Mobile Ad Revenues Will Top $11.4 Billion In 2013, Up 19% On 2012. India, China And Display Fuelling The Boost

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The growing popularity of free mobile content — largely in the form of apps — is having a big impact on mobile advertising, the route that many developers and publishers are taking to monetize that content. Gartner has released its forecasts for mobile advertising today, and it predicts that this year, mobile ads will collectively bring in $11.4 billion in revenues, a rise of 18.75% on 2012′s $9.6 billion.

With that growth will also come an evolution in what kind of ads are doing best: display ads will grow faster than search and eventually overtake them, says Gartner. But other things will not change. The Asia Pacific region will keep its dominant position in mobile ads in 2013, and for the next three years, as the global market for mobile ads grows by a further 400% between now and 2016 to $24.5 billion.

Gartner, it should be pointed out, first published these projections in November 2012, but has actually revised them up. “The mobile advertising market took off even faster than we expected due to an increased uptake in smartphones and tablets, as well as the merger of consumer behaviors on computers and mobile devices,” writes Stephanie Baghdassarian, research director at Gartner.

The growth of display advertising against search ads is down to a few different factors. The first of these is the increasing ubiquity of smartphones, and smartphone-like feature phones: while there is still an issue that one in every five smartphone owners never uses their device for anything other than basic voice and text, those that are using them for other services are proving to be voracious consumers of apps and mobile internet. That rise in usage means more eyeballs and more inventory for advertisers to fill.

“Smartphones and media tablets extend the addressable market for mobile advertising in more and more geographies as an increasing population of users spends an increasing share of its time with these devices,” writes Andrew Frank, research VP at Gartner. That usage, Gartner says, is currently very strong in native apps, although Gartner is in the camp of people who believe that mobile internet, and web apps, will ultimately become the more popular format over native apps.

The second trend is the fact that there are a number of new ad units that are rolling out to make the display ad experience more engaging: whether it is through reward schemes, or less invasive ways of serving those ads, these are, by many accounts, getting more people clicking on display ads, and more advertisers investing in using them.

The third is the decline of more traditional advertising, for example in newspapers and magazines. As these mediums get used less by consumers, media buyers and brands are turning to the places where consumers are reading more: tablets and smartphones. “Growth in mobile advertising comes in part at the expense of print formats, especially local newspapers, which currently face much lower ad yields as a result of mobile publishing initiatives,” writes Baghdassarian.

But this does not mean search is disappearing — far from it. The rise of more integrated and functional maps, for example, will give that ad unit another big boost, as more brands and businesses look to buy paid placements on mapping apps. Gartner also highlights augmented reality as a rising category — but I personally remain skeptical that for now this is not more than a nice technology.  

In terms of regional domination, Gartner points out an interesting shift taking place in Asia Pacific.

Whereas in the past the region was strong because of Japan and South Korea — two relatively small but early-adopting, mobile-crazy countries — its continuing prominence won’t be solely because of that. It will be down to China and India, two of the world’s biggest mobile markets, where we are seeing a big surge for smartphones and mobile data usage among a “growing middle class” of users.

North America and Western Europe, Gartner says, will “close the gap” on Asia with what Gartner refers to as “360-degree advertising campaigns.” This is another term for the kind of advertising that Google is also pushing, with the idea that ads can follow you regardless of what device you happen to be using. (Creepy but possibly useful too.) Growth in the emerging regions of  Latin America, Eastern Europe and Africa will be led by gains in the big markets of Russia and Brazil, as well as Mexico. 

Mobile Advertising Revenue by Region, Worldwide, 2012-2016

(Millions of Dollars)

 

2012

2013

2014

2016

North America

3,181.5

3,825.7

4,694.9

8,866.2

Western Europe

1,600.5

1,941.4

2,367.8

4,445.4

Asia/Pacific and Japan

4,333.0

4,864.9

5,506.7

9,480.2

Rest of the World

644.1

788.0

960.6

1,768.3

Total

9,759.1

11,420.0

13,530.0

24,560.1

Source: Gartner (November 2012)

Photo: Flickr