Commentary

How Will Android's Spread Affect Advertising?

Android-Smartphone

A new forecast from Gartner today projects Android will control nearly half the smartphone market by the end of next year -- a staggering achievement, considering the Google mobile operating system had less than a 4% market share in 2009. The research firm said decreasing smartphone prices in the next two years will help drive Android's growth as individual device makers battle each other for market share.

"Android's position at the high end of the market will remain strong, but its greatest volume opportunity in the longer term will be in the mid- to low-cost smartphones, above all in emerging markets," said Roberta Cozza, principal analyst at Gartner, in a Thursday release. So Android will rapidly replace Symbian as the dominant smartphone platform worldwide, gaining ground in the emerging regions globally that have long been the stronghold of Nokia-Symbian tandem.

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From an advertising perspective, Android will clearly be king by virtue of its reach, powering half of smartphones globally. Google's stranglehold on mobile search appears all but assured given the outlook for Android's further expansion. On the display side, it will also unquestionably be able to deliver the biggest audience worldwide.

But what about the click-through rate for ads on Android? Research released by mobile ad firm Smaato in January showed Android fared poorly in this regard compared to competitors. With the average CTR for mobile platforms set at 100, Symbian had a score of 161; Apple's iOS, 119; Windows Mobile, 112; and Android, 65. Only Palm and BlackBerry performed worse.

Smaato at the time suggested Symbian's strong CTR showing could stem from its saturation in emerging markets. If that's the case, then Android could see its own CTR increase as it displaces Symbian in those same markets. Keep in mind, Gartner predicts Symbian's market share will drop sharply to 5% in 2012, and to almost nothing by 2015, as Nokia replaces Symbian with Windows Phone 7 as its primary smartphone platform.

But even if Android improves its CTR as it expands, will major brands prefer to have a presence on the iPhone or Windows Phone devices that might offer more affluent, if smaller, audiences? To date, the demographics of smartphone users have been fairly similar across operating systems. But if cheaper and cheaper Android phones are embraced by less affluent consumers, it could make the user base less attractive to brand advertisers.

Gartner predicts Apple, by contrast, will try to maintain margins rather than pursuing market share by changing its pricing strategy. That approach will limit adoption in emerging regions -- but could help Apple also maintain premium advertisers and ad rates.

Google's own recent efforts to clamp down on Android development, including temporarily blocking open access to the latest version of the software, suggest the company is concerned about maintaining quality control. But the open-source approach that helped Android to spread so quickly will inevitably help to push down prices, leading to growing fragmentation as more manufacturers introduce their own versions of the mobile platform.

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