This article was carried by The Guardian here

By Simon Birkenhead, Director of Global Advertising Sales, Telefonica Digital

25 April 2013: Mobile advertising is booming in the UK, but despite all the celebration around it hitting £536m in 2012, we have a long way to go to catch up with actual consumer behaviour.

Earlier this month, the Internet Advertising Bureau (IAB UK) announced mobile ad spend in 2012 was up 148% on the previous year, citing mobile as the key factor in total UK digital ad spend hitting the £5bn mark for the first time. Mobile’s contribution was over half the total growth in digital ad spend over the last 12 months.

This jump means mobile now accounts for almost 10% of all digital ad spend. To put this in context, it represented just 1.1% in 2009.

This is great to see, not only for the UK but for the global market. The UK leads the world in both online and mobile advertising, and over the last five years we have seen this trend spreading to other markets.

However, there’s a big problem. Despite this growth, mobile ad spend still lags woefully behind the actual time consumers are spending on their mobile devices.

Consumers are now spending over 10% of their media time on mobiles, fast catching up with traditional media like TV. However advertisers are still only allocating 1.6% of their marketing budgets to reach their customers via mobile.

Which begs the question, why?

Firstly, the ad industry is far too distracted by the desire to create headline-grabbing campaigns with companies like Twitter, Facebook, Shazam or Pinterest without really considering how many of their target customers they can actually reach with these campaigns.

For example, across fast growing markets like Latin America only 31% of consumers have a smartphone, with the majority still using phones that are unable to access these types of mobile ad campaign. Even in Western Europe, smartphone penetration remains below 41%. Once you factor in the (often low) installed base of the apps required to see these campaigns, you quickly realise the potential audience for these types of mobile campaign is extremely limited, and consequently the results may disappoint.

Then there are mobile display campaigns, which represent 52% of mobile media spend yet 70% are still sold blind with almost no targeting. The industry continues to use an ad format designed for a PC but shoehorned onto a mobile screen. It’s hardly surprising advertisers still question their value.

As an industry we have to offer better solutions if mobile advertising spend is to ever fully align with its share of consumers’ media time. We need to provide solutions that offer greater reach, better relevancy and higher engagement.

The other challenge this industry faces is that consumer attitudes towards mobile advertising differ significantly by country.

Recent research from GSMA and WIN/GIA, surveying over 50,000 mobile users across 54 countries categorised respondents’ attitudes towards advertising on a sliding scale, from optimists to pessimists.

It revealed some fascinating cultural differences. The majority of mobile users in North and South America were found to be optimists, meaning they were very open to mobile advertising and the use of their personal data for targeting, especially if it provided opportunities to save money. However, Western European countries, particularly the English and French, were found to be the most likely of all countries to be mobile pessimists, not seeing much value from mobile advertising.

This suggests that, despite mobile advertising’s strong growth in UK, this might actually be one of the toughest markets for this industry to succeed in.

To promote more positive attitudes towards mobile, we need to move on from untargeted, blind advertising to deliver a superior mobile advertising experience for consumers. In Telefonica’s global advertising business, our intelligent targeting solutions have led to very positive attitudes towards mobile marketing, with 83% of customers in our O2 more advertising programme saying they are “quite” to “very” positive to receiving marketing messages on their phone.

By ensuring the ads we serve are relevant to our customers’ interests and real-time location, and designed to be experienced on a mobile, we have demonstrated how ingrained negative attitudes can be shifted.

For mobile ad spend to ever fully reflect the time consumers spend on mobile devices, as an industry we need to do three things:

Firstly, we must ensure mobile ad formats evolve. Rather than just squeezing online ads onto a smaller screen we must develop advertising solutions that are designed specifically for the mobile device.

Secondly, we must make sure we offer targeting options that are based on the interests, passions and location of consumers, to ensure messages are relevant and useful to them.

Thirdly, as an industry we must collaborate to make it easier for advertisers and agencies to work with us. Weve is a great example of this consolidation – a Telefonica-led initiative that has brought together three mobile operators who together have over 80% reach of the UK mobile market. This is mobile marketing at scale.

As an industry we should stop complaining that advertisers and agencies just ‘don’t get’ mobile. It’s our job to offer them compelling solutions that provide high audience reach, strong relevancy, stand-out impact and ease of access. Only then will advertisers give mobile the full attention it deserves.