A respected management consultancy expects 60 percent annual growth in mobile advertising over the next five years, making that channel the next major digital media platform for brands to target customers.

Unlike other reports, the one from Arthur D. Little says that mobile advertising is the next step in the evolution of the online advertising industry. The rise of mobile broadband will play a key role in this growth. But wireless carriers must act soon, Arthur D. Little warned. Only 5 percent of their revenue is derived from mobile advertising, compared with 16 percent in the wider media world.

"If operators do not identify and secure their role in the provision and delivery of mobile advertising, they risk losing a major revenue stream to traditional Internet advertisers like Google or Yahoo," Arthur D. Little said in its "A Mobile Playground" report.

Carriers risk falling behind their rivals in Internet advertising if they don't develop the technology and infrastructure to deliver large-scale, multi-format mobile advertising to their customers, the consultancy said.

Also, carriers must cooperate among themselves since advertisers like dealing with a single broker when launching a mobile advertising campaign, Arthur D. Little said.

Mobile Marketer's Mickey Alam Khan discussed these issues and others that will affect carriers, Internet giants and the growth of mobile advertising with Juergen Morath, partner in Arthur D. Little's telecoms, information, media and electronics practice in London. The interview:

What was the key finding from this report?
We've predicted 60 percent annual growth for the mobile marketing industry over the next five years.

The mobile marketing boom we've predicted raises a whole host of implications for telecoms operators: How can they deliver this service? Who will their technology partners be? How can they secure a piece of the mobile marketing industry in the face of large Internet players who enjoy long-established relationships with advertisers?

These are just a few of the questions facing the telecoms industry, and how operators address these issues within their organizations over the coming year will be critical in determining how, and under whose leadership, mobile marketing will grow.

Players striving to create a sustainable revenue source from mobile advertising must embrace both fixed and mobile advertising.

We do not believe that mobile advertising will remain a standalone revenue source in the medium term.

Advertisers will request multi- and cross-channel advertising campaigns, and with the continuing convergence of fixed and mobile services, online and mobile advertising are likely to become a single marketplace before long.

Why do you predict such a surge in growth over the next five years?
It is no secret that advertisers have responded enthusiastically to the Internet as a medium to target and tailor messages specific to their customers and prospects.

Predicted growth in mobile advertising is based on this same principle -- the more precise targeting options available to advertisers, the more likely they are to see a return on investment for their marketing spend.

Up to this point, mobile marketing has not taken off due to a lack of technical capability, rather than a lack of demand from advertisers.

However, as mobile broadband becomes a reality -- [Arthur D. Little] expect 50 percent market penetration in Europe by 2012 -- mobile advertising will follow close at its heels.

What should operators do to stay ahead of the trend? And marketers?
Mobile operators should strive to maintain and extend their competitive position by developing practical responses to the different challenges posed by mobile advertising.

First, the greatest area of untapped value in mobile service provision is customer data, and operators are in a unique position to leverage customer data in a win-win for both customers and advertisers.

Mobile advertising can offer a combination of relevance and location, age and gender targeting that no other platform can match, and this could represent real value for advertisers.

Consumers perceive a huge disparity in value between unwanted, negative contact experiences and positive, user-initiated relevant marketing.

Mobile operators should take into account the fact that consumers tend to start with a positive disposition towards any service they have requested or to which they have opted-in.

Additionally, operators have a role to play in redefining what mobile advertising is and what it is capable of. Standard mobile advertising is still centered on SMS advertising and Web banners. Additional formats are required in order to create greater value.

Defining standard inventory categories will give advertisers and advertising agencies confidence in a manageable number of services from which they can expect measurable returns.

The resulting transparency will be critical in overcoming the marketing confidence gap that will otherwise continue to limit the potential of mobile advertising.

Another key consideration for operators will be the combination of fixed and mobile advertising platforms.

The ability to integrate mobile with other fixed online advertising channels will be crucial if significant marketing budget is to be dedicated to the mobile industry.

Finally, operators must invest in building the technical platforms for ad serving and inventory management. This includes deciding whether to build in-house, to acquire or to partner with players that own the required capabilities to deliver the adjacent elements of the advertising value chain.

Until they harness the technology to achieve ad selling, serving and publishing through a prominent portal site, operators will have a challenge capturing revenue and making their mobile advertising offers competitive and profitable.

Agencies and marketers must embrace the new comprehensive possibilities which have opened up due to the emergence of an entirely new channel out there.

However, because mobile advertising allows brands to reach a customer wherever and at any time of the day, it requires much better targeting and relevant formats.

Unless brands offer customers a targeted and relevant advertising experience from the very start, advertisers will run the risk that customers will avoid the new advertising formats and grow frustrated with them quickly.

In the end, marketers, agencies and mobile operator will have to work together to find relevant advertising formats and ways to deliver the messages to the customers.