Two months ago I finally abandoned my perfectly functioning, albeit limited, flip phone for an iPhone and never looked back. I also find it difficult to remember how I got by at work without an iPad. I have many friends who can’t imagine functioning without their smartphones and tablets either. Even though Hurricane Sandy reminded many of us exactly what that is like, the market for these types of mobile devices is still going strong.
As more people continue to snap up tablets and smartphones, analysts are predicting a corresponding increase in mobile advertising spend that is much larger than they initially expected.
According to Gartner, worldwide mobile advertising revenue will reach $11.4 billion in 2013, up from $9.6 billion last year, and will hit $24.5 billion in 2016. “The mobile advertising market took off even faster than we expected due to an increased uptake in smartphones and tablets, as well as the merger of consumer behaviors on computers and mobile devices,” said Stephanie Baghdassarian, research director at Gartner, in a statement.
Last September, eMarketer had predicted that mobile advertising spend in the U.S. for 2012 was going to reach $2.6 billion, it then increased that amount to $4 billion in December due to the success of “native” ads like Facebook’s mobile newsfeed ads and Twitter’s Promoted Products.
Mobile technology and its impact on businesses was a major theme at the National Retail Federation’s Big Show, which took place earlier this week in New York City. A report that Cisco released during the conference found that cross-channel shopping involving mobile devices rose on average by 20 percent from last year and mobile search to in-store or online purchase is now actively used by 29 percent and 33 percent of shoppers, respectively. While many retailers spoke of the need to combat showrooming, there were also numerous vendors offering mobile advertising platforms.
In terms of which types of mobile ads companies are investing in, Gartner predicts that mobile search, such as paid positioning on maps and various forms of augmented reality, will drive mobile ad spending temporarily, before being overtaken by mobile display ads. The firm also believes that by 2015, investments in Web display ads will beat in-app display ad spending.
Gartner’s predictions are in line with a recent Forrester study in which 70 percent of the respondents said that automatically served in-app ads were interruptive and two-third found them annoying, which was higher than the percentage of respondents who said they are annoyed by TV and Web-based advertising.
Companies that are pouring more money into mobile ads should also avoid a blanket approach. Nearly half (49 percent) said they were open to mobile ad targeting based upon their personal interests and 59 percent said they want to be rewarded for interacting with an in-app ad, while nearly 40 percent said they prefer to choose which ad they want to see from a host of options.