Mobile advertising grew 42% to $41 billion in 2016, and for the first time generated 55% of all online display advertising revenue, according to one estimate. By 2020, mobile will contribute 75% to online display ad revenue.
IHS Markit released a white paper Sunday at the Mobile World Congress in Barcelona, outlining some of the mobile worldwide trends that companies will see in 2017. Those trends include an uptick in display advertising, adoption of native ads and instant messaging apps, and the adoption of virtual reality.
With the shift, measuring the return on investment for everything from search and display to native advertising has become a major challenge for marketers as more of them move a larger chunk of their advertising budgets from desktop to mobile.
There is no one system for brand-and-performance advertising to understand the performance, according to IHS. It will require lots of experimentation, something online marketing experts will debate at the MediaPost Search Insider Summit coming up in April 2017 in Captiva Island, Fla.
As traffic shifts to mobile, consumers will spend $74 billion on mobile apps by 2020, up from $54 billion in 2016. For advertisers, tying consumers to their brand through mobile will become a broader strategy in 2017. The apps will range from chat to messaging.
Instant messaging apps boast an aggregate audience of more than 5 billion active user accounts by the end of 2016, but that number will skyrocket to nearly 7.5 billion by 2020, according to IHS.
The total virtual reality install base will rise to 90 million by 2121, up from 16 million in 2016. But while mobile headsets will comprise the majority of VR installations in the next few years, IHS expects the inexpensive nature of the devices, often bundled with smartphones, will lead to lower content revenue when compared with content monetization derived from more advanced platforms.
Revenue for smartphones shipped in 2020 will reach $355 billion -- up from 4 billion in 2016 -- with support of artificial intelligence. Software investments and partnerships will create smarter AI-enabled experiences. Google, Apple, Microsoft, Sony and Samsung have developed their own voice assistant technology, and soon it will begin to bring a more personalized user experience to mobile devices.
Baidu, Alibaba and Tencent collectively own 36.5% of the total ad market -- with a total of CNY 160 billion, or $24 billion, in 2016, according to IHS. The three companies have absorbed large TV brand budgets and online ad budgets, and continue to expand aggressively into digital, per the report.
Collectively, the companies made 262 investments, 27 acquisitions and one joint venture between 2009 and 2016. Mobile app companies received most investments from the trio for that period.
This column was previously published in the Search Blog on February 27, 2017.