Why Android Could Fuel Mobile Advertising

A year after the HTC G1 made its debut with T-Mobile USA, Android is getting legs. And that growth could give mobile advertising the push it has long needed to gain mass-market traction.

Android’s momentum is well-documented. Verizon Wireless last week became the latest carrier to jump on the bandwagon, launching two handsets amid substantial — and expensive — buzz. T-Mobile USA has stepped up its Android game with the myTouch 3G and Motorola Cliq, Sprint offers two Android phones and major operators around the world are backing the platform.

Predictably, that growth is spurring mobile downloads and ratcheting up traffic on the wireless Internet. Recent figures from AdMob show that while Apple’s iPhone still dominates traffic on the mobile web, Android usage on the ad network grew from 2 percent to 7 percent in just six months. And Flurry, a San Francisco-based mobile-metrics startup, reported a 94 percent increase in the number of app-development projects started by Android developers from September to October.

That momentum will only increase as Android expands beyond techie types and into the hands off mainstream users. Gartner recently predicted the platform will become the second-largest mobile OS in as little as three years, overtaking the iPhone with a 14.5 percent share of the market. And like the iPhone, Android handsets deliver the kind of sophisticated, user-friendly interface that can spur consumer interaction with brands, increasing consumer stickiness and driving sales.

Also, Android’s open source nature is sure to become increasingly attractive compared to Apple’s proprietary iPhone OS, which some developers view as constricting. Such flexibility could eventually prove to be a curse for platform, as James at jkOnTheRun pointed out months ago. In the near-term, though, it will throw gasoline on Android’s fire, spurring the development of both Android Market apps and the wireless web at large.

Brands are already leveraging the rise of mobile data with clever “app-vertising” come-ons: Dockers uses the iPhone’s accelerometer to deliver a “shakeable” ad that allows users to control the moves of an on-screen dancer, and ad-supported game publisher Greystripe launched a campaign for Burger King that encouraged users to burst heart-shaped bubbles by tapping the screen. Such efforts are fetching $20 to $30 CPMs (cost per 1,000 impressions), far outpacing typical baner ads on the mobile web. Meanwhile, Pizza Hut is demonstrating remarkable success with a branded app it claims has generated $1 million in sales in its first three months.

And marketers are increasingly willing to spend on mobile as the economy begins to recover, according to new figures from Millenial Media (which, of course, has a dog in this fight). Nearly one-third of the 100 ad agencies polled said they will invest between $100,000 and $249,000 next year, and more than 15 percent said they will pour more than $1 million into the channel. The number of agencies planning to spend up to $500,000 dollars tripled, as did the number of those looking to spend between $500,000 and $1 million.

These are still early days for Android, and the OS will surely face substantial growing pains as it evolves over the next year. But the pact with Verizon Wireless will give Google’s platform a huge boost, and developers are already embracing Android in a substantial way. If Android can come close to replicating the knockout success of Apple’s iconic gadget and revolutionary App Store — as it suddenly seems very likely to do — it could help mobile advertising finally reach critical mass.

Question of the week

Will Android fuel mobile advertising?
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Colin Gibbs

Colin Gibbs

Mobile Curator Gigaom Network

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