For something in its infancy (both literally, and in dollar terms), mobile advertising makes a lot of noise. It’s suddenly a required part of every digital ad package, and traditional agencies are scrambling to work up their own mobile offerings. In the trendy world of app building, nascent efforts at mobile display ads and transaction-based mobile platforms may have generated only $550 million to $650 million in revenue last year, according to the Interactive Advertising Bureau—compare that with the larger category of online advertising, which brought in $26 billion—but it’s growing fast. Last year’s revenue in the category was roughly 30 percent higher than 2009’s, and BIA/Kelsey predicts the market will swell to $2.9 billion by 2014.
The average U.S. advertiser reserves around 2 percent to 5 percent of its overall ad budget for mobile apps, according to Kai Buehler, CEO of Mobile Messaging Solutions. While that money previously came out of the digital pool, Buehler said it’s increasingly common for advertisers to dedicate a budget and even an in-house position to the category.
But even as mobile devices evolve at an ever more rapid pace—including the introduction of tablets—mobile advertising is still deciding what, exactly, it is. What advertisers have learned is that a mobile campaign isn’t as simple as cramming a display ad into a smartphone. “Brands don’t just want ads in an app experience,” says Steven Golus, general manager of mobile at DataXu. “They want cross-selling, m-commerce, and in-store advertising.”
They also want exciting creative, and to enhance a customer’s experience in their stores with apps utilizing geo-tagging, for example. And as anyone who has used an iPad or Xoom can testify, the proliferation of high-definition tablets allows for high-quality display ads.
But many brand managers, as well as the creative at traditional agencies, are still far from mobile savvy. That’s where the agencies on our list come in. These shops, devoted exclusively to mobile advertising, are among a selection of agencies as steeped in digital technology as they are creative. While some have been around for a decade or more, it’s “still the early days [of mobile],” says Mark Mackenzie, head of digital media venture capital at AllianceBernstein. “The pieces aren’t all there—the analytics, the data. [But they’re] being built out.”