The Wall Street Journal recently announced that the mobile add market is anticipated to reach $100 billion next year. The research firm eMarketer reports that, in 2016, advertisers will spend $101.37 billion placing ads on mobile phones and tablets worldwide. For the first time, over half of the digital ad market (and about 16.5% of total advertising spending) will be attributed to mobile ads in 2016. This represents a quantum leap in the global mobile ad market of 430% from just 2013.
Looking further ahead, mobile ad spend will nearly double between 2016 and 2019, reaching $196.66 billion to account for 70.1% of digital ad spend, and over 25% of total media spend globally.
eMarketer credits the growth in mobile advertising to the spread of smartphones: the firm predicts that more than two billion consumers across the globe will use smartphones next year, over a quarter of whom will live in China. The number of tablet users is growing more slowly but is nonetheless expected to surpass 1 billion this year, reinforcing the shift away from the desktop.
The US is expected to spend the most money on mobile advertising by far, at about $40.24 billion, followed by China, with about half the expenditure (22.14 billion), and then the U.K. and Japan, at $7.2 billion and $5 billion, respectively. This means that together, the US and China will account for nearly 62% of mobile ad spending next year. This represents a more than 100% increase in digital ad expenditure for the US from 2014-2015 and a near triple increase for China. Other global markets with anticipated significant digital ad market growth include Germany, Canada, and Australia.
It is perhaps only a matter of time before US mobile advertising surpasses “legacy” media such as newspapers and magazines, which eMarketer predicted would happen last year.
As the Wall Street Journal writes, “most major advertisers have only just started testing mobile ads–and many aren’t sure what, if anything, they should do with the medium…the potential for growth is enormous. Think about what this market could look like if ad giants like General Motors and Procter & Gamble really jump in.”
Messaging apps are particularly promising. An interesting article published by MarketingProfs states that consumers use messaging apps nearly five times more than other apps, and are almost twice as likely to keep messaging apps on their phones opposed to other apps. This was based on frequency of use (the number of times apps were opened) and retention (whether users continued to launch apps) between January 2014-2015. The average daily use of an app across all categories is 1.9 times per day, whereas messaging apps are used 8.9 times per day, on average, according to a recent report from Flurry. After one year, the retention rate for an “average” app is only 11% while the retention rate for a message app is a much more impressive 62%—5.6 times greater.
Some that advertise on Snapchat Discover-the social app’s new video content distribution business—are reaching a million people a day on the app, according to Bloomberg, commanding $100 cost-per-thousand ad rates. Such media companies that deliver short videos and articles to Snapchat include ESPN, Comedy Central, People Magazine, CNN, and Dailymail.com.
From a marketing management perspective, here are some questions to consider:
- When, if ever, do you expect mobile advertising to plateau?
- Why is mobile advertising so much more common in the US than any other country? Why?
- What companies can stand to benefit the most from more traditional methods of advertising? Why?