Video fast gaining ground as mobile adspend set to hit $41.9bn by 2017

Mobile may still be one of the poorer members of the digital advertising family (which is worth over US$100-billion), but it’s set to experience some serious growth in the next few years.

Given the massive surge in smartphone and tablet sales, that’s hardly surprising. In fact, you could say that it’s an indication that mobile advertising is about to finally deliver on its promise.

Video ads on mobile coming out tops

According to a report by Gartner, global mobile advertising spending is forecast to reach US$18-billion in 2014, a significant increase from 2013’s estimated US$13.1-billion. It gets better: the research house estimates that the market is expected to grow to $41.9-billion by 2017. What is quite interesting is, although display formats will make up most of the revenue, video will show the highest growth.

“Over the next few years, growth in mobile advertising spending will slow due to ad space inventory supply growing faster than demand, as the number of mobile websites and applications increases faster than brands request ad space on mobile device screens,” said Stephanie Baghdassarian, research director at Gartner. “However, from 2015 to 2017, growth will be fuelled by improved market conditions, such as provider consolidation, measurement standardisation and new targeting technologies, along with a sustained interest in the mobile medium from advertisers.”

It seems that mobile advertising is heading into what could be a formidable second act. The growth of video and audio is mostly attributed to the uptake of tablet devices and the growing number of that market. Though Gartner does maintain that mobile display ad formats will remain collectively the single biggest category of ads. However, there will be a shift in mobile web display after several years of higher growth in in-app display.

Location will be big when it comes to ad search

Gartner reckons that location will play a big role in search/map ad types, with an increased use of location data gathered from users. This data could either be gathered through opting-in to being located automatically through their devices or because they proactively check in the places they visit using apps such as Foursquare.

“As a result, local advertisers will be more interested in the mobile channel as a means of pushing ads. The split between in-app and Web display is taking longer to shift in favour of the latter, as the use of HTML5 tools in mobile website development is taking longer to impact the market,” says Gartner.

Everyone will win big

All regions of the world will experience strong growth in mobile advertising spend. The emerging markets of Latin America, Eastern Europe, the Middle East and Africa, will growth mainly due to the an increased tech adoption and stabilisation of emerging economies, but will mostly be driven by large markets such as Russia, Brazil and Mexico. From 2015, growth rates in this region will exceed the worldwide average.

Although North America is where most of growth will come from, due to the sheer scale of its advertising budgets and the shift to mobile.

“North America is the region with the strongest general advertising focus and investment. It is also the region where online advertising is most mature,” said Mike McGuire, research vice president at Gartner. “Overall advertising budgets are the highest, so when a portion shifts to mobile, in a multiplatform approach, it immediately impacts the market’s scale.”

Western Europe’s market for mobile advertising will remain similar to North America’s, albeit at a slightly lower scale, for the duration of the forecast period. “The mobile channel in Western Europe will become more and more integrated into 360-degree advertising campaigns, eating up budget historically allocated to print and radio advertising,” said Baghdassarian.

Asia/Pacific and Japan is the most mature region for mobile advertising, and therefore growth will slow between 2012 and 2017, averaging 30 per cent a year. Historically, the unusually high adoption of handsets for digital content consumption in Japan and South Korea has given the Asia/Pacific region an early lead in mobile advertising. Looking forward, Gartner expects the high-growth economies of China and India to contribute increasingly to mobile advertising growth as their expanding middle classes present attractive markets for global and local brands.