Mobile advertising should be a bonanza, similar to online advertising a decade ago. However, it has been a bit slow off the ground, and its growth trajectory is not clear cut.
Here's the dynamics surrounding the mobile advertising ecosystem:
- Mobile advertising is relatively tiny: U.S. mobile ad revenue was $1.2 billion last year, a tiny fraction of overall U.S. ad spend. And most "mobile ads" were simply search and display ads viewed on mobile. According to BI Intelligence estimates, mobile advertising is on track to hit $3.2 billion this year.
- Why? Mobile CPMS are low, and ads are oftentimes intrusive. Ad spending has therefore not caught up with time spent on mobile. These will remain significant challenges to mobile ads.
- Also, the mobile ad ecosystem is very complex: The mobile ad ecosystem is not as strictly delineated as the desktop ecosystem. In mobile advertising, the rules of the road change with different combinations of device, wireless operator, and operating system.
- And there are few shared protocols or standards: Mobile lacks the technical consensus that enables ad targeting, delivery, and measurement to work fairly seamlessly across the desktop world. As the mobile ad industry matures it will likely become more streamlined and simple, but for now there are innumerable actors interacting with one another and attempting to find a niche.
- The display ad category presents a dynamic and complicated future: Google dominated the paid search category, which accounted for 62 percent of mobile global ad spend last year. But, mobile ad networks, demand side platforms, mobile ad exchanges are all part of a dynamic ecosystem that is constantly evolving and trying to grow non-search mobile related advertising. New companies are also testing out and finding some success with mobile native ad formats.