5 trends that will shape the future of mobile advertising

Spending in the mobile advertising space will be approximately $4 billion worldwide this year, so despite some perceptions to the contrary, we can safely assume it’s an area to watch in the coming years.

To get a clearer picture of mobile advertising’s future, it helps to first explore the current landscape. Five trends in particular stand out:

More-relevant behavioral targeting. Currently, mobile advertisers use traditional methods of ad targeting: device, demographic group or context. But in five years, mobile ad targeting will become more relevant to a person’s behavior and current location. For instance, online advertising network Adverline has an AdNext server that builds a prediction model of spatial and temporal relevance for delivering ads to mobile users. The company has tested this with the COEX Mall in South Korea, and it found a 70 percent confidence level that ads displayed are spatially and temporally relevant.

Growing mobile search. Mobile search advertising is already a big driver of ad spending; this is where Google currently makes much of its money in mobile. In five years, this will still be the case, as people continue to use mobile devices to search for products and services. What will change is that, coupled with better targeting, search advertisers will deliver more relevant ads based not only on location and relevant keywords but also on more accurate predictability engines.

Better analytics. Right now, the tools for measuring mobile ad campaigns lack the sophistication that advertisers expect. The Mobile Marketing Association and other groups, such as the Interactive Advertising Bureau, have set up good guidelines. But these are still evolving, and not everyone plays by the same rules. In five years, the standards will have matured. Companies will agree more about what gets measured, and analyzing mobile campaign effectiveness will not be as big of a hurdle.

Greater interactivity. Most mobile ads today are delivered as relatively simple text or banner formats. They are clickable but not very interactive. Rich-media ads are available, too, but they are not as widely deployed for a variety of reasons: more cost, and not all devices render them well. In five years, interactive ads will be common, and users will be expanding, collapsing and manipulating them in ways that are still unfolding. This will unleash creative minds to show off their capabilities. Also, technology like augmented reality will make the interaction with brands and the world around consumers more interactive: Imagine looking at your mobile screen and playing a Zynga game sponsored by Coca-Cola, based on your physical surroundings.

Mobile-social as the “personal cloud.” Today the mobile and social worlds already collide with services like Foursquare and Gowalla. In five years, though, this functionality will likely evolve into what some Stanford researchers suggest is the personal cloud, which will be personal data that surrounds us wherever we go. It will also be shareable with whomever we choose and will be used to make purchases, among other things. Savvy advertisers will leverage this trend with relevant offers that provide value but still respect user privacy.

Meanwhile, companies like Google, Apple and Millennial Media currently rule the mobile advertising space, and while some of those will continue to have an impact over the next five years, others leading the way today will fade away or be acquired. To read about these, as well as more trends to watch, please see “The future of mobile advertising, 2011-2016” at GigaOM Pro (subscription required).

Image courtesy of Foursquare.