For mobile advertising networks, era of dominance is over
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For mobile advertising networks, era of dominance is over

Mobile publishers such as Facebook, Pandora, and Twitter are rapidly taking over the mobile display advertising market in the United States.

Where in past years, ad networks such as Google, Millennial Media, and Apple received most of the spending on mobile display ads, now publishers control the segment, thanks to very strong sales growth in the past year. Facebook, Pandora, Twitter, and The Weather Channel all registered strong sales in 2012 and all (with the exception of Pandora) popped onto the scene from zero sales in 2011. As a result, publishers controlled 52% of U.S. mobile display ad spending in 2012, compared to the 39% they received in 2011. This is one of the results from a newly published report from the International Data Corporation (IDC) research group (www.idc.com).

"Mobile ad networks are losing market share to publishers, and we expect them to lose even more going forward," says Karsten Weide, vice president of Media & Entertainment at IDC. "Networks, especially independent ones, are entering a difficult phase, in which, with an ever smaller share of revenue, they'll have to compete with publishers, which will only grow in strength."

Additional findings from IDC's U.S. mobile advertising report include the following:

° Strong growth in mobile advertising spending in the United States continues, even if annual growth rates continue to decline: the market grew by 88% in 2012 (down from 125% in 2011) to a total of US$4.5 billion (up from $2.4 billion in 2011). Mobile market share within all digital advertising reached 11% in 2012, up from 7% in 2011. For 2013, IDC expects a growth rate of 55–65%, with spending coming in around $7 billion, for the United States.

° Mobile display advertising has increased its market share of total mobile spending by no less than 8 percentage points to 39%, versus 61% for search ads, in 2012. Mobile display ads attracted $1.7 billion in 2012 compared with $0.7 billion in 2011. Growth rates have picked up again in 2012 after a dip in 2011. They were at 134% in 2010, 118% in 2011, and 132% in 2012.

° Among mobile publishers selling display advertising, Facebook was the number 1 company in 2012 ($234 million gross revenue), followed by Pandora ($229 million) with Twitter coming in third ($117 million). In the ad network segment, not much has changed. Google still holds the top spot ($243 million). One change is that Millennial Media ($151 million) has taken over Apple ($125 million) to claim the number 2 spot. Jumptap remains number 4 ($90 million).

° Marketers spent $2.8 billion in 2012 on mobile search ads, compared with $1.6 billion in 2011 and $0.7 billion in 2010. Growth rates have slowed significantly, down from 195% in 2010 to 127% in 2011 to 68% in 2012. Google still dominates the market with gross revenue of $2,166 million, and a gross market share of 79%.

 

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