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US Mobile Ad Spending to Top $1 Billion for First Time in 2011

Smartphone, mobile internet adoption make mobile audience increasingly attractive to advertisers

NEW YORK, NY (Oct 4, 2011)—Spending on mobile advertising—long a bit player in the digital media mix—will top $1 billion in the US for the first time this year as smartphone adoption and rising mobile internet usage have made the market more attractive to advertisers.

Advertisers will spend nearly $1.23 billion on mobile advertising this year in the US, up from $743 million last year, according to a new forecast by eMarketer. By 2015, the US mobile advertising market is set to reach almost $4.4 billion. This includes spending on display ads (such as banners, rich media and video), search and messaging-based advertising, and covers ads viewed on both mobile phones and tablets.

eMarketer previously forecast in September 2010 that US mobile advertising spending would hit $1.1 billion in 2011, and reach $2.5 billion in 2014. This revision features significantly higher growth levels throughout the forecast period.

“After the consolidation that took place at the end of 2009 and beginning of 2010, this year has been about setting mobile up for significant growth in 2012 and beyond,” said eMarketer principal analyst Noah Elkin.

The rise in mobile spending has been prompted, in part, by the rapid growth of smartphone and mobile internet usage. By the end of this year, 38% of US mobile users will have a smartphone and 41% will use the mobile internet at least once each month, eMarketer estimates.

“The rapidly expanding smart device and mobile internet user populations make advertising on the mobile web and in apps more of an imperative than ever,” said Elkin.

This year, messaging-based formats still take the largest piece of the pie, accounting for $442.6 million in spending. But in 2012, banners and rich media will be even with search, each getting 33% of spending, or $594.8 million. That will put them ahead of messaging, which will fall to just 28.2% of all mobile ad spending next year. By 2015, banners and rich media and search will dominate further, and messaging will have shrunk to 14.4% of the total—though still growing in terms of dollars.

“Even with Android and Apple setting the pace, marketers will still need cross-platform advertising solutions to reach the bulk of smart device users,” said Elkin.

Video is the fastest-growing mobile ad format, but from the smallest base. Mobile video ad spending, at $57.6 million this year, will grow at a compound annual rate of 69% between 2010 and 2015 to reach $395.6 million.

eMarketer bases its mobile advertising spending forecast on a meta-analysis of mobile advertising estimates from research firms, company data from major mobile ad networks and vendors, and smartphone and tablet usage trends. eMarketer also interviewed industry executives about their mobile strategies and spending outlook.

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Posted on October 4, 2011.