U.S. Mobile Search Ad Investments Growth Slower Than Native Formats
Spending on mobile search ads in the U.S. will jump 55% to $3.6 billion next year, of which Google will take 92.4% share, according to research released Monday.
Although the majority of Google's mobile ad revenue comes from search, the media will grow more slowly than native display formats. eMarketer estimates that Google maintains a 93.3% share of the overall $1.99 billion U.S. mobile search ad market in 2012.
"Shifting consumer behavior has dramatically increased the volume of mobile searches and paid clicks on mobile devices, but advertisers remain hesitant to pay rates per mobile click comparable to those on the desktop, as mobile searchers are still less likely to convert into purchasers than their desktop counterparts," according to the report.
Overall, the amount spent on mobile search ads in the United States pales in comparison to investments in native ad formats.
The convenience of native ad formats like Facebook's mobile newsfeed ads and Twitter’s Promoted Products have pushed up the amount marketers spend on U.S. mobile ads. It turns out the ads are successful at reaching those spending time on smaller screens.
eMarketer estimates that U.S. ad budgets will rise 180% to $4 billion this year for mobile advertising -- display, search and messaging-based ads served to mobile phones and tablets. Released in September 2012, the company previously forecast 80% growth to $2.61 billion. Estimates put 2013 at $7.19 billion, and nearly $21 billion by 2016.
Pointing to Facebook’s Q3 mobile performance as a major reason for the uptick, eMarketer estimates Facebook’s U.S. mobile ad revenue at $339 million in 2012, but it still pales in comparison to Google at $2.17 billion. Estimates are based on data from research firms and investment banks, as well as other sources such as ad revenue, impressions and pricing.
Overall, U.S. mobile ad revenue estimates demonstrate an uphill climb. eMarketer estimates Google's U.S. net mobile ad revenue at $3.9 billion in 2013, rising to $6.3 billion in 2014. The uptick this year was fueled by direct-response advertising, according to the research firm.
Comparing Google's growth with Facebook's, the social network should climb from $851 million in 2013 to $1.2 billion in 2014. Pandora should follow with $347 million and $496 million, respectively. Twitter sits at $249 million and $383 million, and Apple at $213 million and $376, respectively.
eMarketer estimates Facebook will generate 18.4% share of the U.S. mobile display advertising market in 2012. Google’s mobile display business takes 17% -- earning $315 million in the U.S. this year, driven primarily by strength of its AdMob network and relationships with advertisers looking to extend their display efforts to mobile devices. "The bulk of future growth for Google’s mobile display business, eMarketer predicts, will come from mobile monetization of YouTube," according to the report.
Apple, which holds about 6.7% of the U.S. mobile display ad market, has the potential to capture market share in the long run, according to eMarketer. Millennial Media, by contrast, which has performed similarly to Apple, has less potential to scale -- but it does have an outsized presence in the marketplace, despite its 5.1% share of the after-TAC market.