Mobile social ad revenues will grow at a faster pace than desktop social ad revenues to reach $1.47 billion by 2016, according to a new report from BIA/Kelsey.

The fall update to BIA/Kelsey?s U.S. Local Media Forecast reveals that, although mobile social advertising is expected to grow quickly, it will still struggle to capture full revenue share because of several limitations. This is the first time BIA/Kelsey has broken out mobile numbers within its social advertising forecast.

?Right now, mobile social ad revenue is a fraction of desktop spend and it remains a fraction of desktop spend for the life of this forecast,? said Jed Williams, program director for social local media at BIA/Kelsey, Chantilly, VA. ?But if you look at the overall growth of mobile social advertising, it has the most explosive or volatile growth of all of the various components of social advertising.

?If you think about where consumers are from a platform perspective, they are on mobile increasingly,? he said. ?And, if you think about what they are doing on mobile, increasingly a large share of that is social networking.

?So if you tie those together, wherever you fit in the business marketplace, you have to think about the nexus of those two ideas. You have to reach consumers on mobile devices and you have to reach them in effective ways where they are utilizing those mobile devices.?

The Facebook factor
BIA/Kelsey forecasts that the compound annual growth for mobile social ad revenue over the next five years will be 28.5 percent compared to 17.7 percent for desktop and 19.2 percent for social advertising overall.

The growth in U.S. mobile social ad revenues will be driven by Facebook and Twitter. Mobile social ad revenues are expected to top $500 million in 2012 and reach $730 million in 2013.

The factors driving mobile social advertising include rapid growth in mobile social use by consumers, active experimentation by vendors and deep integration of native ad units on the platform.

Overall, the BIA/Kelsey report forecasts that social media ad revenue will total $4.6 billion in 2012 and reach $9.2 billion in 2016. The local segment of social media ad revenues will grow from $1.1 billion in 2012 to $3 billion in 2016.

Native ad units
Other findings include that social display advertising will continue to account for a higher percentage of revenues, driven by Facebook?s Marketplace Ads and YouTube?s multiple display units.

However, native social ad formats ? or branded content that is integrated within a social network newsfeed or content stream ? will grow significantly during this period and emerge as a viable alternative to display.

In Facebook?s case, BIA/Kelsey projects that Sponsored Stories and other native ads will account for more than 50 percent of its ad revenues by 2014.

While mobile social advertising is expected to grow, there are also several limitations in mobile ad economics that will make it hard for the mobile social market to drive even further growth during this period. These include the smaller screen size of smartphones compared to desktop, tepid user ad engagement, limited ad inventory and static creative elements.

?There are some hard realities that businesses large and small are confronting with the mobile platform right now,? Mr. Williams said. ?Mobile economics in general and mobile social economics are still very nascent and haven?t worked themselves out.

?We are placing a bet that the types of ad inventory being introduced are going to be smart and are going to be engaging with consumers and thus are going to drive demand with marketers and thus create premiums around them,? he said.

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York