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US Mobile Ad Spending Soars Past Expectations

JANUARY  2012

Advertisers will spend $2.61 billion on mobile this year

The US mobile advertising market is growing far faster than expected, driven by the rapid ascension of Google’s mobile search advertising business, advertisers’ growing attraction to display inventory on tablet and smartphone devices, and the growing roster of mobile ad networks such as Google’s AdMob, Apple’s iAd and Millennial Media.

eMarketer estimates mobile advertising spending in the US reached $1.45 billion in 2011, up 89% from $769.6 billion in 2010.

This year, US mobile ad spending will grow 80% to $2.61 billion.

eMarketer previously forecast US mobile ad spending would grow 47% to $1.8 billion in 2012, up from $1.2 billion last year. The significantly higher revision is the result of several factors, most notably a stream of new market data made available in the past few months from major advertising publishers and research firms.

“Right now there are many researchers out there basically looking at nearly the same empirical data about the mobile marketplace and drawing completely disparate conclusions,” said Noah Elkin, eMarketer principal analyst.

“In order to form the most complete picture possible about the mobile ad market, we think it’s essential to evaluate multiple information sources, rather than a single set of survey data—especially as the market remains immature,” added Elkin.

eMarketer estimates US mobile search advertising more than doubled in 2011, when spending grew to $652.5 million, up from just $253.2 million in 2010. This year, advertisers will spend $1.28 billion on mobile search ads in the US, eMarketer estimates. eMarketer previously forecast mobile search advertising would reach $349.4 million in 2011 and $594.8 million in 2012. The revisions have helped put search in first place among mobile formats, with 49% of total mobile spending this year.

eMarketer estimates US mobile display ad spending, which includes spending on banner and rich media ads, will grow 93.5% to $861.7 million in 2012, after reaching $445.4 million in 2011. Spending on mobile video advertising will grow an estimated 122% to $151.5 million this year, up from $68.2 million in 2011.

eMarketer forms its forecast for mobile advertising spending through a meta-analysis of estimates from research firms that track mobile ad spending and impressions, reported data from major mobile advertising publishers, and other sources. eMarketer also conducts interviews with executives at agencies, brands and mobile advertising publishers who provide perspective on the development of the mobile advertising business as a whole, as well as the revenues for individual companies.

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November 2011

The upcoming Thanksgiving holiday weekend will be the biggest one yet for mobile shopping with an estimated 60 million consumers planning to use their devices to shop, research purchases or seek retailer information, according to a new report from InMobi.

Mobile users will increasingly reach for their handsets over the Thanksgiving weekend to help with a wide variety of shopping activities, according to InMobi’s Holiday Mobile Shopping Study. The results reflect the critical role that mobile will play for retailers during the upcoming holiday season.

“The single most important message for marketers and retailers is that mobile phones will play the biggest role yet in fueling shopping activity this holiday season,” said Susan Kuo, North America head of marketing for mobile ad network InMobi, San Mateo, CA.

“Whether you are an offline or online store, it is imperative that you consider the impact of mobile as it will be a critical tool in all facets of shopping this holiday season, from price comparison to purchases happening directly from consumers’ mobile devices,” she said.

“Those marketers that identify this early on will have a big advantage and opportunity to differentiate themselves by creating an engaging mobile experience.”

Price comparison

Approximately 45 percent of mobile users plan to compare prices via their handsets during their Thanksgiving weekend shopping, up from 22 percent in 2010.

Not only will consumers use mobile to research products but, over 21 million, or 36 percent, plan to make purchases directly from their mobile devices.

“I think the biggest surprise we found was a staggering 42 percent of mobile shoppers plan to use their mobile devices to shop or research sales on Cyber Monday, which has traditionally been dedicated to online shopping,” Ms. Kuo said.

“This finding is a fairly strong support that mobile is cannibalizing desktop shopping,” she said. “Online merchants will have to pay close attention to this trend that while the profile of their customers may not change, the medium in which they’re accessing their stores will increasingly move to mobile devices, and that means having to make an aggressive move to ensure that that their mobile shopping destinations are user-friendly and to have a strong mobile advertising strategy in place.”

Immersive mobile experiences
Other findings from the report include that 29 percent of users will look to mobile devices to learn about new products or services, 27 percent will use their handset when making a purchasing decision and 15 percent of shoppers will use their mobile device to make a purchase while in a store.

