By Chantal Tode, January 24, 2013 for Mobile Marketer
Mobile advertising revenue is growing at a rate faster than previously expected and should reach $11.4 billion worldwide this year, up from $9.6 billion last year, according to new report from Gartner.
Additionally, Gartner expects North America and Western Europe to close the gap on the Asia/Pacific region with quickly growing mobile advertising revenues over the next few years. The report, “Forecast: Mobile Advertising, Worldwide, 2009-2016, also predicts that b etween 2011 and 2016, mobile advertising revenue will grow by 400 percent worldwide.
“Mobile advertising is growing at a pace to achieve 4X growth between 2011 and 2016,” said Andrew Frank, an analyst at Gartner, Stamford, CT.
“Despite this growth, marketers are struggling to keep up with the shifts in consumer behavior,” he said.
“Marketers need to acknowledge that mobile advertising is now becoming mainstream; at the same they need to think holistically about how mobile interactions can support their marketing and customer relationship aspirations and avoid treating mobile advertising as a channel silo.”
Segmentation, targeting improve
By 2016, mobile advertising revenue worldwide is expected to reach 24.5 billion.
The numbers reflect faster growth in the mobile advertising market than Gartner previously expected due to the fast adoption of smartphones and tablets by consumers as well as the merger of consumer behaviors on computers and mobile devices, with consumers spending increasing amounts of time on their mobile devices.
As the addressable mobile audience continues to grow, this is making it easier for marketers to segment and target their mobile efforts. This, in turn, is driving growth in the mobile advertising spend as brands look for ways to connect with consumers in specific, actionable ways.
The growth in mobile advertising is coming in part at the expense of print formats, especially local newspapers, per Gartner.
North America takes off
While the 400 percent growth rate for mobile advertising reflects the overall worldwide market, the actual pace will vary in different geographic regions.
The large adoption of mobile devices in Japan and South Korea has historically given the Asia/Pacific region as early lead in mobile advertising.
However, North America and Western Europe are expected to close the gap as the mobile channel becomes more tightly integrated into 360-degree advertising campaigns, funneling budgets away from print and radio.
In North America, Gartner forecasts mobile advertising revenue will reach $3.8 billion this year, $4.7 billion in 2014 and $8.9 billion by 2016.
In Western Europe, mobile advertising revenue will total $1.9 billion this year, $2.4 billion in 2014 and $4.4 billion by 2016.
In Asia/Pacific and Japan, mobile advertising revenue will reach $4.9 billion this year, $5.5 billion in 2014 and $9.5 billion by 2016.
Additionally, the high-growth economies of China and India are expected play a bigger role in mobile advertising growth.
Growth in the rest of the world will be mostly driven by Russia, Brazil and Mexico.
Display ad spending grows
By type of advertising, Gartner predicts mobile search – including paid positioning on maps and various forms of augmented reality – will drive mobile ad spending over the next few years. However, mobile search is expected to diminish in strength as the period progresses.
At the same time, mobile display ad spending will grow and take over from mobile search. While mobile display advertising is expected to remain divided between in-app and mobile Web placements, by 2015 Web display spending will take over.
The report also points to the rapidly growing share of time that consumers are spending on mobile devices, which is generating ad inventory at a faster pace considerably than most advertisers can shift their spending to the medium.
As a result, there is a surplus of mobile ad inventory, which is driving down unit ad prices.
“The Gartner report makes it clear that companies should be spending more on mobile advertising campaigns,” said Shrikant Latkar, vice president of global marketing at InMobi.
“Consumers are turning to their mobile devices before turning on the television or browsing the PC web—to ignore this highly engaging channel would be foolish,” he said.
“We have already seen numbers double over the past year and expect this to continue over the next four years. The organizations who don’t invest in mobile advertising will not only be missing out on an essential channel for engaging and communicating with consumers, but also risk being seen as old-fashioned or out-of-touch by the increasing mobile-first generation.”