Turbulent time ahead for Mobile Advertising

Guy Daniels
By Guy Daniels

Jan 21, 2014

Global spending on mobile advertising spending is forecast to reach $18bn this year, up almost 40 per cent from the estimated $13.1bn in 2013, according to new research from Gartner. Within the next three years the market is expected to grow to $41.9bn, with display formats dominating volumes but video showing the highest growth.

But it is forecast to be a turbulent time for the industry, as increased use of mobile sites will saturate the market with inventory (a case of too much of a good thing?), which could lower asking rates. Yet the popularity of the medium, coupled with better advertiser support and higher video traffic, should eventually improve revenues.

“Over the next few years, growth in mobile advertising spending will slow due to ad space inventory supply growing faster than demand, as the number of mobile websites and applications increases faster than brands request ad space on mobile device screens,” said Stephanie Baghdassarian, research director at Gartner. “However, from 2015 to 2017, growth will be fuelled by improved market conditions, such as provider consolidation, measurement standardisation and new targeting technologies, along with a sustained interest in the mobile medium from advertisers.”

It also looks like mobile Web is finally catching up with Apps, thanks to HTML5, although the roll-out of new mobile sites is taking longer to impact the market. Baghdassarian says that mobile display ad formats will remain the single biggest category of ads, although there will be a shift to mobile Web display after several years of higher growth in in-App display.

“North America is the region with the strongest general advertising focus and investment. It is also the region where online advertising is most mature,” said Mike McGuire, research VP at Gartner. “Overall advertising budgets are the highest, so when a portion shifts to mobile, in a multiplatform approach, it immediately impacts the market’s scale.”

Western Europe’s market for mobile advertising will remain similar to North America's, although at a lower scale. Asia/Pacific and Japan is the most mature region for mobile advertising, and therefore growth will slow between 2012 and 2017, averaging 30 per cent a year. Gartner expects the high-growth economies of China and India to contribute increasingly to mobile advertising growth in the near future as their expanding middle classes present attractive markets for global and local brands.

“The mobile channel will become more and more integrated into 360-degree advertising campaigns, eating up budget historically allocated to print and radio advertising,” said Ms. Baghdassarian.

Meanwhile, Google announced that it had removed more than 350m “bad ads” from its systems in 2013 – a significant increase from the 220m miscreants removed in 2012 (this covers all online advertising with Google, not just mobile). However, the number of advertisers it disabled dropped from 850,000 in 2012 to around 270,000 last year. It also blacklisted more than 200,000 publisher pages and disapproved more than 3m attempts to join its AdSense network.

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