Mobile advertising market potential

Pure valuations or even revenue figures provide only limited insights
into the true performance of a company. In the mobile world, ARPU or
average revenue per user, is a commonly used metric to compare the
various revenue opportunities regardless of the size of the underlying

ARPU is calculated by dividing quarterly revenues by three to get
monthly revenues and then dividing the monthly revenues by the number of
subscribers or unique users.

Q1 2010 AT&T Mobility Verizon Wireless Google
Total Revenues$13.9b$13.4b$6.67b
Data Revenues / Google-owned sites Revenues

Subscribers/Unique Users86.9m87.8m156m
ARPU per month$15.73$17.06$9.40
Source: The Nielsen Company calculations based on
company information

We used Google-owned site revenues because we can determine a unique
user count, which we cannot do for the source of the vast majority of
the remaining revenues from AdSense.

Now everyone agrees that mobile is at least as attractive as an
advertising platform as the Internet. Your cell phone is always with
you, is more personal than any other device, and has the ability to
integrate location and immediacy. Furthermore, mobile advertising is
becoming less hampered by the limitations of the device in terms of
screen size and network speed and the difference between the Internet
and mobile experience is becoming less and less. At the same time, we
are at the very beginning of location-based advertising, couponing or
even simple things like dropping a previously opted-in voicemail into
our mailbox.

This brings us back to mobile advertising. If mobile is as good or
better than the Internet as an advertising vehicle, it is also able to
monetize it at least equally well. Google gets $9.40 per month per
unique user in revenue from advertising to Internet users. They should
be able to get at least the same per month for a mobile customer that
uses the device longer, more often, more intensely, and more personally
than the computer and the Internet. If we take $9.40 and multiply it by
280 million wireless subscribers in the U.S., the mobile advertising
market potential is more than $2.5 billion per month or more than $30
billion per year. Think at least 30 billion reasons why Google wants to
buy AdMob for $750 million, at least 30 billion reasons why Apple bought
Quattro Wireless for $360 million, and at least 30 billion reasons why
others will want to participate in this space – and this is just 30
billion reasons why to do it in the U.S., let’s not forget about Europe,
Asia, Latin America, Africa, and Australia.