July 2, 2014 12:06 am

US advertisers scramble to spend on mobile

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TO GO WITH China-IT-telecommunication-Tencent,FOCUS BY AMANDA WANG
People use their mobile devices to communicate in a metro station in Shanghai on March 12, 2014. WeChat has taken China by storm in just three years, allowing its more than 300 million users to send text, photos, videos and voice messages over smartphones, find each other by shaking their devices -- a common dating technique -- and even book and pay for taxis. AFP PHOTO/Peter PARKS (Photo credit should read PETER PARKS/AFP/Getty Images)©AFP

US advertising spending on mobile devices will pass all other digital ads in two years and account for more than a quarter of total marketing budgets by 2018, a new report predicts, as marketers chase the attention of consumers who are increasingly attached to their smartphones and tablets.

Mobile ad spending will more than double to $37.5bn in 2016 from $17.7bn this year, overtaking both desktop and print advertisements, according to eMarketer’s latest forecast of US media ad spending.

The rise of smartphones, tablets and other internet-connected mobile devices is attracting advertising dollars with the promise of precisely targeting consumers on what are becoming their primary means of communication, gaming and managing their lives.

The advertising industry is however also grappling with how to deal with online ad fraud, and with finding better ways to measure the effectiveness of digital ads. In one recent case, Mercedes-Benz discovered that its online campaign was viewed more often by automated computer programmes – or robots – than by human beings.

While Google dominates worldwide mobile ad revenues with its lucrative search advertising business, Facebook and Twitter have launched their own efforts to capture a bigger share of marketing budgets. Twitter stepped up its push this week with the $100m acquisition of TapCommerce, a mobile ad tech company.

“It really has to do with consumers’ time, attention and engagement,” said Noah Elkin, eMarketer executive editor. “Consumers are spending more of their digital media time with their smartphones and tablets than their desktops and laptops.”

FT Video

The future for TV advertising

March 2014: Television advertising is back at record levels. In the UK alone companies spent an estimated £4.6bn on TV ads last year. But how long will the good times last?

US adults now spend 40 minutes more each day on their mobile devices than on larger desktop and laptop screens, up from a two-minute difference in 2013. “To the extent that time is money, that is a contributing factor” behind advertisers’ increased willingness to spend on mobile, Mr Elkin said.

However, many advertisers were still waiting on the sidelines before committing to mobile, said Shelby Saville, head of digital at Spark, a media agency owned by Publicis Groupe. “The opportunities for paid advertising in mobile are not that strong yet. In many ways we are repeating the sins of the past in desktop,” she said, such as selling banner ads “on an even smaller screen”.

Spark’s clients are more interested in putting money behind ad spots that run with video or games on devices, she said. Yahoo this year said it would move away from mobile banner ads to so-called native ads that are interspersed with other content.

eMarketer predicts the growth in mobile will lead to several significant milestones in the years ahead. It will be a major reason behind a 5.3 per cent rise in overall US advertising spending to $180bn this year, the biggest jump in a decade. 2014 will be the first year that digital ad spending – taking in both mobile and desktop – will pass $50bn.

Over the next four years, mobile is set to keep growing as desktop recedes. By 2018, mobile spending is forecast to surge to $82.2bn, or about 70 per cent of digital ad spending, up from about a third this year. It will account for more than a quarter of total advertising spending of $220.55bn.

The rise of wearable technologies such as smart watches could also help drive more money into mobile ads, albeit indirectly, Mr Elkin said. The data those devices collect about users’ preferences and activities could be used to refine the advertising delivered up on their mobile screens. “The more and richer data you can capture about the individual will help serve that individual more engaging ads,” he said.

The bulk of the rise in digital ad spending will benefit Google and Facebook, which together account for about half of digital ad revenues, eMarketer says.

While some of mobile’s growth appears to be coming at the expense of older platforms like print, consumers’ attention remains robust for one long-time advertising venue: eMarketer predicts television ad spending will continue to dominate marketing budgets, accounting for more than a third of total media spending over the next four years.

“After mobile, TV is the format with the largest growth in dollar terms this year,” Mr Elkin said. “Even as consumers spend more time consuming digital videos on their devices, they still spend more time on a daily basis watching TV.”


Twitter: @shannonpareil

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