In terms of the types of information mobile users will be looking for via their devices this holiday season, 31 percent said they will look for updates on sales and promotions, 27 percent will look for local store hours and directions, 26 percent will seek out product information and availability, 26 percent will be interested in product photos, 18 percent will search for official retailer apps and 17 percent will use mobile for customer support.

The survey was conducted during the last week of October and the first week of November. There were 907 respondents with devices across all the major platforms in the United States.

“Given the myriad of information that shoppers are looking to obtain from their mobile devices, retailers and marketers should be looking at integrating those information and features into their mobile destinations, whether it is an app or mobile Web site, and making it as easy as possible for consumers to find this information,” Ms. Kuo said.

“Given the depth of information that consumers are looking to seek on mobile devices, especially given the focus around product information and photos, advertisers may also want to consider leveraging HTML5 and rich media ads to deliver a more immersive and customized experience to engage mobile users prior to them even arriving to their mobile destination,” she said.

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How Google, eBay, And PayPal Are Gearing Up For A Very Mobile Holiday Shopping Season

Leena Rao

 

Online holiday shopping reached record levels in 2010. And e-commerce spending is up this year. All signs point to consumers spending even more online this holiday season. I sat down with executives from Google, eBay, PayPal and ShopKick to discuss the trends that are expected to emerge in the e-commerce space over the next few months.  They center around mobile, tablets, and deals.

PayPal has more than doubled its mobile payments volume since the 2010 holiday shopping season, and we haven’t even hit the thick of this year’s rush. eBay is projecting $5 billion in mobile payments volume in 2010 and this number could increase in the next few months. And Google projects that 15 percent of total search on Black Friday (the day after Thanksgiving and one of the biggest shopping days of the year) will come from mobile devices. Tablet devices are now a part of the online shopping experience and retailers are taking note. Clearly, all signs point to the fact that this could be the breakout year for mobile shopping.

Mobile, Mobile, Mobile

All of the companies I spoke to unanimously agreed that this would be the year of mobile for the holiday shopping season. Steve Yankovich, head of eBay’s mobile business operations and development, says he expects this to be the biggest year for mobile sales for eBay yet. eBay has said that the company expects to see $5 billion in gross merchandise volume in 2011, and this will be partly buoyed by a strong mobile presence in November and December.

PayPal’s Senior Director for Mobile, Laura Chambers, echoes Yankovich’s forecasts and says that merchants are even preparing for the onslaught of traffic to their mobile sites. A number of big retailers, such as Armani Exchange, Guess and The Limited have recently put PayPal’s mobile express checkout as an option for payments on their mobile sites as a way to help the conversion process. “We are seeing strong investments by online retailers for mobile shopping this year,” she says.

Chambers says that last year, the peak day for mobile payments for PayPal was December 12, with $4.7 million in mobile payments volume. Now PayPal is seeing $10 million in mobile payments per day, and we haven’t even officially hit the holiday shopping period. Clearly, the mobile payments numbers could even triple from last year to this year.

While many consumers may shop on mobile for their holiday purchases, the usage of product search, barcode scanning, and other informative apps will also play a big part in this year’s mobile shopping. eBay’s RedLaser barcode scanning apps have seen scans go up 50 percent over the past year. If you aren’t familiar with how it works, RedLaser will scan the barcode of a physical product and show you where you can buy it on eBay’s properties and where it is available in local store locations around you (via Milo) and for how much. The app has been updated with PayPal functionality so that users can actually buy the product directly from the app.

Another shopping app developer who has high hopes for mobile this holiday season is ShopKick. Co-founder Cyriac Roeding says that this year will be the year of mobile for physical shopping. For background, Shopkick automatically recognizes when someone with the free Android or iPhone app on their phone walks into a store. Once a Shopkick Signal is detected, the app delivers reward points called “kickbucks” to the user for walking into a retail store, trying on clothes, scanning a barcode and other actions. Kickbucks can then be redeemed across all partner stores for gift card rewards or for Facebook Credits. User can also receive special discounts on specific products at partners stores like Macy’s, Best Buy or Target.

Roeding explains that the cell phone is the only interactive platform you carry with you in a physical store, and retailers are looking to use the platform to help drive transactions. Clearly, a mobile rewards app that offers in-store discounts can help do this. “The internet has caused brick and mortar retailers more trouble than benefit over the past fifteen years. Now retailers are catching on to how the internet can help retailers—that’s where mobile comes in.”

