May 8, 2014
The advertising industry mega-trend of the last decade — ad dollars shifting from offline to online media — is continuing in this decade, as well. This is because more and more users are becoming "addicted" to the Internet. According to a recent study by the Pew Research Center, “The Web at 25 in the U.S.,” it has become harder for consumers to give up the Internet than TV. Fifty-three percent of Internet users say the Internet would be very hard to give up, up from 38% in 2006. Only 35% of adults say their television would be very hard to give up, down from 44% in 2006.
The mega-trend of the decade is the shift of ad dollars from desktop/laptop to mobile devices. Based on Forrester estimates, US mobile ad spend was just 6% of total US online ad spending in 2011. The share of US mobile ad spending in the total US online ad spending is expected to reach 44% by 2019. All three components of mobile advertising — display, search, and social — will witness increases in their spend levels.
- Mobile display. There is an increasing shift of ad spending from mobile Web to in-app display ads. This is because apps capture most of the smartphone usage. According to a recent study by Flurry, apps capture 86% of usage, whereas only 14% of US mobile consumer’s time is spent on mobile Web. In-app advertisements and mobile video will drive the growth of mobile display ad spending.
- Mobile search. Almost 80% of the US online population currently own a smartphone, and less than half own a tablet. However, tablet-based search revenues are already more than double smartphone-based search revenues. Although PC-based search revenues will continue to climb steadily over the next five years, total search growth will be driven by skyrocketing mobile phone and tablet search spending.
- Mobile social. Forrester believes that mobile is the real driver for US social media advertising growth. Currently, nearly 85% of US social media users access social sites through mobile devices. Social networking companies are also reporting increasing engagement rates of users accessing social sites through mobile devices. This could be one reason for the fast ramp-up of their advertising revenues from mobile devices. Twitter introduced mobile ad products in Q1 2012. In just two years, in Q1 2014, it reported that over 80% of ad revenue came from mobile devices. Facebook introduced mobile ad products in Q2 2012. In less than two years, in Q1 2014, it reported 59% of ad revenue came from mobile. Facebook and Twitter are already monetizing mobile effectively. LinkedIn, Pinterest, Google+, and mobile-only social networks such as Snapchat and Instagram will also capitalize on the mobile advertising opportunity in the coming years.
According to Nielsen, US adults are already spending more time online using their smartphones than their PCs. There remains a significant gap between the time spent on mobile versus the advertising dollars it attracts. As advertisers chase engaged users, this gap will close as the advertisers shift ad spending from offline media and other forms of online media to mobile. Based on our recently published Forrester Research Mobile Advertising Forecast, 2014 To 2019 (US), Forrester expects total mobile ad spending in the US to reach $40 billion by 2019. Mobile social will witness the fastest growth trajectory, whereas mobile search will continue to be that largest component of mobile advertising spend by 2019.