Mobile internet advertising to overtake desktop in 2017

In December ZenithOptimedia predicted that mobile internet advertising would overtake desktop in 2018, but the rapid development of the mobile advertising market since then has caused them to bring that prediction forward by a year. Mobile advertising is growing at a blistering pace: it grew 95 per cent in 2015, and it forecasts 46 per cent growth for 2016, followed by 29 per cent growth in both 2017 and 2018. Mobile is already the primary means of accessing the internet (see Zenith’s Media Consumption Forecasts 2016, published last week). The advertising market is catching up with the consumer as advertisers determine how best to communicate using the mobile internet.

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Desktop internet is now shrinking

Desktop advertising peaked in 2014 at US$98.9bn and shrank 0.2 per cent in 2015 to US$98.7bn as advertisers switched their budgets to mobile. Zenith now expects desktop advertising to decline for the rest of its forecast period: by 0.9 per cent in 2016, 0.4 per cent in 2017 and 6.0 per cent in 2018. It predicts desktop advertising expenditure to total US$91.5bn in 2018, when desktop advertising will account for 42 per cent of all internet advertising, and mobile advertising will account for 58 per cent.

China is the pioneering mobile market, followed by the UK

China is the leading mobile advertising market, pioneering the developments that will later spread around the world. Mobile advertising is already the dominant form of internet advertising – it will account for 56 per cent of internet advertising expenditure in China this year and 78 per cent by 2018, more than anywhere else in the world. Mobile advertising will account for 29 per cent of the entire ad market this year – when it will overtake television to become China’s largest single advertising medium – and 47 per cent in 2018. Next year China will overtake the USA to become the largest mobile advertising market: China’s advertisers will spend US$32.7bn on mobile advertising, while the USA’s will spend US$30.5bn.

The UK is the second‐most‐advanced mobile advertising market. This year it will be the only other market where mobile accounts for more than half – 51 per cent – of internet advertising, and where more advertising expenditure goes to mobile than any other medium. Mobile advertising will account for 28 per cent of total UK advertising expenditure this year, and 39 per cent in 2018.

Globally, mobile advertising is some way behind television and will remain so for at least the next few years: by 2018 we expect mobile advertising expenditure to total US$127.8bn compared to television’s US$192.2bn.

Traditional display is no longer growing

Traditional digital display advertising – banners and similar formats – will shrink 3.1 per cent this year, after growing 8.6 per cent in 2015. While we are forecasting some growth over the next two years it will be barely enough to make up for the ground lost this year – digital display’s growth will average just 0.3 per cent a year between 2015 and 2018, effectively remaining flat. This means that online video and social media will be the sole sources of growth for display advertising over the next three years.

Fortunately these are growing very quickly: Zenith predicts online video advertising will grow by 20.1 per cent a year on average between 2015 and 2018, while social media will grow 23.6 per cent.

The sudden decline in traditional display is a result of the rapid transition to mobile advertising. Banner ads are much less effective on mobile devices than on desktops – consumers find them more intrusive, and are more likely to click on them by accident than by design. Online video, by contrast, is benefiting from the increasing availability of high‐quality content, and improvements to the mobile viewing experience, such as better displays and faster connections. And for many consumers, checking their mobile devices for social media devices has become a regular, ingrained habit, while social media ads blend seamlessly into their mobile app newsfeeds.

Read the rest of this story at ZenithOptimedia.

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