Mobile advertising appears to have hit a turning point, with spend more than doubling during the first half of the year to drive US online ad spend to a record $20.1 billion. A new report commissioned from the IAB claims mobile ad revenues increased 145% year on year, soaring to $3 billion in the first six months of 2013.
While there were also gains in traditional display and search, it is mobile that is really driving growth in US digital ad spending as the level of smartphone and tablet penetration in the US means that marketers are increasingly chasing eyeballs across the small screen. According to the report, total revenues for online advertising surpassed $20.1 billion in the first half of the year, up by nearly a fifth compared to last year. Revenues in Q2 hit a record $10.3 billion in the biggest quarterly haul on record.
“The significant growth rate of mobile advertising has continued into 2013 reflecting the profound shift in how consumers are viewing media – on their mobile devices wherever they go,” commented PwC partner, David Silverman. “And this trend will continue as smartphone and tablet penetration increases and the user experience evolves and improves.”
Search still accounts for the biggest proportion of overall ad spend, but its share shrunk slightly in the first half of the year as mobile’ continues to swell, now accounting for 15% of spend, compared to 9% in the same period last year. Search decreased from 48% to 43%, but still accounts for twice as much spending as its closest competitor, display and banner ads, which make up around a fifth of spending. In fact all categories bar online video – which is also seeing rapid growth and represented 7% of ad revenues in the first half of the year – saw their share of overall spend fall slightly.
“Digital has steadily increased its ability to captivate consumers and then capture the marketing dollars that follow,” said IAB CEO and president, Randal Rothenberg. “Mobile advertising’s breakneck growth is evidence that marketers are recognising the tremendous power of smaller screens. Digital video is also on a positive trajectory, delivering avid viewership and strong brand building opportunities.”
Although online video currently only accounts for around half the spend of other new formats like mobile, the medium is seeing rapid spending growth and this is only expected to continue as the rise of VoD services means that advertisers are increasingly shifting budgets from TV to online video.
When Facebook finally rolls out its video ads, estimates suggest the firm could be looking at generating $1 billion form selling slots by next year. Although that’s still a tiny fraction of US TV ad spend, forecast to be worth more than $66.35 billion in 2013, digital video ad spending is one the fastest-growing online categories marketing spend and Facebook wants to control it. Morgan Stanley analysts forecast video ads could boost Facebook’s ad revenues by as much as 12% next year, highlighting the opportunity for growth.