by Mark Walsh
A new Gartner report projects that worldwide mobile ad revenue will increase 16% from $9.8 billion in 2012 to $11 billion this year and more than double to $24 billion by 2016.
“The mobile advertising market took off even faster than we expected, due to an increased uptake in smartphones and tablets, as well as the merger of consumer behaviors on computers and mobile devices,” said Stephanie Baghdassarian, research director at Gartner.
Regionally, the research firm expects mobile advertising in North America to rise 22% to $3.8 billion this year and reach $8.9 billion in 2016. In Western Europe, mobile ad spending will grow 19% to $1.9 billion and $4 billion in three years. Both regions will close the gap with Asia-Pacific, which has typically led the way in advertising because of its higher mobile adoption rates.
The Asian market will reach $4.9 billion this year and almost doubled to $9.5 billion by 2016, while the rest of the world increases to $788 million in 2013 and $1.8 billion in three years. The high-growth economies of China and India are increasingly expected to bolster mobile advertising as their expanding middle classes draw global brands.
Gartner believes mobile display ad spending will eventually overtake mobile search. Display will initially be split between in-app and mobile Web placements — reflecting consumer usage — before spending on Web display moves past in-app advertising starting in 2015.
The Gartner report also noted the rapid rise in consumer mobile use has outpaced ad demand, creating an inventory glut that drives down ad prices. That in turn has led to a large portion of inventory being scooped up by app developers buying ads to promote their apps, while selling similar ads in their own apps.
The research firm likened this type of “paid discovery” for apps to the ad bartering that took place among Web sites during the late 1990s, producing an inflated picture of ad revenue that contributed to the dot-com bubble.
“Some correction in the growth rate must occur before demand from brand and local advertisers catches up with supply, and more sustainable economics support a faster growth rate commensurate with consumer adoption,” said Baghdassarian.
It should also be noted that the Gartner forecast for North America is substantially lower than the eMarketer projection for U.S. mobile advertising released last month. The latter study forecasts $7 billion in mobile advertising this year, growing to $21 billion in 2016.
Gartner says its estimates including mobile Web display, in-app display, search and maps, video/mobile TV and messaging. They are also based on reported numbers by the main players in the mobile advertising network space (Google and InMobi), and in the digital media measurement space (comScore), as well as industry bodies such as the Interactive Advertising Bureau (IAB).