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January 21, 2013

Global Mobile Advertising Revenue to Reach $11.4B in 2013

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Worldwide mobile advertising revenue will skyrocket 400 percent between 2011 and 2016, a Gartner analyst has forecast.

Globally, mobile advertising revenue will hit $11.4 billion this year, up from $9.6 billion in 2012 and will reach $24.5 billion in 2016, according to the Gartner report.

This surge in profit will create new opportunities for app developers, ad networks, mobile platform providers, specialty agencies and communications service providers in some regions.

“The mobile advertising market took off even faster than we expected due to an increased uptake in Smartphones and tablets, as well as the merger of consumer behaviors on computers and mobile devices,” Gartner research director Stephanie Baghdassarian says. “Growth in mobile advertising comes in part at the expense of print formats, especially local newspapers, which currently face much lower ad yields as a result of mobile publishing initiatives.”

The proliferation of Smartphones and tablets across the globe means the market will “become easier to segment and target, driving the growth of mobile advertising spend for brands and advertisers,” says Gartner research vice-president Andrew Frank.

He is recommending mobile advertising be incorporated into advertisers’ overall marketing campaigns to better establish a connection with mobile consumers.

The Asian/Pacific region will be key in mobile advertising due to the growth of the middle class segment in both China and India combined with the already high handset use in Japan and South Korea, the report says.

“However, North America and Western Europe will close the gap on Asia/Pacific as the mobile channel gets more and more integrated with 360-degree advertising campaigns, eating up budgets historically allocated to print and radio,” the report reads.

“Consumer multi-tasking will drive preference for multiplatform approaches, which will blur the lines between channels and make it difficult to eliminate category overlap. In the rest of the world — Latin America, Eastern Europe, and the Middle East and Africa — mobile advertising growth will be aligned with technology adoption and the stabilization of emerging economies, but will mostly be driven by large markets such as Russia, Brazil and Mexico.”

 

Mobile Advertising Revenue by Region, Worldwide, 2012-2016 (Millions of Dollars)

 

2012

2013

2014

2016

North America

3,181.5

3,825.7

4,694.9

8,866.2

Western Europe

1,600.5

1,941.4

2,367.8

4,445.4

Asia/Pacific and Japan

4,333.0

4,864.9

5,506.7

9,480.2

Rest of the World

644.1

788.0

960.6

1,768.3

Total

9,759.1

11,420.0

13,530.0

24,560.1

Source: Gartner (November 2012)

 

Mobile search — which includes paid positioning on maps and various forms of augmented reality — will help drive mobile ad spending during the forecast period, but will fade as the period progresses. The report predicts mobile display ad spending will take over from mobile search.

“It will initially remain divided between in-app and mobile Web (in-browser) placements — reflecting consumer usage — although after several years of in-app dominance, Web display spending will take over in-app display from 2015,” the report says.

The ever-increasing amount of time consumers spend on Smartphones and tablets is producing ad inventory at a much quicker pace than most advertisers can shift their spending to that segment. This has created a “surplus condition,” triggering a drop in unit ad prices. This, in turn, has led to app developers paying for ads to promote their apps to garner more downloads — this is known as “paid discovery.”

“While the revenue basis of paid-for app store downloads provides some economic justification for this category, for many developers the outlay for ads is close to their maximum ad income or even exceeds it,” says Baghdassarian.

“Some correction in the growth rate must occur before demand from brand and local advertisers catches up with supply, and more sustainable economics support a faster growth rate commensurate with consumer adoption.”

The report is available on Gartner’s website.

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