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Mobile advertising is about to reach a tipping point. Marketers are likely to increase their spending on mobile adverts from almost $69bn this year to more than $100bn in 2016, overtaking the sum spent on desktop advertising.
Only three years ago, mobile accounted for less than 2 per cent of global advertising spending, but its share will reach 12 per cent this year, according to research group eMarketer.
The main driver of this growth is consumer preference. Eight years after Apple launched the iPhone, more than 2bn people globally have smartphones. Benedict Evans, of Andreessen Horowitz, a Silicon Valley venture capital firm, says that by 2020 four in every five adults will own a smartphone.
So far the growth in mobile advertising has mainly benefited just Google and Facebook. Both quickly identified the rise of mobile and optimised services for smartphones, allowing them to capture 55 per cent of all mobile advertising spending in 2014, eMarketer says.
However, industry experts say both these companies’ mobile dominance will decrease as rival media and technology groups compete to offer innovative marketing plans to brands.
Here is a brief guide to some of the current trends that may predict how future marketing strategies will be run:
The rise of the machine
“Programmatic” advertising — in which brands and media groups buy and sell advertising space using automated computer systems — is well established for the web, but this trend is being rapidly replicated on mobile.
James Hilton, chief executive of M&C Saatchi Mobile, a marketing agency, says more than a fifth of mobile ad spend is now programmatic, up from 5 per cent a year ago. Proponents of programmatic advertising say it is more efficient than the old ways of buying and selling ad space, and makes it easier to target consumers in real time.
Traditionally, mobile advertising formats have been mostly simple and static: think of Google’s search ads or the banner ads on news websites. But advertisers are increasingly able to deploy more creative and elaborate ad formats, including video, thanks to improving smartphone technology and the adoption of high-speed, 3G and 4G wireless internet connections.
In the past, direct response advertisers, looking for an immediate reaction such as a click, have accounted for the bulk of mobile advertising. In the future, ad agency executives hope that the growing potential for creativity on mobile will encourage more spending on brand building.
Location, location, location . . .
Smartphones provide advertisers with more data than any other medium — including location data, accurate to just 10 metres, and the opportunities for advertisers to exploit this are becoming ever greater thanks to technology.
Brands are increasingly “geo-fencing” mobile advertising campaigns to target buyers in particular locations. For example, Walmart has used this to offer discounts to particular people near a certain branch at a certain time of day.
Some retailers are even fitting stores with beacons that can communicate with a shopper’s smartphone via Bluetooth. Beacons can allow the delivery of advertising with unprecedented precision and alert shoppers to promotions as they pass through a certain aisle, for example.
The launch of Apple’s iWatch has generated great excitement in the mobile advertising industry. Just as Apple upset the smartphone and tablet markets with the iPhone and iPad, many expect that the iWatch will do the same for the wearable device market.
Forrester Research believes Apple will sell as many as 10m iWatches in its first year — more than all the other manufacturers of wrist-based devices have sold to date, including Nike’s FuelBand fitness tracker, Samsung’s Gear smartwatches, and devices by other up-and-coming companies.
Few advertising chiefs believe the iWatch — which has a screen the size of a postage stamp — will be an appropriate place to engage with consumers, although some plan to experiment. Much more interesting, they say, will be the opportunity to use data collected by apps on wearable devices for better targeted ads on a wearer’s smartphone.
Linking the mobile and the desktop
For marketers, one of the holy grails of online advertising is “cross-device targeting”. This is the ability to track a consumer from their laptop to their smartphone and back again, targeting them with a seamless campaign.
Brands have found it difficult or impossible to obtain a single view of a consumer across devices because the mobile advertising industry relies on a separate set of technology to the desktop advertising industry.
Increasingly, however, the silos between desktop and mobile are being broken down. Google and Facebook are at the forefront of this trend, providing ways for brands to target consumers on mobiles using desktop data, and vice versa, whether on their own sites or those of third parties.