U.S. Mobile Ad Spend To Double In 2012

by Mark Walsh, Apr 23, 2012, 11:45 AM

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A new forecast from Strategy Analytics projects mobile ad spending worldwide will grow 85% in 2012 from $6.3 billion to $11.6 billion. In the U.S., the technology research firm predicts mobile advertising will grow even faster, more than doubling (up 128%) to just under $4.2 billion.

If that projection proves accurate, the total would nearly triple the $1.6 billion estimate the Internet Advertising Bureau released last week for mobile ad revenue in 2011.

Advertising is expected to grow much faster than consumer spending in mobile. Strategy Analytics projects that consumer outlays on mobile media will grow 13.4% from $121.8 billion to $138.2 billion globally in 2012. In the U.S., the corresponding figure will increase 15.5% to $33.7 billion. The majority of consumer dollars (60.2%) worldwide will go toward carrier data plans and mobile Internet services.

But the study anticipates that strong, continued demand for apps will also play a key role in driving growth. The number of apps downloaded in 2011 surged 38% from 23 billion to 32 billion, making them the second-largest revenue category for both consumer and advertiser spending.

In-app display ad revenue, for example, has overtaken mobile Web advertising in the U.S. and major Western European markets by $1.7 billion, to $935 million.

Apps are expected to account for 18.9% of mobile consumer spend in 2012, rising 30.7% to $26.1 billion.

American mobile users are expected to spend $6.7 billion on apps in 2012, up 24.6%. That total would represent 20% of all U.S. consumers' mobile spend. At the same time, U.S. ad revenue on mobile apps is projected to more than double to $1.2 billion. That’s more than twice the $556 million that Strategy Analytics estimates for mobile Web display advertising.

Like apps, mobile video use is expected to rise sharply this year, with the number of videos watched almost tripling to 280 million. But unlike apps, the research firm found the uptick in mobile video viewing is translating into comparable revenue gains. Despite 23.8% sales growth, video is likely to account for just 2.4% ($3.6 billion) of total mobile media dollars in 2012. Of that amount, advertising will account for only about 20%.

David MacQueen, Strategy Analytics’ director of wireless media strategies, explained that mobile video is either often free and ad-supported (YouTube) or bundled without extra charge into services, such as Sky Go in Europe and AT&T U-verse in the U.S. So despite a global audience of 271 million users, mobile video only generated $223 million in ad sales last year.

Mobile music hardly generates any advertising either. But it is said to account for $16 billion in consumer spending on the strength of subscription revenue going to music streaming services like Spotify, Pandora and Deezer. Gains by the new crop of mobile music brands have come at the expense of ringtones, whose revenue is declining fast.

By contrast, social networking is a growing force on mobile devices. Just consider that Facebook has more than 400 million mobile users, and that more than a third (36%) of U.S. mobile consumers accessed a social networking site in February, according to comScore.

For its part, Strategy Analytics predicts that 125 million Americans will use their handsets to social network. But again, advertising and other types of revenue have yet to catch up with consumers. So related U.S. revenue will reach $412.7 million, or $3.48 per mobile user.

Globally, however, revenue related to social networking content, apps and services is expected to increase 16.1% to $17.6 billion, making up 11.8% of overall mobile media revenues.

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1 comment on "U.S. Mobile Ad Spend To Double In 2012".

1. kurt roufosse from none
   

   commented on: April 24, 2012 at 9:44 p.m.
   If you like proximity marketing and back end metrics you should check out Isign Media , its a must.

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