Nearly $18B In Digital Ad Budgets Forecast To Be Earmarked For Mobile

Just over one-third of the $50 billion in projected U.S. digital ad spending this year will be earmarked for ads running on mobile devices, according to a new eMarketer forecast.  The research firm estimates that $32.4 billion -- or almost 65% of digital ad budgets -- will go to desktop campaigns, while $17.7 billion, or 35.4%, will go to smartphones and tablets.

That would be roughly double the 17% share that mobile garnered last year of the $42.8 billion spent on Internet advertising, according to the Interactive Advertising Bureau (IAB). 

Looking at the split between desktop and mobile spending by industry for the first time, eMarketer estimates nearly all sectors will commit about one-third of spending to mobile. Retail is the highest of the nine categories examined, at 37%, with healthcare and pharmaceutical the lowest at 26.5%. That’s not surprising, since the heavily regulated pharma industry is typically more cautious about expanding to new ad platforms.

Retail is expected to be easily the highest-spending sector in digital overall -- accounting for $11 billion of the $50 billion total, with financial services and automotive the next closest categories, at $6.2 billion and $6.15 billion, respectively. Telecom and media and entertainment round out the top five, at $5.6 billion and $5.15 billion, apiece.

The eMarketer forecast also indicates that direct-response advertising will continue to drive the bulk of digital spending, at 59% compared to 41% for brand advertising. Both types of advertising are projected to rise 16% this year, but direct response starts from a higher base, leading to an increase of $4.74 billion versus $2.79 for branding.

For this year’s forecast, eMarketer said it changed how it estimates direct-response and brand advertising as the lines between the two begin to blur. Rather than looking at ad formats such as display and search, the firm said it now bases its definitions of direct response and branding on campaign objectives.

Branding-focused advertising has the goal of building awareness, familiarity, opinion, consideration or engagement with a brand. It’s not designed primarily to drive immediate sales or leads.

Direct response, by contrast, is designed to elicit a specific call to action that prompts a target audience to respond immediately and directly to an advertiser. “Both brand and direct-response advertising can take different formats and be priced in various ways,” according to the report, which eMarketer said was based on analysis of hundreds of data sources, as well as in-depth review with more than 75 executives at agencies, brands and digital ad publishers.

The travel industry -- where companies such as Priceline and Expedia dominate online -- skews heavily to direct response, and specifically search, devoting a larger share of its digital budget to performance advertising than any other industry, at nearly three-quarters.

The CPG and consumer products segment, where only a tiny percentage of total ad buying is directed to digital, is at the other end of the spectrum. It allots about two-thirds of of total digital spend on branding versus direct response. The media and entertainment category is about evenly split between the two, with 50.5% going to branding.

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1 comment about "Nearly $18B In Digital Ad Budgets Forecast To Be Earmarked For Mobile ".
  1. Merri Grace McLeroy from Integrated Marketing Strategies LLC , May 20, 2014 at 9:45 p.m.
    Excellent insight, Mark. I'm interested in information on additional segments. What is the source of the research cited?