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Online and Mobile Advertising: Current Scenario, Emerging Trends, and Future Directions

Venkatesh Shankar Marie Hollinger*

September 2007

* Venkatesh Shankar is Professor and Coleman Chair in Marketing and Director of the Marketing PhD. Program at the Mays Business School, Texas A&M University, College Station, TX 77843. Marie Hollinger is with USAA, San Antonio. The authors thank David Hobbs for assistance with data collection and article preparation. They also thank the MSI review team and Thomas Dotzel for helpful comments. Please address all correspondence to vshankar@mays.tamu.edu.

Online and Mobile Advertising: Current Scenario, Emerging Trends and Future Directions, Copyright © 2007 Venkatesh Shankar and Marie Hollinger. All rights reserved.

Online and Mobile Advertising: Current Scenario, Emerging Trends, and Future Directions Abstract
Online advertising expenditures are growing rapidly and are expected to reach $37 billion in the U.S. by 2011. Mobile advertising or advertising delivered through mobile devices or media is also growing substantially. Advertisers need to better understand the different forms, formats, and media associated with online and mobile advertising, how such advertising influences consumer behavior, the different pricing models for such advertising, and how to formulate a strategy for effectively allocating their marketing dollars to different online advertising forms, formats and media. In this article, we address these issues. We provide an overview of the current scenario with regard to online and mobile advertising. We discuss the emerging trends in these areas and offer our view of the future directions.

1. Introduction
Advertising has been an integral part of marketing since the origins of commerce and free enterprise. With the advent of printed word came a new and more widespread medium to bridge the communication gap between the producer and the consumer. To this day, print advertising can be viewed in vehicles such as newspapers, magazines, and catalogs. The next revolution in advertising came with the invention of the radio. Later, the television became a prevalent and dominant augmentation to print advertising. Television, radio, and print advertisements have remained essential to a company‟s successful marketing of its products. Today, however, with the explosive growth of the Internet and mobile devices, advertisers have an even greater opportunity to reach a broader audience more quickly. This opportunity comes from online advertising, which is advertising that uses the Internet or more generally, the electronic or online media to deliver marketing messages, attract new customers, and retain existing customers. Since its inception, the Internet has been a testing ground for different marketing approaches to online advertising. The advancement of Internet technology has propelled online advertising from simple text ads to interactive ads with video and sound. Historically, the widespread use of low bandwidth dialup connections placed limits on the amount of memory that could be devoted to individual ads. Today, however, public accessibility and high-speed connections have allowed many online advertisers to exploit new and innovative tactics to reach their target markets. In this article, we review the current scenario with regard to online and mobile advertising and offer our views on the emerging trends and future directions in online and mobile advertising. In the next section, we describe the various formats and forms of online advertising. We then offer an overview of mobile media advertising. In the subsequent section, we discuss the models by which online advertising works. In the following section, we present the various advertising pricing models. After that section, we present three sections in which we discuss the growth and emerging trends in online advertising,

advertising offered by the major players, and a framework for formulating online...
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