The Coming Mobile Ad Spend Tsunami

June 26, 2015

The Coming Mobile Ad Spend Tsunami

When we see mobile ad spend charts like this from the annual Internet Trends report from Kleiner-Perkins: Screen Shot 2015-06-05 at 10.29.18 AM The data is clear - digital consumption has caught up with traditional media. Mobile and "internet" or desktop are about even with 24% of the consumption share - adding up to 48% of media share. And while the desktop internet advertising spend almost matches what would be expected based on usage, print is way over represented and mobile is extremely underrepresented. Why aren't more ad budgets being allocated to mobile? Well, mobile ad spend in 2015 doubled from last year - and is still not keeping pace with mobile usage. Check out last year's Internet Trends report. Screen Shot 2015-06-24 at 10.41.27 AMDigital media consumption grew overall from 2013, from 45% share to 48%, but mobile actually took share from desktop internet. In 2013, mobile ad spend was around $7 billion, or 4% of total ad spend. In 2014, mobile ad spend doubled to $13 billion, or 8% of total ad spend, while mobile accounted for 4% more share of media consumption. The ad spend doubles and still can't keep up with the demand. Part of the gap between ad spend and where audiences are spending their time can be explained by how fast this is happening. Here is facebook's revenues by source: Screen Shot 2015-06-24 at 12.09.08 PM 3 years ago, almost no revenue came from mobile. Now 68% of Facebook's revenue comes from mobile ads. Virtually all of its growth is investment in mobile. Which bring us to forecasts. We recognize and understand the opportunity - mobile ad spend is extremely under-represented compared to mobile usage. eMarketer predicts $100 billion in ad spend in 2016. mobile_internet_ad_spending_worldwide_emarketer_copy Note the predictions for % of total media ad spend. Growing from roughly 4% and 8% (similar data in the above KPCB report), to 12% and almost a quarter of total ad spend by 2018. That's $120 billion in advertising spending that is expected to shift from print, radio, TV and even desktop internet to mobile. These trends make it clear the need for an increased investment in:

  • app store optimization and organic user acquisition
  • monetization using ad networks with a large advertiser base (Facebook's Audience Network for example)
  • mobile app marketing, engagement and retention