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Cell Phones: The Next Advertising Frontier

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Reaching consumers immune to their TV, PC screens.

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It's hard to believe, but this economic cyclone is going to produce some new winners. Identifying them and getting in early will be lucrative. My advice: Keep an eye on mobile advertising.

Global television advertising spending peaked in 2006 at $340 billion. For the first time in history TV advertising revenue is shrinking and those billions of dollars are flowing into other arenas. Since global advertising budgets have been rising 3% a year, it is legitimate to ask: Where is the TV money going?

You've probably heard of a little company called Google (GOOG). They're trading around $311 – up 280% since their IPO in 2004. Yes, they're sucking up a chunk of it.
For the last 2 years, media analysts have predicted the next big thing is going to be mobile phone advertising.

It all boils down to one question for the consumer: Are you willing to accept ads on your mobile phone in exchange for a 50% reduction on your monthly phone bill?

A new survey conducted by iGR Consulting has confirmed that for 60% of mobile phone users the answer to that question is now: "Yes."

As the economy continues to contract, mobile phone advertisers are positioning themselves in the surging "belt-tightening business", joining other companies like Concur Technologies (CNQR).

The grim truth is that, for the 600,000 US workers who lost their jobs last month (and the 9.4 million longer-term unemployed), accepting mobile ads may be the only way to keep their cell phones. And for a typical US citizen, canceling a cell phone contract feels about 3 steps away from the soup line.

Before I talk more about mobile advertising (and how you can profit from it) let's back-track and examine how TV lost its mojo - and what the mobile advertising industry can learn from it.

It's no secret that "the Big 3" networks have lost their footing. Their market share has plummeted from 52% in 1970 to around 10% today. NBC, owned by General Electric (GE), ABC, owned by Walt Disney (DIS), and CBS (CBS) are fighting tooth and nail for audiences more interested in playing video games and goofing off online.

Cable television has benefited greatly from the demise of network TV, but their business model is also under attack: PVRs (Personal Recording Devices) -- which will be in 50% of American households by 2011 -- allow viewers to "time shift" their viewing and zap out commercials.

Media buyers are refusing to pay for eyeballs that are wandering away from their message.
There is also growing evidence that even in homes that lack modern "commercial avoidance" technology - fewer than half of the ads are actually watched.

To be crude, advertisers are looking for vacant real estate - a space where they can deliver their message to a receptive audience. Believe it or not - the size of mobile real estate is far bigger than the total number of computer screens.
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No positions in stocks mentioned.

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