By Chantal Tode
December 19, 2012
Facebook has emerged as the leader in mobile display advertising as marketers shift ad spend to the platform much quicker than expected, according to a new report from eMarketer.
The social media giant is expected to generate $339 million in mobile ad revenue this year, up significantly from previous estimates of $45-$100 million. Facebook is expected to have an 18.4 percent share of mobile ad display revenue for the year compared with Google's 17 percent.
“Major ad publishers are strengthening their offerings much faster than previously expected,” said Clark Fredricksen, vice president of communications at eMarketer, New York. “I don’t’ think anybody thought after the second quarter that Google and Facebook would be in position that they are now in the mobile ad marketplace.
“It is really clear for marketers that they are able to potentially leverage the audiences on Facebook, Google and Twitter more effectively than they may have been at the beginning of the year,” he said.
“On the display side, the key finding is that the companies that have integrated ad products into their core user experience have shown it is very effective to do this because they can seamlessly deliver ads across devices.”
Mobile ad spend for 2012 in the United States is now expected to grow by 180 percent for a total of $4 billion, up from eMarketer’s previous forecast – made in September – for 80 percent growth and $2.61 billion in total spend.
EMarketer also revised upward its forecast for mobile ad spend over the next few years, with the total in 2013 expected to reach $7.19 billion and, in 2016, $21 billion.
Despite these upward revisions, mobile still only accounts for just 2.4 percent of total ad spending in the U.S. It is expected to reach an 11 percent share by 2016.
The faster-than-expected growth rate is being driven in large part by the success of native ad formats such as Facebook’s mobile newsfeed ads and Twitter’s Promoted Products.
Facebook is quickly ramping up its mobile advertising business, which launched earlier this year, and is defying analysts’ expectations for a slower build. As a result, Facebook is expected to earn more display revenue than any other mobile publisher this year.
Google is expected to earn $315 million in mobile display ad revenues for a 17 percent share, down from 23 percent in 2011.
“Google is still far and away the market leader in mobile ads as a result of its strong presence in search,” Mr. Fredricksen said.
“In display, Facebook is very strongly positioned but Google has a strong network in adMob and there is a lot of upside potential in the mobile display space for Google because it is only just beginning to monetize YouTube on mobile devices.”
Pandora has also seen its share of mobile display ad revenue shrink this year with an expected total of 12.2 percent, down from 21.9 percent last year. Twitter is expected to come in third place with a 7.3 percent share, Apple next with a 6.7 percent share, followed by Millennial Media with a 5.1 percent share.
Mobile search grows
Google comes in first place in terms of total mobile ad revenue totals for 2012, with the search giant expected to generate $2.2 billion. Facebook is in second place with $339 million and Pandora is in third place with $225 million in expected mobile ad revenues this year.
Twitter follows with expected mobile ad revenues of $135 million, then comes Apple with $124 million, followed by Millennial Media with $94 million.
Google had a strong third quarter, fueled primarily by direct-response advertisers. As a result, Google now controls a 56.6 percent share of the U.S. mobile advertising market.
Google's share of the mobile ad market is expected to remain fairly stable over the couple of years, coming in at 57.8 percent by 2014. Facebook's share is expected to reach 11.1 percent by this time.
Most of Google’s mobile ad revenues come from search. Spending on mobile search ads in the U.S. is expected to jump 55 percent to $3.6 billion next year, with Google expected to earn a 92.4 percent share.
While search is growing, the rate of growth is smaller than mobile display ads because mobile paid search rates are lower than desktop.
“There are still definite issues with mobile,” Mr. Fredricksen said. “There is still the big issue that most people are less likely to purchase goods on a phone than they are on desktop, which means that pricing on a cost per click basis on mobile search will remain much lower than on desktop.
“That said, people are spending more money from a mobile commerce standpoint, so mobile will continue to become increasingly attractive for direct response marketers and ultimately that is going to benefit companies with a larger search presence, such as Google,” he said.
Chantal Tode is associate editor on Mobile Marketer, New York