Mobile advertising is playing catch-up

Updated: 2014-02-17 06:11

By CHRIS DAVIS in New York (China Daily Latin America)

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It's no secret that the whole world has become obsessed with smartphones. Everywhere you look, people have their noses buried in them: walking on city streets, waiting for a train, riding a bus, dining with friends ... even, alas, driving their car! Smartphones and mobile technology have taken over. And advertisers know it.

According to Gartner research, global mobile advertising spending will reach $18 billion before this year is done, up 38 percent from $13.1 billion in 2013. It's forecast to more than double beyond that and hit $41.9 billion by 2017.

That's still peanuts compared to the $198 billion spent on television advertising and the $110 billion spent on print ads in 2013. But it's still a stampede that will shortly overtake and surpass radio advertising's $32.5 billion, which is actually shrinking.

"From 2015 to 2017, growth will be fueled by improved market conditions, such as provider consolidation, measurement standardization and new targeting technologies, along with a sustained interest in the mobile medium from advertisers," Stephanie Baghdassarian, research director at Gartner, said in a statement.

Although North America — due to the sheer scale of advertising budgets along with the shift to mobile — is where most of the growth will take place, all regions of the world will contribute to the growth.

The emerging economies of the BRICS nations (Brazil, Russia, India, China and South Africa) will be playing a key role in driving this expansion, as mobile advertising growth, as a rule, tracks the adoption of technology and more and more people get smartphones.

In Brazil, according to the report, the number of smartphone users continues to mushroom, with 16 million smartphones purchased in 2012 and 21 million in 2013. An estimated 67 million Brazilians use the mobile Internet and most smartphones there are used for gaming, social media and maps.

Russia, whose mobile Internet has been running a few laps behind other Western markets for a while now — as visitors to the Olympics are finding out — is starting to gain momentum.

"Mobile Internet usage skyrocketed in Russia in the last few years, growing by more than 50 percent each year, which of course could not stay unnoticed by both researchers and businesses," writes Anna Oshkalo on Russian Search Tips. The number of people accessing the Internet from a smartphone in 2012 rose 39 percent over the previous year and grew even faster in 2013.

In China, where online marketing is expected to rise to $165 million by 2015, mobile Internet users are accessing the mobile Internet far more frequently than people using home computers and advertisers are racing to keep up, developing interactive mobile and display ads.

Placed as banners in game apps, the "discount ad" is considered by experts to be one of the most effective among the Chinese, who are highly cost conscious.

"Looking forward, Gartner expects the high-growth economies of China and India to contribute increasingly to mobile advertising growth as their expanding middle classes present attractive markets," the report said.

According to analyst firm Berg Insight, "the total value of the global mobile marketing and advertising market will grow from $9.4 billion in 2012 at a compound annual growth rate of 26 percent to $37.9 billion in 2018".

This corresponds to 19.3 percent of all online advertising. Globally, mobile search advertising will account for more than half, followed by display ads and messaging.

It doesn't all make sense to the experts, however. "There is currently a mismatch between the ad dollars spent on different media and the share of time consumers devote to the various channels", said Rickard Andersson, a senior analyst at Berg Insight. He said consumers on average devote a double-digit percentage of their time to mobile devices, which attract only a small percentage of global ad spending.

The reason? Perhaps, it's the relative newness of the mobile channel as an advertising medium versus the speed-of-light growth of mobile media consumption in recent years.