New estimates from the Interactive Advertising Bureau (IAB), IAB Europe and IHS Technology clocked global mobile advertising at $19.3 billion in 2013 — nearly doubling 2012's $10.1 billion (the IAB's previously reported 2012 figure was $8.9 billion, but IAB has since updated it to reflect actuals instead of estimates and different exchange rates). Additionally, the new 2012 figure replaces estimates with actuals, accounts for changed methodology in local markets, and replaces smartphone forecasts with actuals, according to the IAB's press release.
Latin America demonstrated a particularly high growth rate, up 215% from 2012, followed by North America (122%), Europe (90%), APAC (69%) and the Middle East and Africa (45%).
Search generated the most revenue at $9.5 billion, representing 48.9% of the 2013 total, while display came in right behind with 41.5% at $8 billion. Messaging lagged significantly at $1.9 billion (9.6%). Mobile display exhibited the highest growth at 123.4%, followed by mobile search at 92.1%. Messaging’s growth was less robust, up just 19.4%.
“Search and display, in total, are fairly evenly matched with each other,”said Joe Laszlo, senior director of the IAB’s Mobile Marketing Center of Excellence. “It feels like there’s maybe a natural equilibrium there where marketers get different sorts of value from search than they get from display, but they see that both are very important to the overall success of their marketing strategy. The gap between search and display is definitely going to continue to close.”
Display is certainly making up for lost time, with video as the main driver. Mobile video content is included in the report’s display revenue figures.
Laszlo told AdExchanger that the IAB is seeing higher consumption of video content on smartphones as well as on tablets. He attributed the increase to reduced costs for mobile data plans, making consumers more willing and able to watch video on their phones. Faster data networks are also crucial for enabling good mobile video experiences.
“In almost any country where you see those two things in tandem, you should definitely expect to see more video viewing by consumers and therefore more video advertising opportunities as well,” he said.
Messaging has quickly reached maturity, especially in the United States, accounting for its fall behind search and display. In markets with high smartphone penetration, marketers often deploy mobile apps as direct marketing channels, which allows them to connect directly with an end user as opposed to paying a third party for SMS or MMS access or services, Laszlo said. As a result, whatever marketers pay for the app covers their messaging cost as well, thereby decreasing revenue for traditional messaging.
Email has also impacted the mobile messaging market. According to Laszlo, marketers know consumers frequently check email on their phone, so rather than launching separate messaging-based marketing campaigns, marketers are adapting their email campaigns to make sure their email messages look good on smartphone-sized screens too. “Email marketing, to the extent that marketers are still doing that, is becoming a mobile phenomenon as well as a desktop phenomenon,”he said.
Rather than becoming less important, it could be that messaging has just outgrown the initial carrier-based SMS and MMS channels.
“Rising smartphone penetration is extending the addressable market and is inducing a shift from messaging to display-based formats, although messaging remains strong in emerging markets,” said Daniel Knapp, director of advertising research at IHS Technology and author of the IAB’s report. “More fundamentally, the pervasiveness of mobile consumption has sparked a change in the mindset of marketers. Increasingly, they come to realize mobile as a medium in its own right that rewards abandoning engrained desktop-based marketing principles with new creative, tactical and strategic opportunities.”
Laszlo predicts that mobile ad revenue growth will continue for 2014, particularly in the United States.
“Some of the key impediments to the growth of mobile around ad creative and the ability to build fun ads — ads that can tell a story, ads that can deliver a branding style message in mobile — are steadily getting better and better, and measurement is slowly but surely improving in mobile as well,” he said. “As the ad creative and measurement sides improve, 2014 will see the growth trajectory of mobile advertising improve.”
Overall, the report reflects positively on the evolving mobile ad ecosystem. “I think the report is great news for the digital media industry. It says that marketers are awake and aware of the fact that their customers are using the mobile Internet, they’re interested in reaching their customers on the mobile Internet and they’re more and more confident that they can do that successfully.”
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