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The Driving Forces Behind Mobile Advertising in 2016

MobileGrowth_bannerAccording to research firm eMarketer, mobile ad spend will exceed $100B this year and account for over half of the global digital advertising market. By 2019, it’s expected to make up 72% of total digital ad spend in the US alone.

While conservative compared to figures from IBIS Capital, who recently projected the industry to reach $253B globally by as soon as 2018, it's abundantly clear the mobile channel is growing and growing fast. But what exactly is fueling it?

Demand for mobile video

In their early days, mobile ads lacked creativity. They were often a last resort monetization strategy for developers, and advertisers seldom achieved substantial ROI or brand reach. Ad placements were uninspiring in this environment, and many decided investment in the channel was premature.

But the emergence of newer ad formats like mobile video have quickly changed this perception. The rich media format is emerging as a favorite among mobile advertisers, delivering high CTR’s and user engagement. It’s the fastest growing segment in digital advertising, as reported by Business Insider, with a 39.5% compound annual growth rate compared to desktop video’s 12.9% from 2015-2020.

Advertisers simply can’t get enough of it. On ironSource’s own platform, we saw spend for mobile video triple in 2015, representing over two-thirds of network advertising spend. And with the help of increasingly sophisticated integrations like rewarded video, more video supply is making itself available. 67% of our developers currently use rewarded video, which only looks to increase as demand does in proportion.

Mobile programmatic matures

The consolidation the industry is currently experiencing is in many ways an effort to improve the buying and selling of mobile media. Disparate technologies mean multiple partners and multiple integrations, creating more layers and inefficiencies in an already complicated process.

In a cookieless world, the growing bond between data and programmatic seems the likely solution. And as it matures, so will its marketers. What was once considered a marketplace for remnant inventory, mobile programmatic has come of age with spend in the sector now surpassing that of desktop programmatic. And while the buying of mobile inventory has certainly gotten easier thanks to automation, publishers are increasingly seeing it as a premier channel to sell direct, creating closer ties with their advertisers. It’s no wonder marketers have plans to dedicate significantly more budget to the channel in 2016, led predominantly by CPG brands.

Brand and performance crossover

The average US consumer spends 4.7 hours a day on their mobile devices, of which 90% is spent in-app. VC partner at Kleiner Perkins, Mary Meeker, spotlights this trend, proposing a large but shrinking $25 billion dollar opportunity gap as marketers play ‘catch up’.

And brand advertisers are paying attention. Kelly Liyakasa, advertising editor at AdExchanger, affirms: “as brands begin to apply real-time data to contextualize ad buys, demand and dollars will shift from TV budgets to digital video and mobile” - a trend we’re already seeing as mobile programmatic blossoms and time spent in desktop and television is shrinking.

The root of this shift lies in an increasing need marketers have to make a performance-based impression. And as consumers spend more and more time on their handhelds, a bulk of these opportunities will occur on our mobile devices. It’s no surprise the spotlight has moved to this channel, a medium where consumers can be influenced and then encouraged to act immediately on intent, whether that means downloading an app, making a mobile purchase, or registering for an account.

So, with advertisers seeking touchpoints less fleeting and more measurable, they are increasingly looking to mobile to satisfy this. As we continue to see the forces of mobile growth rising, and with the consumer journey becoming more device agnostic, the importance of capturing the right audience, and most importantly their loyalty, will likely lie in their most personal media devices. Today, as we continue to marvel at the rapid growth of mobile, it seems the channel with which they discover and engage with media will largely begin and in many cases end with the mobile device.  

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