Citing accelerating mobile revenue growth at Facebook and Google, eMarketer has raised its 2012 US full-year mobile ad forecast significantly: from just over $2.6 billion to more than $4 billion. The forecast includes tablet advertising; however eMarketer does not break that out as a separate category or indicate its percentage contribution.
I believe the new $4 billion eMarketer figure is probably aggressive. However it directionally it reflects the rapid growth of the mobile market.
A few months ago, the IAB found that 1H 2012 mobile ad revenue was approximately $1.2 billion, suggesting a full-year haul of $2.5 or maybe up to $3 billion (in an upbeat scenario). It’s true however that Facebook had little or no mobile revenue at the start of 2012. By the end of 2012 eMarketer expects Facebook to generate mobile ad revenue of nearly $340 million.
The total value of the US mobile ad market (all ad formats) will be $4.06 billion this year, according to the firm. It will grow to more than $7 billion next year.
By 2014 eMarketer expects mobile advertising in the US to be worth in excess of $11 billion. These 2013 – 2016 projections make the assumption that obstacles to mobile advertising will be substantially if not totally eliminated and that marketers will move budgets commensurate with consumer time spent on mobile devices.
Some mobile ad companies such as Flurry and InMobi argue that daily time spent with mobile apps now rivals time spent with conventional TV. Yet it took a number of years before ad dollars began to migrate online in earnest, despite much earlier consumer adoption of the internet.
The same pattern may well play itself out in mobile — though perhaps in a slightly more concentrated time frame. It’s reasonable to expect sizable gains in mobile ad spending in 2013 and 2014. During that time, however, we may see the market evolve in unexpected ways and not simply mirror the PC ad market, as most mobile revenue forecasts assume.
There’s little question that Google is the dominant mobile advertising company in the US, with an estimated $2.17 billion in anticipated revenue this year says eMarketer. On its most recent quarterly earnings call Google reported that it now had a (mostly advertising-driven) $8 billion annualized mobile “run rate” globally.
After only a few months, Facebook is the second largest mobile ad revenue generator in the US according to the eMarketer projections.
Online paid search represents roughly 48 percent of total digital ad revenue in the US. And eMarketer sees a roughly comparable share of mobile ad revenue going to search (with almost 100 percent of that going to Google).
Display advertising on the PC was 21 percent in the first half according to the IAB. However, in mobile, eMarketer believes display will generate 45 percent of all ad revenue in the US in 2012. There’s quite a bit more mobile display “inventory” than search queries in mobile.
If search accounts for 49 percent of total US mobile revenue and Google controls almost 100 percent of that slice of the pie, the company’s 2012 mobile paid search revenues would come to approximately $1.87 billion by my calculation. That would mean that Google’s mobile display revenues would be worth about $290 million within the eMarketer forecast parameters.
That figure seems low to me. It would mean Facebook will end the year with more mobile display revenue than Google (as well as any other individual mobile ad network). It’s hypothetically possible but unlikely that Facebook’s mobile display revenues are already higher than Google’s after only a few months.