Mobile advertising will reach $7.29 billion in 2013, and Google will take a 54.66% share or $3.984 billion of it. Facebook will take a 28.6% share of U.S. mobile display ads or $1.056 billion in 2013, but Google will dominate U.S. mobile ad search advertising with a 93.35% share.
Following explosive entrances by Facebook and Twitter to the marketplace, as well as a strong performance from Google, US mobile advertising spending grew 178% last year to $4.11 billion, according to a new forecast by eMarketer, and spending is expected to rise a further 77.3% to $7.29 billion in 2013.
That’s a nearly fivefold increase in spending since just 2011, and includes ad dollars spent on display, search and messaging-based formats served to all mobile devices, including tablets. By 2017, eMarketer projects US advertisers will devote $27.13 billion to mobile—just under 45% of all digital ad spending and 13.8% of total media ad spending that year.
Based on year-end reporting from several major mobile publishers—along with estimates from other research firms; consumer mobile usage trends; and eMarketer interviews with executives at ad agencies, brands, mobile ad publishers and other industry leaders—eMarketer revised its estimate for 2012 spending only slightly upward from the previous forecast in December 2012.
While top-line figures were relatively unchanged since the previous forecast, there were some small adjustments in market share and revenues for some of the larger players following Q4 results.
Google, thanks to its dominance of the mobile search market and strong showing in mobile display, is by far the largest player in the space with 93.3% of US net mobile search ad dollars going to the company last year. Overall, more than half of total US mobile ad revenues will go to Google this year, and its share will grow by nearly 3 percentage points by 2015.
eMarketer believes further mobile monetization of YouTube will contribute the lion’s share of incremental growth to Google’s mobile display revenues, while search ad revenues will continue to rise rapidly.
Facebook, the No. 2 mobile ad publisher in the country, accounted for 9.5% of mobile ad revenues in 2012 and is expected to take 13.2% this year. In the mobile display market, however, Facebook is on top, projected to grab nearly three in 10 dollars this year. eMarketer revised Facebook’s share of US mobile display advertising ad revenue upward by several percentage points after fourth quarter results came in higher than previously expected.
Google and Pandora round out the top three mobile display slots, with Twitter—whose figures were also significantly increased in the new forecast—making a strong showing in fourth place. The microblogging service took in 7.3% of net US mobile display ad revenues in 2012, the first year it offered such ads.
Both Facebook and Twitter have benefited from their use of so-called native ad formats that are seamlessly integrated within the core user experiences of their respective products. The resulting ability for both companies to deliver mobile ad impressions at much higher volume than many traditional ad publishers has helped them capture market share very quickly.
The most significant adjustment in the new forecast is a downward revision to Millennial Media’s mobile display ad revenues and market share for 2012 through 2015. The company’s traffic acquisition costs (TAC) paid to partners and ad publishers are not expected to fall in the next few years, as eMarketer previously believed. Millennial will take an estimated 2.8% of US mobile display revenues this year, excluding TAC. Apple will come in slightly higher at 6.3%, eMarketer estimates.
COMMENTARY: Facebook appears to be making all the moves necessary to become a powerhouse in desktop and mobile advertising.
- April 11, 2012 - In advance of its $100 billion IPO scheduled for mid-May 2012, Facebook announced that it had acquired photo sharing app Instagram for $1 billion, the largest acquisition ever for Facebook, giving Facebook a strong foothold in the mobile market. Photo-sharing is a huge driver of user engagement on Facebook, so the acquisition gave Facebook access to 27 million Instagram users and another feature that would improve the overall user experience for its users and increase Facebook stickiness.
- September 19, 2012 - I informed my readers that Facebook had beta launched a mobile ad network.
- December 15, 2012 - Facebook officially launches Facebook Timeline, in a move to increase Facebook stickiness. Timeline was announced in September on stage at the f8 conference, and it might be the most ambitious feature Facebook has introduced since the News Feed. The feature exchanges your profile page for a scrapbook-inspired list of your history on Facebook, telling the story of your life in a collection of photos, status updates and more.
- February 28, 2013 - Announced the acquisition of Microsoft's Advertiser Suite for a reported $100 million, a move to improve its advertising analytics.
