Many online retailers are still attempting to fully understand the concepts and capabilities mobile devices bring to their industry. With the mobile landscape ever-changing, mobile advertising has been at the forefront of growth within the retail industry. Although 9 out of 10 online retailers have a mobile strategy, according to Forrester less than half of retailers currently use mobile display ads, a percentage which will likely increase in the coming years.
With both the digital and traditional advertising industries in a constant state of change, here are four things to know about the mobile ad industry…
1) The mobile ad industry is growing around the world – Few industries are growing at the same speed as the mobile ad industry. According to Gartner, mobile ad revenue around the world is expected to increase to $11.4 billion this year, an 18.8% increase from last year ($9.6 billion) – last year the U.S. led all countries in mobile ad revenue with over $2 billion spent. Gartner also forecasts that global ad revenue from mobile devices will reach $24.5 billion by the end of 2016, almost three times the revenue generated last year.
2) Mobile ads on social networks are booming – Some major social networks, including Facebook and Twitter, launched mobile ads for the first time last year. Although Facebook dominates display ads on non-mobile devices, Twitter actually generated more mobile revenue from ads than Facebook last year ($130 million estimated). However, this trend isn’t likely to continue as Facebook recently debuted ads directly in their news feed on mobile devices for the first time ever. Research firm eMarketer predicts that by 2014 Facebook will have a mobile ad revenue of $629 million, almost nine times the mobile ad revenue generated by the company in 2012 ($72.7 million estimated).
3) Bigger screens aren’t always better for mobile ads – Logically you would think a larger screen with larger ads would lead to a larger click-through rate (CTR) – this isn’t always the case. According to research from a mobile ad company, Jumptap, the iPhone actually had a significantly higher CTR than the Samsung Galaxy Tab despite having a screen size that is 6” smaller. The Kindle Fire had the highest CTR of any device, although the main users of these devices are actually “baby boomers” who tend to have lower conversion rates. Apple and Samsung products, although they had a lower CTR than the Kindle Fire, are more popular with the 18-34 age demographic who tend to not only shop online more but also make purchases with a higher average order value.
4) Mobile ads are on devices consumers interact with – Smartphones truly have become the “Swiss Army Knife” of technology and many smartphone owners have their devices near them at all times (yes, even while sleeping). With approximately 30% of smartphone owners shopping from their devices it only makes sense for retailers to be where consumers can not only see their ads but also act on them and make a purchase. In fact, mobile ads are set to reach 11% of all media ad spending by 2016 (up from only 2.4% in 2012) as they are poised to take marketing dollars from print, radio, and directory advertising. Television ad spending is predicted to stay the same in the coming years.
In conclusion, mobile advertising is an industry which many retailers (both online and offline) will likely continue to focus on in the coming years. The industry is still in its infancy and many retailers will explore the capabilities of these ads to determine how they can effectively reach their audience. The 18-34 age demographic in particular appears to be driving this shift in advertising almost solely based on the way they consume media, making mobile advertising especially important to retailers who market to this younger demographic.