With changing technology and proliferation of high end smartphones, mobile advertising is gradually picking up. Initially it was dominated by text messages and multimedia messaging and now it has evolved to mobile web and mobile in-app advertisement.
By this piece we try to examine the changes in mobile advertising, why they’ve happened and what can be the future of mobile advertising.
Mobile Advertising Spending
Spending on Mobile Advertising is on the rise. Global mobile Advertising spending in the year 2013 accounted for USD 17.96 billion and grew at a rate of 105% from 2012, according to a report by emarketer.
United States is the biggest market in Mobile Advertising. As compared to USD 1.6 billion in 2011 (5% of total), this figure rises to USD 7.1 billion in 2013 (17% of the total), a 443.7% rise in two years.
Mobile advertising spending in India was USD 35.4 million in the year 2012. With the rising use of mobile devices the spending on mobile advertising is expected to rise.
Spending by Mobile Advertisement Format
Mobile Advertising from messaging has been shifting to other formats. The spending on messaging is going to decline and search and display advertisements in mobile are going to take over.
In India, mobile advertising was 10% of total digital advertising in the year 2013 with in app advertisements and mobile web having large shares.
Mobile Ad formats
Search and display were the dominant ad formats till 2012. From here the trend as shown by the spending trend has shifted to rich media ads and in-app advertisements.
According to a report by opera mediaworks, tap-to expand and mobile video advertisement, both rich media categories reached a share of 6% in 2013. In the Q2 2013, the report showed that in-app and rich media ads performed better than banner ads and mobile web.
Mobile Advertisement companies
Google has the highest market share in mobile advertising while Facebook’s share has grown rapidly from 5.4% in 2012 to 17.5% in 2013.
The Indian mobile advertising industry is at a very nascent stage. The major players in this space in India are Google, InMobi, Komli and Vserv.
Vserv’s speciality lies in feature phones whereas InMobi focuses on smartphones. InMobi has started providing native advertisements and has recently launched a Native Ad exchange as well.
Reasons for the Change
The mobile advertising landscape has evolved and the marketers have started paying attention. It is progressing towards formats which support rich content and higher quality media.
Following reasons account for the changes.
1. Growing Mobile Subscription base
International Telecommunication Union estimates say that the number of mobile subscriptions worldwide would reach a whopping 7 billion by the end of 2014. The developing world would account for 78% of the total mobile subscription base.
2. Internet connectivity
With the growing subscription base the number of mobile internet users are also rising. So the devices which are connected to the internet have a potential of being tapped by the means of mobile web whereas others can only be targeted by text messaging.
According to a report by Internet and Mobile Association of India (IAMAI), the number of mobile internet users in India is going to rise to 185 million by June 2014, of which the urban population would account for 153 million. This provides huge potential for the marketers to reach the consumer via mobile.
The primary driver of change is the evolution of mobile gadgets. From feature phones to smartphones and now to tablets, the devices are changing rapidly.
- Smartphones: According to a report by technology research firm gartner, the year 2013 saw global smartphone sales surge to 968 million units as compared to 680 million unit sales in the year 2012, i.e. a growth of 42.3%.
- Tablets: Till now the year 2014 has seen a slowdown in the tablet sales. As per International Data Corporation (IDC) the first quarter of 2014 saw a 3.9% growth over the same period last year. According to another estimate of the organisation, tablet sales in the Indian market in the Q1 2014 were 0.78 million units a year-on-year decline of -32.8% over Q1 2013.
This decline can be due to people holding on to their tablets longer and also increased competition by smartphones with large screens (range of 5.5 inch to 6.99 inch) known as phablets.
- Role of large Screens: Larger screens means more space and better viewable area. This means companies can design advertisements with better graphics and can incorporate video and high quality media. According to State of Mobile Advertising report released in Q2 2012, the Apple’s iPhone was the leader with an average eCPM of USD 2.85 whereas android ranked second with an average eCPM of USD 2.10. iPad had an eCPM of USD 3.96. From Q2 2012 to Q1 2014, iOS has remained on top in terms of monetization.
- Operating System: The devices supporting android operating system has grown drastically. According to opera mediaworks insights, android devices have taken over iOS devices in terms of traffic.
Android OS is present on low priced devices as well. Thus, increasing android penetration means more app usage and that means more potential for in-app advertising.
These factors -increasing internet penetration, proliferation of mobile phone users and tablets – point towards the development of a generation of connected consumer. Thus with rising population which accesses internet on the go mobile advertising is increasing.
Future of Mobile Advertising
- The spending on Mobile is going to rise Globally and in India as well. Globally it is expected to reach USD 94.91 billion and in India it is projected at USD 318.34 million by 2018.
- According to Gartner, the spending would slow down due to ad space inventory supply growing faster than demand.
- From simple contextual information like demographics and mobile phone carrier the shift would be towards complex information like time of day and day of week leading to better targeting.
- The growing use of location based sharing sites like Foursquare and Pinterest (people pin the places they visit) will contribute to increased targeting.
- Lastly mobile in-apps advertisement would gain a large share due to rising smartphone usage.
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