- March 3, 2013 - Facebook rolled out "Graph Search" that gives users answers to their Facebook searches, not links like Google. Facebook first introduced Graph Search on January 16, 2013. Graph Search underwent a slow beta-test, and finally rolled it out to everybody in March. This represents a bold strategic move by Facebook to grab a share of the $3.6 billion U.S. mobile search ad market, and pit itself against Google, the dominant player in mobile search advertising with a 93.3% market share. Facebook already dominates the global desktop search market.
- March 21, 2013 - The Wall Street Journal announced that Facebook would be adopting hashtags (#), one of the hallmarks of microblogging giant Twitter, as a way to improve its search engine results and increase Facebook's stickiness with users.
- March 13, 2013 - After a beta period lasting a couple of months, Facebook officially launched Facebook Ad Exchange (FBX) in September 2012, which makes the social networking giant’s inventory available to real-time bidding (RTB) and retargeting. Through Facebook Exchange, advertisers and agencies have been able to use cookie-based targeting through Demand-Side Platforms (DSPs) to reach their audience on Facebook with more timely and relevant messages. For brands and agencies, the result is a powerful tool for driving direct response goals on Facebook. We caught up with Scott Shapiro, product marketing manager for Facebook Exchange, to learn more.
- March 14, 2013 - VentureBeat revealed that Facebook is planning on adding video ads to a users newsfeed. Facebook is hoping to grab a share of the rapidly expanding online video advertising market space, which is expected to reach $4 billion in 2013, an increase of more than 40 percent over 2012. As soon as July, according to some reports, Facebook will be rolling out 15-second video ads right in your news feed. You’ll only see one video ad from one company a day, but the positioning right in your news feed — and the fact that they may be autoplay ads– makes it a risky move. That’s very different than Facebook’s existing video ad proposition, as Wired notes, which is on brands’ own product pages. News Corps' Rupert Murdoch predicts that Facebook runs the risk of becoming another MySpace because ads in a users newsfeed run the risk of becoming too disruptive.
- March 19, 2013 - Facebook announced that it was offering advertisers another tool to target consumers on the platform with Lookalike Audiences, a feature that lets them reach users similar to those in their Custom Audience databases. Lookalie Audiences, which Facebook began beta-testing in February, and will launch this week as a targeting option on the social network’s power editor, allowing advertisers to reach out to potential customers with similar characteristics to their current customers. Facebook launched Custom Audiences in the fall of 2012, which allowed brands to show ads to their current customers who were on the social network. Lookalike Audiences extend this ability to other Facebook users with similar attributes. Both Custom Audiences and Lookalike Audiences work off hashes, which are bits of text that uniquely identify data (such as an email addresses) but are designed to protect against reverse engineering that would reveal those data, so no customer information is shared with advertisers or any third parties.
- March 23, 2013 - Facebook announces personalized ads based on behavioral targeting using third-party data intelligence and analytics. Facebook formed partnerships with data intelligence and analytics vendors Epsilon, Acxiom, and Datalogix which could have a large impact on the retail world.
- April 7, 2013 - Facebook unveiled "Facebook Home," a mobile app which loads when you start your phone, and replaces your regular startup display menu of app icons. "Home" gives existing Android phones a total Facebook makeover, transforming both lock and home screens into immsersive, edge-to-edge slideshows of photos and status updates. Home was a move by Facebook to create a "Facebook phone" without actually having to produce its own phone. This would allow it to compete in the Android and iOS smartphone market and a bigger chunk of the mobile ad dollars. However, in a blog post dated May 16, 2013, I told readers that Home was "officially a failure." Brand marketers and users had mixed doubts and expectatons about Home. In the end, Home was simply too disruptive. With an average 2.3 star rating and a 1 million+ installs from a social network with a user base of 1.1 billion active users, the app is not what you’d call a smash hit. In fact, it never came anywhere close to ranking in the Top 25 (barely reaching the Top 100 only) according to Google Play.
- April 12, 2013 - Facebook unveils "Emoticons," emotional "smiley" icons that improves "Likes" and opens the doors to "Dislikes." The move is obviously geared to improve user engagement and increase Facebook stickiness.
In a blog post dated May 9, 2013, I commented on the rumored acquisition of the Israeli-based developer of Waze, a social GPS mapping and traffic reports mobile app with 40 million users. This acquisition, if successful, will allow Facebook to fill a gap in its mobile offerings and effectively compete against Google Maps , Microsoft's Bing Maps and Apple Maps, by keeping its users from leaving Facebook for mapping help.
Courtesy of an article dated April 3, 2013 appearing in eMarketer