Tipping Point For The Touchscreen: Tablet Ad Spend Will Outweigh Smartphone Spend This Holiday Season, Says M&C Saatchi

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With all eyes on an Apple event next week that many think will reveal a new, smaller iPad, the ad agency M&C Saatchi has come out with some compelling numbers that point to how tablets are overtaking smartphones when it comes to monetizing content. It says that the growth in ad spend on tablets is already outpacing that of smartphones, and by this holiday season tablet spend will, for the first time, be higher than that for smartphone campaigns.

The agency — which claims that it is the world’s biggest buyer of mobile ads, working with brands like Reebok, Sky, BMW, Harper Collins, HSBC, Dior, and Yahoo – says that in the lead-up to holiday shopping, some 90% of its clients are growing tablet spend by 25% in the coming months. They are being driven by data that shows conversion rates (where people either click on an ad or perform some other built-in action) for tablet ads at least four times higher than the same ads delivered on smartphones.

(As a point of comparison, M&C Saatchi says that premium smartphone ad rates have gone up by 20% in the last year, with that 20% rise equating to $0.10 more on CTRs.)

And… it’s worth noting that ad agencies aren’t the only ones noticing a divergence between tablet and smartphone advertising.

The news comes just as Google yesterday noted in its Q3 earnings that its mobile advertising run rate is now at $8 billion, up from $2.5 billion a year ago. The company is making a big push on multiscreen experiences to capitalize on what it also sees as an increase in cross-device usage.

And earlier this week, Mojiva launched the first tablet-only mobile advertising network, in a move to better meed demand from advertisers to target users on those devices specifically.

Device makers are also jumping on the potential of tablets-as-ad-medium — a look at how Amazon is loading ads into the Kindle Fire (pictured) is one idea of the shape of things to come.

M&C Saatchi Mobile CEO James Hilton says that the holiday period is proving to be a catalytic moment for the tip to more spending on tablet ads, but he also predicts that the effect “will continue to increase after the Christmas period.”

Its research into consumer behavior has — carried out between April and October in the U.S. and UK — also confirmed that tablet usage so far is proving to be different from that on smartphones. Because tablets today tend to be more often used in stationary locations than on-the-go, geo-targeting is used by less than 10% of M&C Saatchi’s clients. Conversely, targeting based on city or country location, language, time of day and demographic profiles are significantly more common. When techniques like this are implemented, M&C Saatchi says that conversion can go up to five or six times higher.

Prior to M&C Saatchi’s news, we already knew that engagement on tablets tends to be more sustained than on smartphones. This is down to the basic form factor of the device and how content is being created to cater to that: a bigger screen is simply a more enjoyable way of consuming a lot of long form content such as video, magazines and newspapers.

But tablet growth is still in an early stage. Figures from the OPA note at in 2011, only 11% of consumers in the U.S. owned a tablet. By 2013, that proportion will be at 47%. M&C Saatchi believes that the next phase will see a transformation in what tablet usage (and subsequently advertising) may mean, because of the introduction of smaller devices.

Apple, for example, is expected to release a smaller (and possibly less expensive) device on to the market next week, rising to the challenge from Amazon, Samsung and others that offer a range of tablet sizes and price points to a market that is only just beginning to hit its stride.

“Since the introduction of the iPad, brands and marketers have been trying to work out what exactly it meant for them,” writes M&C Saatchi Mobile CEO James Hilton. “The impact has been far beyond what anyone really expected. With the current and forthcoming releases of more affordable, sub £200 devices such as Amazon Kindle Fire HD and the Google Nexus 7, as well as other high-end devices such as the Microsoft Surface then we believe the impact of tablets upon mobile advertising will continue to increase after the Christmas period. This Christmas heralds a major sea change in the mass market adoption of tablets.”