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Mobile Advertising Works -- So Why Is Nobody Doing It?
Posted on January 30th 2013
We don’t need data points to realize that world is going mobile. New statistics are coming out almost daily evidencing the increased usage of smartphones and tablet computers by today’s consumers. According to my own review of these sometimes conflicting data, I think it is fair to say that at least half of US adults are now using a mobile device to access the Internet at some point each month. As such, this blog presupposes the reader has accepted that the world, and with it the Internet, is quickly going mobile.
If you happen to disagree with this notion, feel free to either a) read this post on the subject, b) read on anyway, or c) stop reading now.
For those of you still with me, I’d like to point out a broad trend emerging from data gathered by two respected digital media sources, eMarketer and Gartner - as a percentage of overall media ad spend, few businesses are thowing money at mobile.
And I don’t understand why.
NUMBERS DON'T LIE
First, let’s look at the data. This nifty graphic from eMarketer depicts total projected media ad spending worldwide through 2016:
The endnote at the bottom of the graphic lists all of the media included in the projections, which for my money pretty much covers every type of media likely used by businesses.
To add to the analysis, here are some data from Gartner projecting worldwide mobile ad revenues through the same period (2016):
Mobile Advertising Revenue by Region, Worldwide, 2012-2016 (Millions of Dollars)
When taken together, these two data sets reveal the miniscule nature of worldwide mobile ad spend as a percentage of total media ad spend:
- 2012: 1.8% - Yikes!
- 2016: 3.9% - Better, but not by much.
Looking at the US alone, here are some numbers published by eMarketer in September of 2012 comparing total media ad spend to mobile ad spend:
- 2012: 1.6%*
- 2016: 6.3%*
These are much better than the global average, but suggest that mobile garners only a tiny portion of total media ad spend in the US.
(*eMarketer data from December of 2012 racheted these percentages up significantly, to 2.4% and 11%, respectively. Regardless, the numbers remain quite low).
According to Gartner, different types of mobile advertising are evolving in different ways. For example, spending on location-based mobile search ad spend will markedly increase over the next few years, before slowly tapering off. Gartner predicts that eventually, mobile display ads on mobile web browsers will dominate.
Interestingly, Gartner also noted that the rapid consumer adoption of mobile devices is creating a glut of ad space inventory, as business ad spend lags behind consumer mobile usage. To me, this suggests that advertising on mobile is likely to be much cheaper now than it will be in the future.
WHY MOBILE MATTERS
Here’s a stat that summarizes why mobile advertising matters:
- According to a 2012 survey from Hipcricket, 46% of smartphone owners have viewed a mobile ad; among them, 64% have completed at least one purchase as a result of doing so. However, fully 74% of smartphone users say their favorite brands have not yet advertised to them via mobile. Among those who have made a purchase as a result of a mobile ad, 45% have referred a product or service to a friend or colleague.
Early feedback from Facebook mobile Sponsored Stories corroborates the utility of advertising on mobile:
- A recent study by several of Facebook Ads API partners, Facebook’s mobile Sponsored Stories are getting over 13X the click-through rates and earn 11.2X the money per-impression on mobile compared to Facebook’s desktop ads.
THE BOTTOM LINE
Here’s the irony: for businesses, mobile advertising is still in the early stages of adoption; for users, mobile advertising is tolerated and in some cases welcomed.
This fundamental disconnect presents a significant opportunity for businesses that incorporate mobile ads into their digital marketing mix sooner rather than later. In fact, brands need to embrace social, local, mobile (SoLoMo), recognizing each as fundamental to a broader integrated digital marketing strategy.
Early data from mobile advertising would seem to underscore these very sentiments.