The speed that mobile advertising has taken off has exceeded Gartner’s expectations, leading the research analysts to revise forecasts. Asia and North America, in particular, are growing faster than predicted, while Western Europe and the rest of the world are not growing as fast as expected.
Key finding’s from Gartner’s research:
• Global mobile ad expenditure is forecast to be US$11.4b in 2013, up from $9.8b in 2012, rising to $24.6b in 2016. Asia will continue to be the largest mobile ad market, initially driven by Japan and South Korea, and later by China and India. However the North American market is catching up fast.
• The uptake in smartphones and tablets is driving mobile advertising. But the number of people using mobile media, and hence ad impressions, is growing faster than advertisers can shift their demand from other media, thus creating an over-supply of mobile inventory and driving down cost.
• Growth in mobile advertising is partly at the expense of print advertising.
• Outside Asia, North America and Western Europe, Russia, Brazil and Mexico are tipped as key growth markets for mobile advertising.
• Mobile search — including paid-positioning on maps and augmented reality — will continue to drive mobile ad spending, but Gartner believes mobile display ad spending will take over from mobile search.
• For the next couple of years expenditure on in-app display ads will be marginally ahead of mobile Web display ads, but mobile Web will dominate from 2015. See Q5 below for the stats for each mobile ad format.
• A significant portion of in-app display ads is taken up by "paid discovery", where app publishers pay for ads to promote their apps and drive more downloads. For many developers the outlay for ads is close to their maximum ad income or even exceeds it. Paid discovery is creating an inflated picture of revenue that may ultimately prove to be a bubble, warns Gartner.
Mobile advertising revenue by region, worldwide, 2012-2016 (Millions of US Dollars), according to Gartner
Asia/Pacific and Japan
Rest of the World
Source: Gartner (January 2013)
Q&A with Andrew Frank, research vice president at Gartner
Q1: What do you include in mobile advertising – mobile search ads, mobile web display and in-app advertising, anything else?
A: For the purpose of this forecast, we define mobile advertising to include:
• Display advertising, either on mobile Web pages or applications (banners, insertions).
• Advertising as a result of searches in the form of sponsored links or on maps.
• Audio or video advertising messages receivable by mobile devices, as long as they are not delivered as part of broadcast signals (TV or radio).
• Mobile advertising for SMS, MMS and IM, when referring to insertions in user-generated messages — rather than mobile marketing messages pushed to users, which have been removed from our forecast.
Q2: Why do you think the mobile advertising market took off faster than expected? Is this extra enthusiasm for mobile ads due to brands seeing better ROI from mobile ads than was expected? Or is it due to oversupply making mobile ads so cheap that brands can’t resist them?
A: I think both may contribute, but the main factor appears to be rapid and pervasive adoption of mobile devices and services by consumers.
Q3: Last time we discussed mobile ad expenditure (the last time the report was released, in June 2011), you predicted that brand spending on mobile ads would be about 4 percent of the budget in 2015. Has this increased also?
A: Yes, although I don’t have a figure at the moment.
Q4: How does the mobile ad expenditure split between mobile search v mobile Web display v in-app ads today? How do you expect this balance to change come 2014 and 2016?
A: See table:
Mobile advertising revenue by type, worldwide, 2012-2016 (millions of US dollars), according to Gartner
Mobile Web display
Source: Gartner (January 2013)
Q5: Why do you think that mobile Web display will overtake in-app ads? Has it got something to do with increasing sophistication of mobile display ads due to better targeting with context, location etc?
A: Improvements in targeting and ad formats will certainly contribute to growth.
Q6: It’s interesting what you say about “paid discovery” – mobiThinking has long had a suspicion that the vast majority of in-app advertising is for other mobile apps (which are struggling get the downloads they were expecting). Is this the case?
A: I would not say “vast majority”, but it is a sizeable portion.
Q7: Is anyone – i.e. publishers and advertisers – making any money out of mobile advertising apart from the middlemen – the ad networks and the media agencies?
A: Many advertisers are seeing gains from mobile advertising, and some – but not many – publishers are finding success as well.
Q8: The last time we discussed this, you estimated that Google accounted for 70 percent of mobile ad expenditure in 2010. Is it still so dominant today? Will remain so in the future?
A: Google continues to operate the leading mobile ad network. I expect it to remain strong, although I’m not sure it will be “dominant”.
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