The mobile advertising space has made significant progress over the past twelve months, attracting substantial investment from agencies and advertisers beyond small-scale test campaigns and experimental budgets. According to market intelligence firm IDC, spending on mobile advertising in the U.S. grew 138 percent, year-over-year, to reach $877.2 million in 2010.
That increased interest and spend has been driven by two major factors: the continued proliferation of smartphone devices among U.S. consumers, and high profile acquisitions of mobile ad firms by Google and Apple. Though the channel is still firmly in its infancy in relation to other digital ad channels, the progress it made in 2010 has lead some to suggest it’s the closest the industry will get to the much-hyped “year of mobile.”
Google and Apple Join the Party
Google helped kick-start the year by announcing in late 2009 that it had agreed to acquire mobile ad network AdMob for $750 million. Although that transaction didn’t close until May following an antitrust investigation by the Federal Trade Commission, Apple promptly highlighted its own ambitions in the space when it announced the acquisition of AdMob competitor Quattro Wireless in January.
That acquisition lead to the launch of Apple’s iAd network in April, through which CEO Steve Jobs said the company intended to improve the quality of mobile ads by providing more “engaging and emotive” solutions, stating existing mobile ads “sucked.” Despite complications around the creation of those campaigns and with the company’s relationship with agencies, the first iAd campaigns went live on the iPhone and iPod Touch in June, with Unilever and Nissan as launch advertisers. Following delays, ads for Best Buy, Campbell’s Soup, Chanel, Citi, DirecTV, GEICO, and GE followed, with the first iAd appearing on the iPad earlier this month for Disney movie Tron.
To help streamline the creative process Apple launched a drag and drop iAd production tool last week, removing the necessity for it to produce iAd creative itself. However, delays of the rollout of its initial campaigns, not to mention the whopping seven-figure minimum spend the company was seeking for them, opened the door for rival mobile ad companies to capitalize on the buzz the launch created.
The Rise of Mobile Rich Media Vendors
Mobile rich media providers such as Medialets and Crisp Wireless began touting their own iAd-like solutions, which they sell directly to publishers and integrate with some mobile ad networks. Following the iAd launch, other networks such as Millennial Media, Greystripe, and Google’s AdMob have also been aggressively pitching their own rich media offerings. “Both Google and Apple have validated the huge potential of mobile advertising. Apple’s push behind rich media set the bar for what advertising should be on mobile,” explained Boris Fridman, Crisp Media CEO.
The fact iAds didn’t appear on the iPad until December also offered rival vendors the opportunity to beat Apple to market. In October, for example, AdMob and Medialets facilitated campaigns on the iPad for Infiniti and Visa, respectively.
The Growth of Smartphones and the Android OS
Aside from the advances in ad technology, probably the most important factor driving the growth of mobile advertising this year was the continued consumer adoption of smartphones, aided largely by an explosion of devices running Google’s Android operating system. According to Nielsen data, almost 30 percent of U.S. mobile subscribers owned a smartphone in October, of which 27.9 percent were running Apple’s iOS and 22.7 percent were running Google’s Android platform.
Though Apple continues to lead the market, therefore, Android appears to be on track to outpace iOS by early next year given its current rate of growth. In addition, mobile ad networks themselves are also reporting substantial growth in impressions from Android devices. According to mobile ad network InMobi, for example, the share of overall impressions it served to the Android platform grew by 8.7 percentage points in October, while those served to iOS devices decreased 2.2 percentage points.
Millennial Media, meanwhile, reported similar findings for October, with Android growing its share of impressions by 8 percent, month-over-month, to reach the same share of impressions as iOS at 37 percent.
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