SYDNEY: Mobile advertising expenditure in Australia is growing strongly and is expected to reach $682m in 2018, by which time tablets will account for 70% of the total, according to a new report.

The study from market research company Frost & Sullivan, Australian Online General and Mobile Advertising Market 2013, said that over the last 12 months mobile adspend had been growing rapidly, fuelled by rising media consumption on smartphones and tablets.

In the short term, 50% of companies planned to increase their mobile advertising budget substantially compared to the previous year, while 79% indicated they would do so by more than 10%.

In the longer term, Frost & Sullivan predicted a compound annual growth rate of 39% for mobile adspend between 2013 and 2018 and said that mobile was an increasingly important part of the overall advertising strategy of both media agencies and brands.

"Banking & finance and automotive continue to lead the market, though retail is also seeing strong adoption," said Phil Harpur, Senior Research Manager, Australia & New Zealand, Frost & Sullivan.

He noted that both local and global mobile ad networks were expanding their business models and he anticipated this trend would continue into 2014, "assisted by the advancement of mobile-specific advertising campaigns, optimised for both smartphones and tablets".

In terms of inventory, rich media was growing in importance, with most new inventory now being produced using this format, but Harpur said the mobile video advertising market was underdeveloped. Mobile search advertising, meanwhile, continued to grow strongly in line with the growing usage of mobile search.

One problem that has resulted from the growing use of smartphones and tablets has been the oversupply of inventory spots. "A major challenge for the industry moving forward is how to drive value in mobile and tablet advertising in light of the burgeoning supply of inventory via better targeting techniques," Harpur declared.

He also saw higher demand for premium mobile ad solutions. These, he suggested, were "now seen as an essential part of an integrated advertising campaign covering both offline channels, such as TV and print, and online channels, both mobile and non-mobile".

Data sourced from PR Newswire; additional content by Warc staff