by Mike Kapsch, Investment U Research
Tuesday, September 4, 2012
Ever since Apple (Nasdaq: AAPL) invented the smartphone, the cellphone has never been the same.
Today, smartphones allow us to not only make calls, but surf the web, watch video, email, text, download apps, and even pay for items at select locations.
And more and more, consumers are getting on the smartphone bandwagon…
According to Juniper Research, it’s estimated that by 2016, one billion smartphones will be sold every year. That’s double the number sold now.
However, just as smartphones will be bought up in droves around the globe over the coming years, not everything about them is loved by all.
In fact, if there’s one thing people hate about them, it’s mobile advertising.
Yet, like it or not, this despised mobile business is growing even faster than the annual sales of smartphones themselves.
Perhaps the Only Good Thing About Mobile Ads
I don’t know many people who actually enjoy getting ads – especially on their phones.
But publishers and broadcasters need to pay their bills. (How do you think we’re able to make Investment U free, after all?)
Ads are just a necessary part of the business. And like it or not, the mobile ad business is booming as smartphone sales continue to soar higher.
IT research firm, Gartner (NYSE: IT), predicts that revenue from mobile advertising is set to reach $20.6 billion worldwide by 2016. That’s a 522% increase from the total revenue brought in just last year.
But that’s not all.
The best part about mobile advertising is that private investors are loving its growth prospects, too.
In 2011, venture capitalist investments in mobile marketing and advertising increased five-fold from 2010 to $592 million.
So who exactly is making money from this?
The two main players in the mobile ad market are Google (Nasdaq: GOOG) and Apple. Together they account for 57% of the mobile advertising market.
However, there’s a little-known company that’s the independent leader in mobile advertising and data, a company that’s also set to benefit as the mobile ad market continues its surge upwards.
That company is Millennial Media (NYSE: MM).
A Pure Play on Mobile Advertising
Millennial Media has been the subject of a number of recent research reports.
For example, ThinkEquity initiated coverage on shares of the company in late July.
Shortly before then, analysts at Canaccord Genuity initiated coverage on shares of MM in a research note to investors in June.
Also, Goldman Sachs (NYSE: GS) gave the company a “Buy” rating in May, predicting shares will reach $19, up from the $11.53 per share as I write.
That’s a potential gain of 64%.
All in all, Millennial Media is a company that’s set to rise should all of the predictions about mobile advertising become truth.
And if you’re a believer, why not pick up a few shares of the company that’s the purest, and biggest, play on mobile advertising around?
MikeHow the Mobile Industry’s “Most-Hated Business” is Set to Grow Five-Fold By 2016,