Mobile display will gain share at search’s expense
Financial services firm Cowen and Company surveyed 50 major US ad buyers in various industries in September and found that eight in 10 planned to increase their mobile advertising in the next 12 to 18 months. By the end of that time period more than three-quarters of respondents expected to devote at least 5% of their total ad budget to mobile.
But devoting more spend to mobile is as much about putting more ads in the channel, as it is a result of rising mobile ad prices as advertising in the space matures.
The highest percentage of respondents believed the fast adoption of smartphones and tablets was the No. 1 factor driving up the price of ads on mobile, at 70%, indicating that mobile penetration is the most important factor determining advertising value. Improved ad formats on mobile was also an important factor buyers perceived as driving up prices, cited by two-thirds of respondents. Interestingly, increased mcommerce was only seen as a factor in rising prices by just over half of respondents.
Mobile pricing was still believed to be cheaper than desktop pricing by a majority of respondents. Asked when mobile and desktop pricing would be similar, the greatest percentage of respondents, 36%, believed that the two channels would be comparably priced within the next two years.
The survey broke social and video mobile advertising out from display, leaving display as primarily consisting of banner ads. Given this more restricted definition, display was found by the highest percentage of respondents to be cheaper on mobile vs. desktop, which is understandable given that smaller screens limit the banner experience.
The increasingly limited potential of display on mobile—excluding social and video ads—was further demonstrated when respondents were asked about current vs. future mobile budget allocation. Display’s share of ad buyers’ budgets was set to decrease by 5 percentage points, swapping its position as the No. 1 mobile channel with search. Given mobile’s now well-documented role as a key player in gathering real-time information, it makes sense that buyers would be putting more money toward search.
Video will also see a bump in spend as mobile video viewing becomes more common, with buyers expecting to put nearly 10% of mobile spend toward video in the next year and a half.
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Check out today’s other articles, “Together, TV and Tablets Drive Brand Searches” and “In China, Social Networkers Embrace Brands.”