Worldwide mobile ad revenues will reach US$16.65 billion in 2013, according to estimates by eMarketer. That’s almost double last year’s total of $8.80 billion. Mobile’s share of digital media spend is growing rapidly – this year it is expected to account for 14.2 percent of digital revenues, up from 8.5 percent in 2012.
This is higher than Gartner’s forecast that global mobile advertising revenues this year will be US$11.4 billion.
This growth all sounds very encouraging until you look at the big picture. Mobile is still a minnow when it comes to media spending. Global advertising spend on all things media is forecast to be $517.1 for 2013, by eMarketer. By mobiThinking’s calculations that means companies are still only spending 3.22 percent of their total media budget on mobile.
While this 3.22 percent is an improvement on eMarketer’s estimate for last year, such a low expenditure on mobile is baffling considering that there are 6.8 billion mobile subscriptions worldwide, (ITU, February 2013) and mobile Web use is growing rapidly – there were 2.1 billion active mobile broadband subscriptions in 2012.
|Mobile, digital and total ad revenues (US$ billions) worldwide, according to eMarketer|
|Mobile ad share
of digital spend
|Mobile ad share
of total spend
|Source: © eMarketer (August 2013)||via: © mobiThinking|
On the other hand, it also shows the potential for growth in mobile media expenditure, as marketers’ budgets start to catch up with their customers’ media habits, and they start to reallocate the some funds from the other 96.7 percent of their media spend. It is this future potential that allows companies such as mobile ad network Millennial Media to justify running at a loss for years, despite healthy revenues.
Who’s making money from mobile ads?
The companies that will pick up the biggest slice of mobile ad revenues worldwide, according to eMarketer estimates, are Google with an amazing 53.2 percent; Facebook with a fast-growing 15.8 percent; Pandora 2.37 percent; YP (Yellow Pages) 2.27 percent; Twitter 1.85 percent and Millennial Media 0.72 percent. All others account for a surprisingly low 23.8 percent of the market.
|Mobile Internet ad revenues (US$ millions) worldwide by company, according to eMarketer|
|Source: © eMarketer (August 2013)||via: © mobiThinking|
With the exception of YP, these rankings look remarkably similar to IDC’s ranking of mobile advertising players in the US market.
What’s particularly interesting is the mix of companies, albeit all US companies (see below), in a market that was previously dominated by ad networks, or so it seemed from IDC’s previous reports. Now together with Google, with its search and display ad networks, and Millennial Media, a display-based ad network; you have social media sites Facebook and Twitter, Internet/mobile radio producer Pandora and directory publisher (and ad network) YP.
Expect this variety to increase as big online publishers, retailers et al get their acts together with their mobile offering, and media buyers start going direct to publishers instead of buying predominantly via ad networks. Just seeing what their competitors are making from mobile ads, should be sufficient for CEOs to ask their digital teams for their strategy on mobile ads.
Why you should expect the standings to change
As the mobile media market grows rapidly – which is what all analysts forecast, Gartner, for example, expects it to double between 2013 and 2016 – changes in the companies that are reaping the rewards are inevitable.
There have been lots of acquisitions in the mobile ad network space, e.g. Google and Admob; Apple and Quattro. Just this month (August 2013) Millennial Media announced its plan to purchase Jumptap. While Jumptap doesn’t feature on eMarketer’s global list, IDC rates Jumptap as the fourth largest mobile ad network in the US, behind Google, Millennial and Apple’s iAd.
2) New entrants
Facebook and Twitter have come from nowhere in 2011 (neither registered any mobile ad revenue that year, according to eMarketer or IDC) to become number two and five respectively. Facebook’s ability to harness mobile ad revenues has been part of the reason that the company’s stock price has now recovered its IPO price after 14 months of poor performance. The rise of Facebook and Twitter shows that in this fast-growing market, with massive potential, there’s plenty of opportunity for other companies to break into this market and even crack the top six.
And plenty of companies are eying this market, such as Amazon with its recent launch of a mobile affiliates program called Amazon Associates, where Android app developers receive up to 6 percent of revenue if a customer clicks on an ad within their app and goes on to buy an Amazon product.
3) Geographical concentration
All six of the top performers in mobile advertising are US companies. That’s not necessarily surprising, considering that the US is, probably, the largest mobile ad market in the world; and Google’s and Facebook’s position as number one search engine and social network, respectively.
However these companies aren’t just US-based, they also derive a substantial proportion of their business from the US, some majorly so:
- Google: 45 percent of revenue is from the US (Q2, 2013 earnings);
- Facebook: 48 percent of revenue is from the US and Canada (2012 annual report). It has nearly as many users in the US (165 million) as in Brazil, India and Indonesia – nations two, three and four – put together (Quintly, February 2013).
- Pandora: due to licensing restrictions, Pandora can only operate its mobile/Internet radio in US, Australia and New Zealand.
- YP directory services, formerly part of AT&T, is predominantly US-based (as far as mobiThinking can glean from company info).
- Twitter: 83 percent of revenue is from the US (eMarketer March 2013).
- Millennial Media: while the earning ratio is unclear, 35 percent of the people who see the network’s ads are in the US (Q2, 2013 earnings).
While the US is a large mobile market, companies that are too concentrated here will inevitably lose market share to global players, possibly even to companies focused on larger markets than the US, such as China or Europe.
3) New information
eMarketer has taken on a momentous task in trying to quantify global mobile ad revenues and market share among the main participants. There is a myriad players operating in this global market and considerable reluctance from participants (other than the few public companies that have to release data in their quarterly statements) to share data on revenues. It’s possible – probable even – that the analysts don’t have all the data, particularly on companies outside the US. So it’s likely that companies may surface that have quietly been making handsome profits in mobile advertising for years. These may or may not challenge some of the top six for their rank, but will certainly swell the “others” category, proportionally reducing the market shares of the others, including Google’s incredible 53.17 percent.
• The insiders’ guide to mobile app promotion: top tips for marketing your app from industry experts
• New damning report into Apple factories: why you should care
• Introduction to China’s booming mobile money market
• Guide to mobile industry awards • Check out the video case studies: Cannes Mobile Lions 2013 •
• Google search to punish mobile Web bad practice, including download-our-app interstitial ads
• How greedy is your app – does it drain batteries or gobble data?
• Websites must be mobile-friendly to comply with FTC’s new digital advertising guidelines
• The big compendium of global mobile stats • Latest update: Mobile apps
• The insiders’ guides to world’s greatest mobile markets • Latest country guide: Sweden
• Mobile/smartphone sales 2012: the big picture
• Guide to mobile ad networks • Latest ad network profiles: DMG • Twinpine
• Guide to mobile agencies • Latest agency profiles: Pontomobi • The Hyperfactory •
• Mobile events 2013 • best conferences, great discounts and free tickets •
• Most popular content on mobiThinking in 2012
Leave a Reply