Digital ad spend up 14.9% this year, vs. mobile's 95.0% growth rate
US digital ad spending will hit $42.26 billion this year, up from $36.80 billion in 2012, to account for 24.7% of total media ad spending this year, eMarketer estimates.
eMarketer’s latest forecast for digital ad spending anticipates 14.9% growth for the year, just shy of 2012’s 15% growth rate, and set to continue falling through 2017, when spending will rise 7.1% to reach $61.35 billion.
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These figures represent a slight upward revision to eMarketer’s June 2013 forecast of digital ad spending, which estimated marketers would spend $41.94 billion this year on advertising appearing on desktop and laptop computers as well as mobile phones, tablets and other connected devices. The upward revision to the digital forecast is primarily due to an upward revision to estimates of mobile spending, which is now expected to reach $8.51 billion this year. In June, eMarketer estimated mobile spending would come in at $7.65 billion for 2013.
Now, mobile spending is expected to rise 95.0% this year to account for 20.1% of all digital ad spending, and 5.0% of total media ad spending.
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eMarketer bases its estimates of US ad spending on the analysis of reported revenues from major ad-selling companies; data from benchmark sources the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC); estimates from other research firms; consumer internet usage trends; and eMarketer interviews with executives at ad agencies, brands, online ad publishers and other industry leaders.
COMMENTARY: The mobile advertising industry is one of the most dynamic industries in the world, and while it can be tough to predict future trends in such a fast-changing market, we’d like to give it a shot! Here are a few of the biggest trends and predictions that we see shaping the mobile advertising industry in 2013:
- Yield optimization will be a major mobile advertising trend in 2013: Mobile advertising networks and advertisers are learning more and more about our users and the best way to reach them, but the challenge is, what do we do with all of that data once we’ve got it? The next phase in mobile advertising is yield optimization – using the glut of data available with every ad request in order to serve the right ad to the right people. Location and time of day are going to become increasingly critical factors in mobile ad yield optimization. If you can put an ad in front of users at the right time of day when they are thinking about making a purchase or a download, and do it in a way that is relevant to their geographic location, you have unlocked a new universe of possibilities. My company, PlacePlay, has based our mobile advertising strategy on these same principles. It’s not good enough to take a scattershot approach with mobile advertising, where you just “throw a bunch of spaghetti against the wall and see what sticks.” Instead you need to take a more focused and intentional approach, where you base your mobile advertising strategies on the unique characteristics and needs of the users you’re trying to reach. We believe that geo-location and chronological targeting will result in higher yields and more effective mobile advertising, more often, than mobile ad campaigns that are not based on those factors.
- Richer, more interactive experiences with mobile ad campaigns: Most mobile advertisers are still barely scratching the surface of what is possible to create with mobile advertising as a medium of communication. A few companies are doing really beautiful and impressive mobile advertising campaigns, but there is opportunity for so much more – especially on tablets, which offer larger screens and more elaborate capabilities for displaying mobile ads. Beyond simple mobile ad banners or slimmed-down versions of a 30-second TV ad, we will start to see much more interesting mobile advertising campaigns designed specifically for mobile devices.
- Mobile ad campaigns will become the entry to the sales funnel: In the early days of mobile ads, most advertisers used mobile ads solely to generate immediate action or a purchase decision – “download this game” or “sign up for this.” But mobile ads don’t have to be used solely to get the user to do something related to the mobile device. In 2013, more mobile advertisers will start using mobile ads as an entry point to a longer-term sales relationship. Mobile ads will be used to drive more people to the advertisers’ desired channels – either social media, websites, e-mail lists, or others. Mobile marketers will get smarter about using mobile advertising as the entrance to their overall sales funnel. There are many ways to entice customers and deepen relationships with prospects via mobile ads. Beyond simply clicking on a banner ad, mobile ads can be the point of entry for a longer relationship that leads to sales.
- Commoditization of big mobile ad networks: SDK installations are a big driver of company value. Companies like MoPub and Burst.ly are securing more and more of those relationships with developers making big ad networks commodity players who, essentially, become sales organizations. It’s good for developers and it’s good for the mediators, but it’s potentially bad for the networks because they become totally reliant on being able to sell advertising while the mediators own the developer relationship and take a cut.
- Faster move from Cost Per Click (CPC) to Cost Per Action (CPA): Instead of Cost Per Impression (CPM) or cost-per-click (CPC), more mobile advertisers will shift to a model of what I’ll call, “CPA & More.” Cost-per-click mobile advertising has become less desirable in recent years because, especially with mobile banner ads, accidental clicks are a big problem that drives down CPC value and makes marketers unclear on the ROI they are getting from their mobile advertising campaigns. So if clicks are becoming less valuable as an indicator of user interest, what’s next? Cost Per Action (CPA) – and there is more flexibility in what exactly that “action” needs to be. We will start to see a bigger move towards monetizing secondary actions after the user clicks the ad. For example, maybe the click is free – but if someone engages with a company beyond that initial click, the advertiser pays more on a sliding scale. CPA is the most commonly used method of pricing for pay-per-install services – but I think it can be extended to all types of advertisers. Now more than ever, it’s possible to track and analyze “what happens” with users after they click a mobile ad. So it only makes sense that advertisers would be willing to pay more for better engagement with prospects. CPA mobile ads are good for marketers because they are getting what they pay for, and they’re good for mobile ad networks because they provide marketers with a clearer view of value and they have the opportunity to monetize at much higher rates than a $0.01 – $0.10 CPC. This is part of the overall shift in mobile advertising from “high quantities of low-value clicks” to more focused, higher quality interactions that lead to measurable outcomes and add more value.
Courtesy of an article dated August 21, 2013 appearing in eMarketer
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