Facebook, Google Help Rocket Mobile Advertising

Once feared to be Facebook’s Achilles’ heel, mobile advertising is now thriving thanks to the stewardship of the social giant. Along with Google, Facebook helped drive mobile ad spending up 105% to $17.96 billion in 2013 -- up from $8.76 billion in 2012, according to new global estimates from eMarketer.

This year, mobile advertising is on pace to rise another 75.1% to $31.45 billion, which would account for nearly a quarter of total digital ad spending worldwide.

Combined, Facebook and Google saw an increase of $6.92 billion in net mobile ad revenues in 2013.

Facebook's mobile fortunes are newly found. In 2012, Facebook accounted for just 5.4% of the global mobile ad marketplace. In 2013, that share increased to 17.5%, and eMarketer predicts it will rise again this year to 21.7%. Even more remarkable is the restraint that Facebook has shown with respect to mobile advertising, according to Martin Utreras, senior analyst at eMarketer.

“They’ve been patient [by] not adding too many ads out of respect for their users,” Utreras said on Wednesday. Rather, the company has increased mobile revenue by increasing ad prices, said Utreras.

In the fourth quarter of last year, Facebook said ad impressions across channels declined 8%, while the average effective price per ad was up 92% year-over-year.

“The key driver of ad revenue growth continued to be the strong performance of newsfeed ads on mobile and desktop, which helped us attract more advertiser demand,” David Ebersman, Facebook’s CFO, explained in a quarterly earnings statement. “Mobile ad revenue increased from approximately $881 million in [the third quarter] to approximately $1.25 billion in [the fourth quarter], a healthy increase that of course benefited from seasonal effects.”

Google still dominates the mobile ad market worldwide, taking a portion of nearly 50% in 2013, according to eMarketer. Yet the rapid growth of Facebook will cause the search giant's share to drop to 46.8% in 2014, eMarketer estimates.

The rapid pace at which mobile has taken over Facebook’s ad revenue share paints a clear picture for the company’s future. In 2012, only 11% of Facebook's net ad revenues worldwide came from mobile -- and last year, that figure jumped to 45.1%. In 2014, eMarketer estimates that mobile will account for 63.4% of Facebook's net digital ad revenues.

The steady rollout of video ads on Facebook -- and the addition of ads on Instagram -- bode well for the company’s mobile outlook. Utreras, however, expects Facebook to proceed with caution on both fronts. “Facebook remains very careful when it comes to rolling out new ad products,” he said.

Twitter, for its part, is one of the few companies expected to increase share of the mobile ad market this year. eMarketer estimates the company saw Twitter’s share of the worldwide mobile advertising market increase to 2.4% last year -- up from 1.5% in 2012. This year, eMarketer estimates Twitter will see its share rise to 2.6%.

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1 comment about "Facebook, Google Help Rocket Mobile Advertising".
  1. Anni Paul from BoscoSystems , March 20, 2014 at 12:57 a.m.
    I think a tip of the hat is also in order for mobile ad networks. Basically, I think one of the reasons mobile advertising is growing like this is because mobile users are being exposed to better ads. There has been a dramatic evolution in mobile ad quality (in terms of the relevance, timing, positioning, etc) just in the last year or two. And it's done wonders for this industry, as Google and Facebook are realizing. A good article from Airpush points out that something like 70% of users surveyed considered mobile ads on smartphones as a personal invitation instead of an intrusion. That's because ads are getting smarter, more relevant, and more creative than a big old banner that sticks out like a sore thumb ... http://www.airpush.com/how-consumers-are-driving-a-new-acceptance-of-mobile-advertising/