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Mobile Ad Spending Projected to Nearly Double in 2012

25 Apr, 2012 By: Jackie Jones

BOSTON – According to the latest Global Mobile Media Forecast from Strategy Analytics, 2011 was the first year that global consumer spending on media content, apps and services for mobile phones surpassed the $100 billion barrier.

Consumers are expected to further increase spending on mobile media by 13.4 percent in 2012, up from $121.8 billion in 2011 to $138.2 billion this year, data show. Advertisers’ spend on mobile media is expected to nearly double, from $6.3 billion to $11.6 billion, with the total mobile media economy reaching $149.8 billion in revenue in 2012, a 17-percent increase when compared to last year.

“Advertisers chase eyeballs, so the fact that brands spend more on in-app advertising than the mobile Web is a clear sign that apps are what consumers are glued to for an increasing range of activities,” said David MacQueen, director of wireless media strategies at Strategy Analytics. “In the eyes of many advertisers, Web browsing on the smartphone is playing second fiddle to the app economy.”

While the majority of consumers’ spending is dedicated to data plans and Web browsing (60.2 percent), the app market on smartphones such as the iPhone and Android devices is a key driver of growth, Strategy Analytics said. More than 23 billion apps were downloaded globally in 2011.

“Apps are now the second-largest category for revenues for both consumer and advertiser spend,” Strategy Analytics said. “Apps are expected to account for 18.9 percent of global consumer spend in 2012 – $26.1 billion, up 30.7 percent on 2011 – but the strength of the apps ecosystem is also demonstrated by advertiser spend.”

For example, revenue from display ads on the mobile Web ($934.5 million) has been overtaken by in-app advertising ($1.7 billion), Strategy Analytics added. Mobile video usage is also increasing dramatically, but Strategy Analytics warned that the revenue is not as present as with apps.

“Low revenues are down to many major mobile video services being free to the end user, either funded by advertising or bundled without additional costs by pay TV providers,” MacQueen explained. “Despite the huge audience of 271 million users, ad revenues from mobile videos are tiny – a meager $223 million globally in 2011. While ad revenues will more than triple to $726 million in 2012, it is still clearly challenging for advertisers looking to reach consumers through video ads on smartphones.”

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