The mobile advertising market in Australia is very much in its infancy with total revenues reaching just $2.5 million in 2007. However, this figure is set to grow more than 300 per cent in 2008 and be sustained into next year driven by the growing consumer take-up of 3G data services coupled with attractive campaign pricing to entice advertisers.

A new report from Frost & Sullivan highlights, however, that sustained growth of mobile advertising into 2009 will depend on a continued reduction in mobile operator data charges, the development of sophisticated mobile advertising offerings from more organisations, and enhanced technological capabilities and integration across the mobile advertising value chain.

At the same time, continued uncertainty about the mobile advertising medium among advertisers is still restraining its popularity. Indeed, mobile advertising spend currently is mainly driven by the media and entertainment, and banking, financial services and insurance (BFSI) industries which together contributed more than 50 per cent of revenues in 2007.

Currently, the bulk of mobile advertising spend is based on campaign trials in partnership with mobile carriers and content publishers. This is concentrated in display (banners and video) accounting for 91 per cent of total revenues. Concurrently, search advertising on mobile phones remains very low, with most consumer activity still concentrated in the free-to-access, on-deck directories within carrier portals.

Frost & Sullivan's research shows that three main forces have now come together to create a positive market environment for rapid growth in mobile advertising marketing spend.

The number of 3G handset subscribers is expected to mushroom with the corresponding adoption of mobile data services. Frost & Sullivan estimates there are now more than six million 3G handset subscribers (services in operation) in Australia and this will grow rapidly over the next two years as operators phase out their non-3G handset offerings. Adoption of Apple's iPhone is also expected to have very strong impact in the usage of mobile data services.

Finally, early success by advertisers deploying mobile advertising in their marketing mix, particularly with SMS/MMS broadcast and response campaigns, is driving further take-up and experimentation.

"2007 marked a watershed year in mobile advertising with the medium achieving a successful proof-of-concept stage. Indeed, advertisers which have adopted mobile advertising show a clear propensity to increase their spend with the medium. They are organisations which typically have large advertising budgets overall and have been wowed by the rich campaign ROI metrics available from mobile. At the same time, they typically have a strong commitment to digital advertising and are now looking for even more sophisticated mobile inventory," said Darryl Nelson, Frost & Sullivan Senior Research Manager, Digital Media, Asia Pacific.