Sameer Samat, VP of Product Management for Google Commerce, tells me that the search giant is seeing a growing number of users are making buying decisions using their mobile phone. “We are definitely seeing m-commerce conversions growing and becoming bigger over time,” he says. “But users are also using their mobile phone to search for products and find local availability.”

Samat says that Google has seen a 200 percent growth in mobile product search usage and Google Shopper app downloads over the past year. Shopper, which is available for iOS and Android, allows you to find product prices, reviews, specs, local inventory of products at nearby stores, and more.

As we mentioned above, Google is forecasting that 15 percent of total search on Black Friday. will come from mobile. “There’s no doubt that users are now making buying decisions using their mobile phone,” says Samat. “And we are seeing m-commerce conversions growing and becoming bigger over time.”

Tablets

As tablets have grown to be the go-to browsing device, the iPad, and other devices are also becoming a way to shop. And retailers are catching on to this trend. According to a National Retail Federation study, 20 percent of retailers have invested in tablet device apps this holiday season.

With this in mind, Google debuted catalogs in August, an app for tablet devices that includes 200 catalogs from major brands including Anthropologie, Bare Escentuals, Bergdorf Goodman, Crate and Barrel, L.L. Bean, Lands’ End, Macy’s, Neiman Marcus, Nordstrom, Pottery Barn, Saks Fifth Avenue, Sephora, Sundance, Tea Collection, Urban Outfitters and Williams-Sonoma.

The app is more than just a browsing experience. When consumers find an item they’d like to purchase, they can tap to find it in a store nearby or tap “Buy on Website” to visit the merchant online.

Google’s Samat says that “the tablet is the ultimate leanback experience and we see that playing a big role in holiday shopping as a replacement for the mail order catalogs you used to browse through.”

PayPal calls it ‘couch commerce’ and believes that tablet commerce will have a record year. PayPal recently reported that consumers who own both a tablet and a smartphone are significantly more likely (63%) to indicate increased overall spending on mobile purchases, versus owners of smartphones only (29%). Owners of both a tablet and a smartphone buy nearly twice as often as those who only have smartphones and more than 40% of dual owners made more than 20 mobile purchases over the past year, compared to only 12% of smartphone-only owners.

Forrester just released a report predicting a 15 percent increase in online shopping sales this year to nearly $60 billion, partly due to the increase in consumer-use of tablet computers for shopping.

Beyond Black Friday And Cyber Monday

Black Friday and Cyber Monday are historically the top-high-grossing online shopping days during the holiday season. But execs expect to see high volumes of online shopping on other days thanks to an increase in mobile shopping and deals.

Yankovitch tells me that eBay expects revenue numbers to be well over numbers that eBay saw last year for Black Friday and Cyber Monday, but expects to see more activity at times when people aren’t traditionally shopping.

The day of Thanksgiving is one of those days, says Chambers. Because people will have their phone everywhere (including at the table), consumers are expected to make purchases on the fly, especially on Thanksgiving evening. In fact, PayPal is predicting that after dinner on Thanksgiving Day will be the first mobile shopping spike this holiday season.

Another popular day has been the second Sunday in December, which is one of the last days where people feel confident that items will be shipped in times for the holiday. And Chambers says across the board, Sunday is the biggest day for mobile shopping generally.

Deals

There’s no doubt that deals, coupons and discounts will be a large part of the online holiday shopping experience, especially with the current state of the economy. According to the recent Forrester report, 58 percent of Americans say they are more price-conscious today than they were a year ago and nearly half believe they find better values online.

“I really expect consumers to be deal hunting this season,” explains Chambers. She says that PayPal, which has historically offered special deals for the holiday shopping season, will be bulking up on more consumer deals this holiday season.

Samat says that Google has always seen a spike for queries like deals, coupons, and sales during the holiday time and fully expects to see an increase this year. “The consumer desire for a better deal will help give certain product decision tools a big bump,” he explains. “People may take more time this year to find the best possible price.”

Deals could also include lucrative holiday shipping offers. In 2010, 45 of the top 50 online retailers offered some sort of promotional deal between Thanksgiving and Cyber Monday, most of which were a type of shipping promotion. And in 2011, Shop.org anticipates that a record 92.5% of online retailers will offer free shipping and not just as a Cyber Monday promotion.

