Mobile Advertising is the fastest growing sector of the advertising industry, in 2015 it generated 30% of total digital advertising income, which hit a new record of $27.5 billion. It has three distribution channels – mobile apps, mobile web and messaging. About 2bn people in the world have a mobile phone, which is making mobile advertising a major distribution vehicle. The number of mobile phones has outnumbered TV sets, PCs, laptops and tablets. According to the recent Forrester research study, this enormous number of mobile devices commands 30 billion “mobile moments” a day, instances when people interact with their smartphone.
Here is what we’ve found about the state of the mobile advertising in numbers.
Key Mobile Advertising Statistics:
- Digital advertising revenue 2014 – $49.5 billion
- Mobile advertising revenue 2014 – $12.5 billion
- Mobile App Install Ads revenue 2014 – $3.6 billion
- Cost per mobile app install – $1.28 (for iOS), $1.53 (for Android)
- Cost per loyal mobile app user – $2.90 (for iOS)
Let’s draw a bigger picture of the mobile app advertising market, in terms of its growth rate, revenue share, formats and geography.
When we look at the general trend for mobile advertising revenue, we see that Search is and will continue to be the fastest growing type of mobile ads. Primarily because, as we’ll see on a graph later in this article, the major platform for mobile Search ads is Google, which is the company with the biggest mobile ad revenue share on the market. By the year 2018 the total mobile ad revenue is projected to reach $42 billion, more than 300% growth from $12.5 billion as of 2014. Video ads revenue is also projected to double from $1 billion in 2015 to $1.7 billion in 2016.
Forecast: Mobile Advertising Revenue 2014-2018, by Type
Source: Business Insider
One of the major ongoing challenges of digital advertising is ads blocking. Desktop ads blocking software is being popular on a desktop for a while and, according to some estimates, in 2014 alone resulted in $5.8 billion revenue loss. Even though mobile ads blocking represents only 2% of the total blocked ads volume, it presents a serious problem because, as the global share of visits graph demonstrates, the number of mobile visits rapidly increases, while desktop visits is in decline. Meaning the ads blocking issue is quickly moving into the mobile area.
Global Monthly Ad Blocking Growth
Source: PageFair & Adobe
There are several companies that dominate mobile advertising market, let’s look at their share, in US in particular. The eMarketer research data suggests that Google continues to be a leader, even though it looses its share gradually, with 37.66% in 2013, only 35.17% in 2015 and it’s projected that its share will continue to decline this year. Facebook is number two and year over year it gains and loses one or two percent, staying within 16-18%. Almost all other companies on the chart has a one-digit share and see only a slight decrease and increase within one percent. LinkedIn is the only company outside of the Google-Facebook-Twitter trio that experienced a significant mobile advertising revenue share growth, with 0.05% in 2013 and 0.36% in 2015, which is 700% growth!
US Mobile Advertising Revenue Share, by Company
Revenue share with respect to device and mobile platform presents another facet of the mobile advertising market. As of the Q3 of 2015 Android commanded 65.39% of total mobile traffic and 44.39% of a mobile advertising revenue. iOS generated 28.93% of traffic and 52.05% of revenue. The biggest gap in this heated iOS vs. Android completion can be seen at revenue share difference for both platforms tablet computers. Apple’s iPad generated 20.32% and Android tablets combined only 5.94%. BlackBerry, Windows and Symbian have a less than a single percent share and really don’t present any meaningful competition to the iOS-Android duopoly.
Traffic and Revenue Share in Q3, 2015, by Device
Source: Opera Mediaworks
Geographically the mobile advertising marketplace presented by 25 countries that represent all continents. 34.69% of the total mobile ads inventory belongs to US, Asia-Pacific countries serve 29.92% and Europe holds the third position, with only 11.56%. Among countries that demonstrate the most significant over the previous year growth are Turkey, it jumped up from 16 to 6th position, Argentina, from 20 to 5th position and Kenia entered the Top 25 list for the first time in 2015 and held 20th position.
Numbers of Mobile Advertisements Served, by Country
Source: Opera Mediaworks
Both iOS and Android platforms are divided into several categories mobile app owners publish their apps. These categories revenue potential varies, as of 2015 the highest valued inventory were Business, Finance and Investing category, with revenue/impressions ratio equal to 6:1. Games held the second position, with 23.6% of brand advertising revenue, with less than 10% of a total ad impressions volume.
Traffic and Revenue Share by Publisher Category
Source: Opera Mediaworks
Because of the exponentially growing popularity of mobile apps, mobile app install ads have become multi-billion dollars business within a few years. The Apple’s app store was launched in 2008, by 2014 mobile app install ads revenue reached $3.6 billion. By the year 2019 the total mobile app install ad revenue is projected to almost double this number and hit $6.8 billion.
Forecast: Mobile App Install Ad Revenue 2014-2019
Source: Business Insider
One of the most important metrics that is important for both mobile app owners and mobile advertising companies is Cost Per Install (CPI). According to the Fiksu mobile marketing company, as of January 2015 an iOS app install cost $1.28 and an Android app install cost $1.53. This metric varies throughout the year, it depends on mobile advertising demand increase during the holiday season, new smartphone models introduction and mobile operating system updates. Retrospectively it’s interesting to note that the CPI metric fluctuates around $1 since Fiksu began measuring early in 2013.
Cost Per Install Index January, 2014 – January, 2015
As important cost per install is, there is another metric, which Fiksu measures, that is even more essential for mobile apps portfolio owners – cost per loyal user. This metric indicates how much does it cost for a company to acquire app users who actively use and will continue to use their apps. As of January 2015 cost per loyal user was $2.90, 30% up from January of 2014.
Cost Per Loyal User Index January, 2014 – January, 2015
Mobile advertising represents a significant portion of digital advertising, the ongoing evolution of mobile devices presents new opportunities for new ad formats and more sophisticated targeting. Due to its higher mobility a smartphone allows to generate a greater mobile ad revenue than a tablet computer. The bulk of mobile ad revenue is controlled by the leading social networks and Google. Mobile app install ads market is in billions range and continues to grow rapidly, with major players in this field such as Facebook, Google and Twitter. One thing is clear, mobile advertising is only going to grow in future as it becomes perhaps the dominant platform for the advertising industry.