumers will spend on mobile media in 2012.

Music providers like Pandora, which follow a hybrid advertising-subscription model, nab about 11% of the total global market for mobile media and advertising, with projected 2012 revenues of $16.3 billion.

The laggard here is video, which accounts for little of either direct revenue or ad spending. Google’s YouTube set the bar at ‘free’ and it has been difficult for any other service to break that precedent. Mobile video claims 271 million users, but generated ad revenues of just $223 million globally in 2011.

Total global ad spending in all media, from newspapers to Web-based (excluding mobile) was estimated at around $460 billion in 2011. Mobile ad spending equals less than 1.5% of that total, but the percentage grows to 2.4% on projections for 2012 ad spending. Mobile advertising remains incremental to other types of ad spending, but its importance is growing and, as with most other technology-based revenue streams, early entrants have a major advantage.

Paul Ausick

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