According to the latest data from independent market research
firm eMarketer, mobile advertising spending in 2014 is likely to
continue moving north after more than a two-fold increase last
year. A paradigm shift is observed in the digital marketing
industry as mobile ad spending is expected to hit $31.5 billion
in 2014, an increase of 75.4% over the prior year. This follows a
staggering 105% increase in 2013 to $17.96 billion.
The overall number of smartphone users across the world is
predicted to surpass 1.75 billion in 2014. Advertisers thus feel
the need to remain visible on the always-on always-there platform
to gain a top-of-the-mind brand recall.
An August eMarketer research report claimed that the adult
U.S. population spent 19.4% of their time on mobile devices
compared to 19.2% on computers. This has led to a mad rush among
advertisers for a bigger piece the market pie. Subsequently,
mobile advertising has suddenly become the money-vending machine
in the advertising industry.
The Undisputed Leader
With a 49.3% market share in the mobile ad industry in 2013,
) is the undisputed leader in its category. Although its market
share declined from 52.6% in 2012, the company still has a
sizable lead over its nearest competitor,
). With targeted ad models like Enhanced Campaigns and Product
Listing Ads that feature product information without requiring
additional keywords, Google has held on to its lead position
through increased click share on mobile throughout 2013.
According to a report by
Marin Software Inc.
), mobile devices are expected to account for almost half of
Google paid search clicks by Dec 2015. This offers a lucrative
option for advertisers as the average U.S. click-through rate
(CTR) of smartphones and tablets were respectively reported to be
64% and 18% higher than the average desktop CTR. The conversion
rate of search ads on mobile devices in the U.S. also enjoyed a
significant improvement in 2013, with the respective tallies for
smartphone and tablets increasing 57% and 67% year over year.
However, despite a competitive advantage, Google is facing
headwinds as users gradually begin to visit specific apps from
) to find product information rather than using its search
queries. This has probably eroded its market share and eMarketer
forecasts Google's stronghold may dip further to 46.8% in 2014.
From a paltry 5.4% market share in 2012, Facebook has taken rapid
strides to garner 17.5% market share in 2013. As consumers
largely shifted toward mobile devices, the social media giant
began to subtly place ads directly into users' news feeds. Thus,
they could sell more mobile-native products like ads that let
users install a new app with just a few clicks.
This quickly translated to faster money and mobile ad revenues
increased from 11% of the total revenue in 2012 to 45% in 2013.
This played a huge role in boosting the share prices to newer
highs with the current year-over-year return hovering at a
With 1.23 billion monthly active users and 757 million logins on
a daily basis at year-end 2013, Facebook offers a large platform
to advertisers to reach a wider audience. The company has further
inked an advertising deal with advertising major
Omnicom Group Inc.
) to monetize its online photo-sharing service provider
Instagram. With the deal, Omnicom will be able to showcase
various promotional videos and pictures of associated brands of
its clients in Instagram to increase brand awareness and attract
As diversified brands increasingly take to Instagram to attract
new customers and deliver visually pleasing contents to users,
mobile ad revenues are poised to swell. In 2014, eMarketer
forecasts Facebook to rake in $6.8 billion in mobile advertising
revenues for a 21.7% market share. Although the projected
revenues are comparatively lesser than Google's estimated $14.7
billion, the chasm between the two players is closing fast.
Others in the Fray
As Google and Facebook own the lion's share in the market, other
players in the industry like social media giant
), Internet radio service provider
Pandora Media, Inc.
), and mobile advertising firm
Millennial Media Inc.
) have a much smaller presence. Unless these companies come up
with something extraordinary, the industry is set to remain
oligopolistic with the two biggest players calling the shots.
The ubiquity of mobile devices, speedy growth of technologies and
massive proliferation of consumers' engagement have made mobile
advertising an integral part of the marketing campaign. However,
any intrusive or irrelevant ad within the personal mobile space
is likely to become counteractive. Advertisers face the risk of
losing their appeal in the clutter unless the messages are
cleverly integrated within the content.
In addition, mobile advertising entails huge costs as advertisers
need to modify the ad format to incorporate rich media to make it
more appealing. So instead of jumping onto the mobile bandwagon
to buy as many mobile ad slots as possible, advertisers need to
judiciously and meticulously plan an effective mobile ad campaign
for a healthy ROI.
Consequently, as advertisers realize the importance of the
quality of the view over quantity, newer metrics such as Cost Per
Engagement (CPE) and Cost Per View (CPV) have become the main
purchasing models and Cost Per Mille (CPM) have began to fade
into the oblivion.
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The Road Ahead
Matt Ackley, chief marketing officer at Marin Software, perfectly
summarizes with the following comment: "We're at the cusp of
mobile becoming the dominant channel in search marketing.
Consumers are becoming much more comfortable using their
smartphones and tablets to complete transactions online, and as
we see that comfort level rise advertisers will follow suit with
continued investment and optimization in mobile."