Clearly, there’s plenty of optimism from retailers, and tech companies regarding online spending and shopping this holiday season. And this holiday season is somewhat unique considering the big bet that retailers are making on newer technologies, such as mobile, geo-location, tablets, local product search and more. The big question is how consumers will react to and engage with these technologies over the next several weeks.  It could be a very mobile Christmas.

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Mobile Advertising Goes Mainstream

OCTOBER 31, 2011

Mobile search, display spending surges in response to mobile web adoption

US mobile ad spending will grow 47% in 2012, reaching $1.8 billion, as marketers seek to capitalize on rising smart device and mobile web adoption. As on the desktop, search and display (banners, rich media and video) are emerging as the dominant mobile ad formats.

“Mobile advertising is no longer a question of ‘if’ but of ‘when,’” said Noah Elkin, principal analyst at eMarketer and author of the new report, “Mobile Advertising and Marketing: Moving to the Mainstream.” “A key factor pushing mobile advertising toward the mainstream is that mobile web access is fast becoming more the norm than the exception. This makes mobile a greater imperative than ever for marketers.”

Reflecting the continued advance of smartphones and rising tablet acquisition among US consumers, eMarketer’s latest forecast is sharply higher. Relative to the September 2010 forecast, mobile ad spending projections for 2011 through 2014 have been revised upward anywhere from 11% to 33% per year. Overseas markets are experiencing comparable momentum, driven by similar trends in device and mobile web adoption.

All mobile ad formats will see sizeable spending increases through 2015, but similar to the dynamics of online advertising, search and display are emerging as the dominant mobile ad formats. Mobile display ad spending (banners, rich media and video) will overtake messaging to become the largest overall format in 2012. Within the display category, rich media and video are growing the fastest as marketers seek to translate the desktop’s engaging brand experiences to smartphones and tablets.

Marketers are approaching mobile from a perspective of both less and more: less experimentation and more commitment, fewer test budgets and more real dollars, fewer one-off campaigns and more repeat buys. Most importantly, there is a growing sophistication in marketers’ efforts to integrate mobile into their broader digital campaigns to engage consumers. Mobile will continue to emerge as less of an afterthought and more of a permanent fixture in marketers’ digital strategies, the report finds.

“Consumers increasingly expect to communicate, network, browse and shop from a range of devices, and the growing sophistication of smart devices will only accelerate this trend,” said Elkin. “But whether consumers access the web from a PC or a mobile device will ultimately take a back seat to marketers’ ability to build campaigns that reach across channels and devices and focus on targeting specific actions.”

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Two in Five Mobile Owners Use Internet on the Go
AUGUST 2011

Almost 100 million consumers will be on the mobile web this year

The US mobile web population will be up almost 25% this year as 97.3 million mobile owners log on to the internet from their device at least monthly, eMarketer estimates.

By 2015, more than three in five mobile users and almost half the total US population will be using the mobile internet, eMarketer forecasts.

“The rapidly expanding smartphone and mobile internet user populations raise the stakes for marketers and make the mobile web more of an imperative than ever,” said Noah Elkin, eMarketer principal analyst for mobile.

US Mobile Internet Users and Penetration, 2010-2015 (millions, % of mobile phone users and % of population)

eMarketer’s estimates of mobile internet usage include people of any age who access the internet from a mobile browser or installed application at least once per month.

Most of the growth in mobile internet usage will come from increased smartphone penetration, which will reach 38% of mobile users and 28.8% of the overall population by the end of this year. The number of smartphone users is set to increase 49.6% this year and continue growing at a steady double-digit pace through 2015, when nearly 150 million US consumers will have such a device.

US Smartphone Users and Penetration, 2010-2015 (millions, % of mobile phone users and % of population)

Mobile internet usage is still heaviest among younger adults, with 43.2 million US consumers ages 18 to 34 logging on to the mobile web this year, eMarketer estimates—or 44.4% of the total.

Usage is on the rise among older adults as well, however. This year, eMarketer estimates 21.5 million 45- to 64-year-olds and 3.7 million seniors 65 and older will use the mobile internet. By 2015, those numbers will both more than double to 45.4 million and 11.3 million, respectively.