Mobile Ad Funding Is Heating Up

Marketers are not yet certain about how the mobile ad market will benefit their brands. That has not stopped venture firms and tech companies from jumping into the market to try to capture what they hope will be a strong new channel.

There are some technical problems, such as websites not being properly aligned for the demands of mobile commerce. Marketers are also not yet sure how ads and promotions for the mobile market need to be different from the web or mainstream media, if at all. The question of whether mobile commerce will canibalize e-commerce and retail or whether it will enhance them has yet to be determined. There are also concerns being raised about the potential for abuse that could lead to an explosion of consumer debt, particularly by those least able to afford it. All of those concerns aside, the betting is that this is going to be huge. Ryan Kim reports in GigaOm:

"Mobile advertising currently generates just a fraction of the total revenue earned by online advertising. But it’s ramping up quickly and is poised to grow by more than 40 percent over the next several years, outpacing traditional online advertising. That’s helping fuel a spate of funding announcements and deals for mobile advertising companies as the competition in this space heats up.

The Interactive Advertising Bureau started reporting mobile advertising revenue for the first time, saying mobile ads brought in an estimated $550 to $650 million in the U.S. last year. Online advertising raked in a record $26 billion in 2010, eclipsing newspaper advertising revenue for the first time ever. Mobile advertising, while small, is expected to grow from $491 million in 2009 to $2.9 billion in 2014, according to BIA/Kelsey, a 43 percent compound annual growth rate. It’s that promise of rising growth that’s fueling optimism in the online advertising space.

Google is a major player with its AdMob acquisition and said last year its mobile advertising business was on a $1 billion run rate. Apple has also used its Quattro Wireless pick-up to introduce iAD. But there are plenty of other players in this space who are making moves, picking up money and getting bought up
Here’s a look at some of the recent activity:

JiWire announced it has raised $20 million to expand its location-based advertising network, which utilizes Wi-Fi hotspots and mobile devices. I recently talked about the Gap’s results using JiWire’s platform .
Jumptap yesterday said it raised $25 million, helping it bulk up as one of the top independent ad networks. The company said it reaches 83 million consumers a month, a 30-percent increase from last year.
Millennial Media, considered the largest independent network, pulled in $27.5 million in January, helping it in its bid to compete with Google and Apple. Millennial said it tripled its revenue in 2010.
Location-based ad network WHERE was bought up by eBay last month. WHERE only delivers ads based on a person’s location, which is going to be one an important way mobile ads become more effective.
Last month, ValueClick also reportedly bought mobile ad network Greystripe for $75 million.

Again, it’s still early and mobile advertising revenue is relatively small. But the promise is big for this industry, which can get in front of consumers and engage them in very personal and targeted ways. As rich media and location-based mobile ads grow, we’ll see more money head this way as advertisers look to use these channels for reaching consumers.

Expect to see a lot more deals and funding announcements as mobile advertising ramps up.