For the first time ever last year, smartphone sales passed PC sales. Smartphones are rapidly becoming the most common device connected to the Internet. Now, everyone's attention is turning towards the future of mobile advertising. BI Intelligence has produced a comprehensive presentation on mobile advertising, looking closely at the growth of smartphones and tablets, mobile usage trends, and emerging mobile advertising strategies.
Here's a quick breakdown of today's mobile advertising dynamics:
- Mobile usage has -- and will continue to -- grow exponentially: Smartphone sales have overtaken PC sales, and will soon dawrf them. There are over one billion smartphones in use, and it's still early in the conversation cycle (with six billion dumb phones in use). Time spent on mobile is growing rapidly, accounting for more than 10% of total web traffic, and more than 50% of Pandora and Twitter use.
- The mobile ad market is still relatively small: Last year, the total U.S. mobile ad spend was approximately $1.25 billion, a tiny fraction of overall U.S. ad spend. And most "mobile ads" were simply search and display ads viewed on mobile.
- Why? Mobile CPMS are low, and ads are oftentimes intrusive. Ad spending has therefore not caught up with time spent on mobile. These will remain significant challenges to mobile ads.
- But, native ad formats are emerging and we are seeing growth: The future of the Internet is mobile, and new ad formats are being designed and tested. So far, sponsored stories have proven most effective for the advertiser and least intrusive to the user. Facebook created a mobile sponsored story business with a run rate of $180 million in almost no time.