The Growth of Mobile Advertising

This is a guest blog post by Duncan Jones, an online marketing specialist from New Zealand who is passionate about helping businesses and marketing professionals improve their online marketing results. Duncan has a focus on performance marketing, insists on tracking everything, and loves optimizing and improving campaigns for clients across a huge range of industries. He regularly writes about marketing and optimization on his blog.

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One of the biggest shifts in advertising in the past decade has been the exponential growth of mobile advertising. With a shift in the way people use and consume media from newspapers to desktops and now to mobile, the advertising industry has had to change at a rapid pace. So where did mobile advertising begin?

Back in 1992 when cellular devices had been around for about 12 years, a test engineer in the U.K. sent the first SMS message, simply saying ‘Merry Christmas’. Fast forward a few years and advertising agencies jumped on this new way of communicating with the formation of the first mobile advertising offering: bulk text messaging.

Since the days of ‘brick phones’ and bulk text messaging, change has been rapid. The most significant step for the industry was the first phone with internet access in 1996. This has led to the fastest spreading technology in history — smartphones. According to research by Statista.com, mobile devices now make up 17% of total internet usage worldwide which is a year on year increase of 36% — a growth rate that is not showing signs of slowing.

There are many companies trying to take advantage of this growing market. One of the first mobile advertising companies to launch was Admob which offered advertising solutions for a wide range of mobile phone platforms. Seeing the potential for mobile, both Google and Apple tried to acquire Admob, with Google eventually outbidding Apple in 2009 at $750 million. This sale kick started the industry and showed how much focus the big companies were putting on mobile.

Mobile advertising revenue hit $8.8 billion in 2012 and this is forecast to almost double to $16.65 billion in 2013 according to research by eMarketer. Google and Facebook are forecasted to take 68.97% of the mobile advertising spend in 2013 with both companies spending a lot of time and resources perfecting their mobile strategy. Because of this incredible growth, both companies’ share prices are at near record highs, so what does the future of advertising hold?

Estimated Mobile Advertising Revenue Share in 2013

With the uptake of mobile devices still growing, along with the number of advertisers moving to mobile, there is no doubt that mobile advertising will continue to grow. The advertising options available are increasing and it has now become easy to track advertising on mobile websites and apps to accurately measure ROI. As consumers become more comfortable shopping online and mobile conversion rates are improved there will be a big move into mobile from performance focused companies which now make up a large proportion of Google’s Desktop advertisers.

No one can accurately know what will happen in the future, however here are a few things that I predict for the future of mobile advertising:

• Increasing mobile advertising revenue with Google and Facebook continuing to grow market share as mobile search volumes and social media use increase.
• Continued growth in highly targeted hyperlocal advertising via mobile devices.
• Continued innovation and adoption of behavioral / personalized advertising.
• Increased use of responsive designs for both websites and email marketing to improve conversion rates on a wide range of screen sizes.
• Increased tracking and attribution models enabling accurate tracking of conversions generated on a mobile device but completed on other devices.
• Huge growth in mobile advertising in Latin America, Asia, Africa, and the Middle East due to the increasing adoption of mobile phones in place of computers.
• A growing mobile app market that will start to face competition from in-browser, hybrid applications.

What do you think the future holds for mobile advertising? Let us know your thoughts in the comments.