Flurry is out today with one of its always-useful mobile app reports. This one is bound to be misread though (it already has), as saying that mobile display ad revenues will surpass their desktop equivalent by year-end.

First, the online display ad market is about $12 billion, while we peg the mobile display ad market — as do many of our industry peers — at about $600 million (not counting search and SMS).

So what is Flurry saying today to suggest to some that mobile will make this 20x jump in the next few months? Though the figures are labeled, they are presented in a way that could cause confusion.

Smartphones app usage, facilitated by explosive iOS and Android device adoption, has created among the fastest-growing media channels in the history of consumer technology. Flurry estimates that, worldwide, over 600 thousand apps are available for over 350 million iOS and Android devices. On average, consumers have downloaded over 65 apps per device …

… In this report, Flurry focuses on the size and growth of available advertising inventory within iOS and Android applications. We used data from over 100,000 applications tracked by Flurry to estimate the size of this media channel. The chart below shows that U.S. app inventory is not only growing at a staggering rate, but also poised to absorb the equivalent of the entire U.S. Internet display advertising spend by the end of this year.

Essentially the firm makes an apples-to-oranges comparison of mobile ad inventory (not ads actually sold), to online display ad sales. In other words, the mobile figure represents the upper limit of what could be sold.

Of course demand isn’t there yet, and this is a hypothetical situation that assumes a 100% fill rate. Another problem is that the figure applies an average $2.50 CPM (which seems right).

However, with this imbalance of inventory supply and demand — and the explosion of supply that is the very point of the study — CPMs are bound to decrease, further throwing off the equation.

And finally, there is the caveat that should be remembered with all such reports: This looks at activity within one network and extrapolates out to get an overall market view.

There’s nothing wrong with that, nor any of the above, as long as it’s well-defined and taken with the appropriate salt tonnage. My point: Be careful reading the headlines over the next 24 hours that will surely misconstrue this.

Otherwise, there are some good input data in the report such as the growth of apps, session lengths, demographics and quality of impressions. A few more charts are below.

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