• by Gavin O'Malley  @mp_gavin, August 31, 2011

By the end of the year, available ad inventory within mobile apps is positioned to absorb the equivalent of the entire U.S. Internet display ad spend.  

That bold claim comes courtesy of app advertising and analytics firm Flurry. It is based on data from the more than 100,000 apps it tracks.

"We see that U.S. mobile app inventory has grown aggressively over the last year," according to Flurry researcher Charles Newark-French. "With its growth trajectory, it will be able to absorb the entire U.S. online display ad spend by the end of the year." Put another way, mobile app inventory is growing so aggressively that in about two years it could easily meet the demand of a mature, 15-year-old form of online advertising, according to Flurry.

To arrive at these figures, Flurry first tracked the average number of ads shown per application session, which it found to be 4.3. The average application session is 4.2 minutes. (For reference, the average session length of a Web site is just under 1 minute.)

The study then looked at the number of sessions. Flurry tracks about 20% of all sessions in the market; it grew its numbers accordingly to arrive at a market size.

Flurry then compared this inventory with the net spend on display advertising in the U.S. The U.S. market currently spends a little over $12 billion per year on online display advertising.

Flurry assumed a conservative CPM of $2.50 for mobile application inventory. As a point of reference, a typical 30-second video on a large video streaming site, such as Hulu, has a CPM of $10 to $15.

There are several reasons why the market is growing at such a rapid rate, the first being dramatic smartphone growth. Indeed, over a million smartphone devices are currently being activated on a daily basis.

In regard to publisher growth, Apple's App store now has more than 400,000 apps in the market -- while Android, with over 200,000, is catching up quickly.

In addition, Flurry previously found that smartphone users now spend more time with mobile apps per day than the average Internet user spends online. Not only is inventory growing, but Flurry found the average user of a smartphone is a very attractive target for advertisers.

With a sample of more than 60,000 app users, it used location data and ZIP code statistics available from the U.S. Census Bureau to understand their demographics. On average, smartphone users are better educated and earn higher household incomes than the average U.S. population, according to Flurry.

Looking at age and gender, it found that U.S. smartphone app users cluster into younger age groups and trend slightly more female.