US mobile local advertising revenues will grow from $1.2 billion in 2012 to $9.1 billion in 2017—at a compound annual growth rate (CAGR) of 49.3%—according to the US Local Media Forecast (2012-2017), issued by BIA/Kelsey, an adviser to companies in the local media industry.
Mobile search is forecast to be the dominant ad format, growing to $5.7 billion in 2017. The forecast comprises advertising placed in mobile search, display, and video, and commercial SMS.
Below, additional details from BIA/Kelsey's US Local Media Forecast (2012-2017).
Mobile US local advertising is forecast to increase from 0.9% of local media ad revenues in 2012 to 6.1% in 2017:
Local Advertising Spending - Mobile and All Others - 2012 through 2017 - BIA-Kelsey - 2013 (Click Image To Enlarge)
The projected mobile local ad revenues are a subset of total US mobile ad spending, which is forecast to grow from $3.2 billion in 2012 to $16.8 billion in 2017.
Accordingly, locally targeted mobile ads, which constituted 38% of overall US mobile ad spending in 2012, are expected to grow to account for 54% in 2017:
Local vs National Ad Spend in Mobile - Location Targeted and Non-Location Targeted Ad Spend - 2012 through 2017 - BIA-Kelsey (Click Image To Enlarge)
Mobile Local Media Forecast by Format
Search advertising now accounts for the largest share of mobile local media ad spend, followed by display and SMS. The BIA/Kelsey forecast includes a breakdown of mobile local ad spending by format, as follows:
- Display (display advertising applied to app and mobile Web inventory) will grow from $379 million in 2012 to $2.7 billion in 2017.
- Search (text advertising applied to search queries on mobile devices) will grow from $704 million in 2012 to $5.7 billion in 2017.
- SMS (commercial SMS messaging) will grow from $101 million in 2012 to $162 million in 2017.
- Video (rich media ad units distributed within app and mobile web inventory) will grow from $38 million in 2012 to $515 million in 2017.
Mobile Local Ad Spend By Format - Display, Search, SMS, Video - 2012 through 2017 - BISA-Kelsey - 2013 (Click Image To Enlarge)
Search's dominant share indexes higher within the localized segment than within the broader of US mobile ad revenue total because of the high correlation between mobile search and local user intent, BIA/Kelsey said.
Conversely, there is a lower percentage of localization within the display category, because of the branding (as opposed to direct response) and reach-driven objectives inherent in display campaigns (e.g., in-app ads).
Drivers of Localized Share of Mobile
Several factors will drive the "localized" share of US mobile ad revenues, according to BIA/Kelsey, including the following:
- Large brand advertisers will increasingly adapt their campaign objectives to the capabilities of the mobile device due to effective, abundant, and currently undervalued mobile local ad inventory.
- Mobile advertising will move down market to the SMB segment through a combination of self-serve tools and local media direct sales channels.
- Premiums that develop for location-targeted ads will compound ad volume growth.
- Innovation will increase among ad networks and ad tech providers (e.g., Enhanced Campaigns).
Michael Boland, senior analyst and director of content, BIA/Kelsey, said.
"Though inventory growth currently outpaces advertiser demand, we believe the latter will begin to accelerate. This will not only increase overall mobile ad spend, but mobile ad rates such as CPMs and CPCs, which are currently lower than desktop equivalents due to inventory oversupply."
About the data: BIA/Kelsey's Annual US Local Media Forecast (2012-2017) draws from multiple sources, including proprietary data; company, industry, and country information in the public domain; and discussions with clients and nonclients about the direction and pace of development in the local media marketplace.
BIA/Kelsey defines the local media advertising marketplace as those media that provide local audiences to all types of advertisers. Mobile local advertising is defined as advertising that is targeted based on a user's location.
COMMENTARY: On April 4, 2013, eMarketer released its U.S. mobile advertising spending forecast for the years 2013 through 2015.
Google will remain the U.S. mobile ad leader with revenues of $3.984.4 billion in 2013, and will maintain its lead through 2015, when eMarketer forecasts that its U.S. mobile advertiing revenues will reach $9.293 billion.
Facebook, by virture of its strong showing in mobile advertising in 2012, will hit $964.9 million in 2013, and will double its U.S. mobile ad revenues to $1.863 billion by 2015. Pandora, the digital music broadcasting service, will rank third with $372.1 million in 2013, and will double its U.S. mobile ad revenues to $748.6 million by 2015.
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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.
According to eMarketer, U.S. mbile ad spending growth will enter a period of decline in 2014, when growth will only be 55.5%, and U.S. mobile advertising growth will continue to decline to only 26.0% by 2017.
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Courtesy of an article dated April 10, 2013 appearing in MarketingProfs and an article dated April 4, 2013 appearing in eMarketer
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