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The US mobile advertising market is growing far faster than expected, driven by the rapid ascension of Google’s mobile search advertising business, advertisers’ growing attraction to display inventory on tablet and smartphone devices, and the growing roster of mobile ad networks such as Google’s AdMob, Apple’s iAd, and Millennial Media.
eMarketer estimates mobile advertising spending in the US reached $1.45 billion in 2011, up 89% from $769.6 million in 2010. This year, US mobile ad spending will grow 80% to $2.61 billion. Despite rapid growth, however, mobile advertising accounted for less than 1% of total ad spending in the US in 2011, according to eMarketer.
eMarketer previously forecast US mobile ad spending would grow 47% to $1.8 billion in 2012, up from $1.2 billion last year. The significantly higher revision is the result of several factors, most notably a stream of new market data made available in the past few months from major advertising publishers and research firms.
“Right now there are many researchers out there looking at nearly the same empirical data about the mobile marketplace and drawing completely disparate conclusions,” said Noah Elkin, eMarketer principal analyst.
“In order to form the most complete picture possible about the mobile ad market, we think it’s essential to evaluate multiple information sources—rather than a single dataset—especially as the market remains immature,” added Elkin.
eMarketer forms its forecast for mobile advertising spending through a meta-analysis of estimates from research firms that track mobile ad spending and impressions, reported data from major mobile advertising publishers, and other sources. eMarketer also conducts interviews with executives at agencies, brands and mobile advertising publishers who provide perspective on the development of the mobile advertising business as a whole, as well as the revenues for individual companies.
The most significant adjustment in this forecast comes as a result of Google’s exceptional mobile advertising performance—which has propelled mobile search advertising far faster than previously expected, said Elkin.
eMarketer estimates Google’s share of overall US mobile ad revenues reached 51.7%, or about $750 million, in 2011. The company is both the biggest catalyst and beneficiary of mobile search’s growing footprint, earning an estimated 95% of all US mobile search ad revenues. This is the first time eMarketer has estimated market share and revenues for major players in the mobile advertising market.
eMarketer estimates US mobile search advertising more than doubled in 2011, with spending rising to $652.5 million, up from just $253.2 million in 2010. This year, advertisers will spend $1.28 billion on mobile search ads in the US, eMarketer estimates. eMarketer previously forecast mobile search advertising would reach $349.4 million and $594.8 million in 2011 and 2012, respectively.
“Google has translated its dominance of overall online and desktop search advertising into dominance of mobile search and mobile advertising at a rapid pace,” said Elkin. “Given the pace of this market’s expansion, eMarketer’s estimates for mobile search may still be on the conservative side.”
Apple Inc. and Millennial Media, which do not sell mobile search ads, trail Google in terms of overall US mobile ad revenues and market share by significant margins. Apple’s iAd platform generated $92.4 million in revenues last year—translating to a 6.4% share of overall US mobile ad revenues—while Millennial earned $90.9 million, or a 6.3% share.
Competition between Google, Apple and Millennial for mobile display dollars is healthier. eMarketer estimates Google earned $127.5 million from US mobile display advertising in 2011, or a 24.8% share of total US mobile display revenues. Apple’s share of display revenues reached 18% in 2011, just over Millennial’s 17.7% share, eMarketer estimates.
“While Google remains a leader in mobile display, it’s too early to call the race,” said Elkin. “Both Apple and Millennial have healthy, $90-million-plus US businesses, while companies with larger international footprints such as InMobi, Amobee, and JumpTap shouldn’t be discounted either.”
eMarketer estimates US mobile display ad spending, which includes spending on banner and rich media ads, will grow 93.5% to $861.7 million in 2012, after reaching $445.4 million in 2011. Spending on mobile video advertising will grow an estimated 122% to $151.5 million this year, up from $68.2 in 2011.
Meanwhile, mobile messaging advertising, which includes SMS, MMS, and P2P messaging, will see its share of overall mobile spending decline more rapidly than previously—the result of advertisers increasingly moving mobile dollars toward display, search and video. However, as a widely used mobile communication medium, messaging will remain vital for marketers as a support mechanism for mobile couponing, loyalty and customer care campaigns, Elkin said.
eMarketer publishes data, analysis and insights on digital marketing, media and commerce. We do this by gathering information from many sources, filtering it, and putting it into perspective. For more than a decade, leading companies have trusted this approach, and have relied on eMarketer to help them make better business decisions.
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