Mobile ad revenues to surge

24 December 2012

GOTHENBERG: Mobile advertising expenditure is likely to approach the €20bn mark in five years' time, equating to a five-fold increase in spending levels, according to a forecast.

Berg Insight, the research firm, stated that adspend through this channel should reach €19.7bn in 2017, compared with €3.8bn in 2011, equivalent to a compound annual growth rate of 31%.

Worldwide revenues are likely to surpass the €10bn benchmark for the first time in 2014 and come in at around €15bn in 2015, the analysis added.

More broadly, mobile will take 15.5% of the online advertising market at the end of the forecast period, compared with 4.4% last year, not least as a result of the "digital convergence" between these channels.

Rickard Andersson, a telecom analyst at Berg Insight, suggested this would go some way towards reversing the current gap between usage of wireless devices and the share of budgets they receive.

"Consumers are currently devoting a quarter of their media consumption time on mobile devices, yet the channel only attracts slightly more than 1% of the ad dollars," he said.

Several industry trends are also likely to drive this process, including the roll out of enhanced real-time advertising platforms allowing marketers greater flexibility in payment and audience profiling.

"The unique targeting possibilities and new creative ad units suitable for mobile devices will spur mobile ad spend to increase severalfold in the medium-term"" said Andersson.

One key issue which needs to be resolved, however, is the fragmentation of the "value chain", as there are still considerable numbers of providers across various aspects of the mobile marketing ecosystem.

Google was named as one of the best-positioned players, as its Android operating system and AdMob advertising network have enabled the company to build a strong foundation.

Apple, the manufacturer of the iPad and iPhone, is similarly well-placed, with its iOs operating system and iAd advertising services offering a more closed ecosystem that Google's open source approach.

Microsoft, Yahoo and Facebook are just some of the other major internet companies attempting to carve out a share of the market, Berg Insight said.

"Facebook ... may surface as an important player if combining advanced user targeting with innovative mobile ad formats," its study added.

Data sourced from Berg Insight; additional content by Warc staff