Mobile advertising spend to hit $US41.9 billion by 2017, but a slowdown on the way

Mobile advertising spend is forecast to reach $US41.9 billion ($A47.2 billion) globally by 2017, with mobile display advertising formats comprising the bulk of revenue, new research suggests.

This year, the figure is expected to reach $US18 billion, up from an estimated $US13.1 billion in 2013.

However, the report, Forecast: Mobile Advertising, Worldwide, 2010-2017, by US-based IT forecasting company Gartner found that advertisers are not requesting advertising space at the same rate as new platforms are becoming available.

“Over the next few years, growth in mobile advertising spending will slow due to ad space inventory supply growing faster than demand, as the number of mobile websites and applications increases faster than brands request ad space on mobile device screens,” said Gartner research director Stephanie Baghdassarian.

Between now and 2017, video advertising will show the highest growth, due to the increase in tablet use, which make it easier to view videos.

Advertisements that tap into a user’s search or map location data will increase in popularity, as advertisers increasingly use this information to specifically target audiences to their interests and area.

“However, from 2015 to 2017, growth will be fuelled by improved market conditions, such as provider consolidation, measurement standardisation and new targeting technologies, along with a sustained interest in the mobile medium from advertisers.”

The Asia-Pacific and Japan are the most advanced for mobile advertising, the report said. This relates to the fast adoption of mobile handsets in the region, giving the area a kick start on mobile advertising. However, this means that growth will slow between now and 2017, with an average growth of 30% each year.

China and India are forecast to contribute greatly to mobile advertising growth as they adopt more mobile technology in coming years.

North America is expected to show great growth and Gartner research vice president Mike McGuire said this is due to the scale of advertising budgets and the increasing shift to mobile use.

“Overall advertising budgets are the highest, so when a portion shifts to mobile, in a multiplatform approach, it immediately impacts the market’s scale,” he said.

In Western Europe, the spend is forecast to remain similar to North America, while Latin America, Eastern Europe, the Middle East and Africa will be slower, due to slower technology adoption and the need to stabilise emerging economies.

It forecast that from 2015, growth rates in Russia, Brazil and Mexico will exceed the worldwide average.

SalesForce and ExactTarget Marketing Cloud head of marketing Ryan Bonnici told SmartCompany the survey findings reflect local expectations.

Bonnici says a 2014 State of the Market report by ExactTarget found that display advertisements were fuelling growth locally, and around 29% of respondents had experienced a return on investment for mobile marketing.

For 51% of respondents they were confident that a return on investment would happen down the track, however 16% felt it would be unlikely to reap rewards.

Bonnici says it was important for small businesses to view mobile marketing in context of a bigger picture approach to reaching out to customers. He says it is vital to think of the “lifecycle” of a customer and how they engage with their mobile devices, and use this to create a diverse mobile approach including SMS, direct emails, on screen display advertising and push notifications. 

In 2013, SmartCompany reported on research from Telsyte which forecast that spend in Australia on mobile search advertising was expected to reach $430 million for the year.

It found that by 2017, the mobile search sector will make up more than half of the Australian paid search market, and will be the largest individual digital advertising product segment by 2018.

At the time, Telsyte research director Foad Fadaghi said that small businesses needed to improve their advertising practices to remain up to speed with mobile search advertising progress.

The Telsyte report highlighted that mobile advertising return on investment had not yet reached its desktop counterpart.