What If People Do Not Want Ads On Their Mobile Phones?

Research firm BIA/Kelsey released a survey widely covered in the press predicted that “total U.S. mobile ad spending will grow from $790 million in 2010 to $4 billion in 2015.” The reason for its forecast is easy to understand. Advertisers will want to take advantage of the movement of people to mobile phones as a primary means of communications and entertainment. PCs and TVs will become less important. The money will move to the medium where people spend their time.

The flaw with the reasoning is that wireless subscribers may not want to watch adverting on their handsets. These consumers have already spent as much as $200 to $300 for their phones and in addition pay as much as $100 a month for voice and data service. They are not unlike pay TV subscribers. HBO does not run advertising because its customers have paid a subscription fee. The pact between HBO and the consumer is that programs which they pay for will not have the annoying commercials that run on broadcast and most of cable TV.

The argument that people will accept paid advertising on their phones is that wireless subscribers will want to download applications which they find very useful to gather information, or very entertaining. However, many of these applications require the user to pay an upfront fee, and often an ongoing toll as well. These consumers are also likely to think that they should not have to pay twice–once for the application and a second time as commercials run on those apps.

Smartphone application growth has been particularly rapid compared to many other types of hardware and software. People pay for the handsets and services they require. They download some free apps, and others which are paid, to suit their individual needs. Advertising puts another aspect into the pact that people believe they have between their service and their daily use of that service.

Wireless customers could reject the presence of advertising on their phones. These same customers may form negative opinion of the marketers who advertise to them. The forecast that mobile advertising revenue will grow by five times over the next four years is a farce.

Douglas A. McIntyre