Growth rate in mobile ad spending to slow: Gartner
Despite predictions that the growth rate for mobile ad spending worldwide will slow over the next few years, research firm Gartner still expects the global mobile ad market to reach $18 billion in 2014, up from $13.1 billion last year, and $41.9 billion by 2017.
The mobile ad spend growth rate will slow as the supply of mobile ad space outpaces demand. The report is the latest research to suggest that mobile advertising is still struggling to catch up with the skyrocketing use of mobile by consumers.
?We see ad budgets expanding in every major segment of mobile advertising. Why? Because that's where the eye balls and consumers are,? said Mahi de Silva, CEO of Opera Mediaworks, San Mateo, CA. ?In the U.S., there are now over 200 million smartphone and tablet users.
?Post Christmas, we saw a 13 percent uptick in new devices, that is 13 percent growth in users that use a smartphone or tablet,? he said.
?In 2013, brands spend in mobile moved from the back burner to the front burner. We expect at least a 40 percent increase in brand spend in 2014.?
Between 2015 and 2017, Gartner expects improved market conditions to drive growth in mobile ad spend. During this time, provider consolidation, measurement standardization and new targeting technologies will drive growth.
Separate research suggests consumer packaged goods will be behind some of the growth, with the global mobile ad spend by consumer packaged goods companies growing 175 percent in 2013 on InMobi, the mobile ad network reported this week.
One key area of growth could be mobile retargeting, which has picked up steam in the past six months as Facebook and others have rolled out retargeting strategies. New research from myThings found that retargeting sales increase by 18 percent when mobile is added.
One of the challenges marketers are going to face scaling up their mobile advertising strategies is likely to be how to drive engaging experiences on Android. While engaging Android users is of growing importance given how many users are on the platform, marketers are still challenged monetizing these strategies compared to iOS.
New research from Opera Mediaworks found that in the fourth quarter of 2013, iOS devices captured 56 percent of revenue, up from 50 percent in the third quarter. In terms of traffic, Android tops out with a nearly 36 percent share compared to iPhone?s 28.7 percent.
Mobile Web display ads
While all regions of the world will see strong growth in mobile advertising spend, most of the growth will come from North America because overall advertising budgets are highest here.
In Asia/Pacific and Japan, the most mature region for mobile advertising, Gartner expects growth will slow between 2012 and 2017, averaging 30 percent a year. The high-growth economies of China and India are expected to contribute increasingly to mobile advertising growth.
As mobile becomes increasingly integrated into 360-degree advertising campaigns, it will eat up budget previously allocated to print and radio advertising.
Display formats will account for most of the revenue, but video will show the highest growth rate.
However, the market is expected to begin to shift toward mobile Web display ads following several years of higher growth in in-app display. The shift to Web display ads on mobile is not happening as quickly as expected because the use of HTML5 tools in mobile Web site development is taking longer to impact the market.
By the end of the forecast period, growth in audio and video formats will be higher as the tablet market continues to grow and tablets drive video consumption.
Gartner also expects search and map ad types to benefit from increased use of location data gathered from users and interest from local advertisers in leveraging mobile. Driving this growth will be the growing number of users opting into being located automatically through their devices or because they are checking in at the place they visit via apps such as Foursquare and Pinterest.
?[In terms of CPI and app downloads], this is a multi-billion dollar market from big game publishers like King.com and Supercell to apps from brands like eBay, Bank of America, American Express, HBO and DirecTV,? Opera Mediawork's Mr. de Silva said. ?We expect to see 100 percent or greater growth in 2014.
?From basic cost-per-click to lead generation, cost-per-acquisition for lending, automotive, insurance, ecommerce/mcommerce, we expect to see 50 percent growth in 2014,? he said.
Chantal Tode is associate editor on Mobile Marketer, New York