27 January 2017

FUTURE TRENDS - Mobile ad Spending Projected to Reach $72 Billion by 2020

For the first time ever, market research and analyst firm BIA/Kelsey has compiled a five year forecast with in depth analysis and ad spending projections for mobile.

Why? Because mobile is the fastest growing among all location targeted media that they track.

They project mobile’s overall US ad spend in 2020 to reach $72 billion, up from $33 billion in 2016 - a 17 percent compound annual growth rate (CAGR).

Zeroing in on the location targeted portion of that overall mobile ad spend, it will grow from $12 billion in 2016 to $32 billion in 2021, a 21 percent CAGR.

What are location targeted ads? They are ads that are targeted based on a user’s location or include proximity-relevant content to trigger local offline conversions.

There are several factors driving this growth, including the mobile culture.

79 percent of mobile phones in the US are smartphones whose users spend a growing amount of time gaming, messaging and surfing social media.

Localized mobile ad spending includes in-market small businesses as well as national brand advertisers.

National brands account for the majority of the spending, largely due to their ability to implement newer technologies faster.

BIA/Kelsey also breaks down the ad spend by format including display, search, video, messaging and native-social advertising.

Search advertising currently holds the largest share, followed by display and native-social.

They project that search ads will continue to hold the largest share but native-social is growing the fastest.

An example of native-social is Facebook News Feed Ads which are based on past behaviour, ie: Facebook likes, and social connections to people and groups.

For companies to take advantage of the growth in mobile advertising, BIA/Kelsey emphasizes the importance of native formats when creating ads.

This means formats that are built “mobile first” or “mobile only” instead of being taken from other formats and plunked into mobile.

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