Apps to drive mobile ad spending in enterprise

by Sohini Bagchi    Jan 17, 2013

mobile advertising

Mobile advertising is creating newer opportunity not only for app developers and mobile service providers, but also for enterprises and SMEs across verticals, who are scrambling to maximize the return on their investments on this platform. In a recent report, Gartner forecasts that mobile advertising revenue is likely to touch $11.4 billion in 2013, up from $9.6 billion in 2012 and will reach $24.5 billion in 2016.

“The mobile advertising market took off even faster than we expected due to an increased uptake in smartphones and tablets, as well as the merger of consumer behaviors on computers and mobile devices,” says Stephanie Baghdassarian, research director at Gartner. Baghdassarian believes that the growth in mobile advertising comes in part at the expense of print formats, especially local newspapers, which currently face much lower ad yields as a result of mobile publishing initiatives.

With more business users spending time on smartphones and tablets across geographies, it has become easy to track down and segment the addressable market for mobile advertising. Gartner believes that mobile advertising should be integrated into the advertisers’ overall marketing campaigns in order to connect with their audience in very specific and interactive ways through their mobile devices. As mobile apps get more agile and localized, Gartner believes it will contribute to drive mobile advertising spending of enterprises and end user consumers across the forecast period.

Apps are in fact becoming a critical component driving the growth of mobile advertisement. Research reveals that mobile web clients download more than twice as much data than desktop web clients. This means that a mobile web page can have twice the size of the desktop application. Krzysztof Ziemianowicz, Senior Product Manager at Compuware Corporation mentions in his latest blog, one of the importance of agile mobile apps in designing mobile web applications. “It requires a lot of creativity and effort, as mobile users tend to demand a sleeker experience with the application than desktop users.”

He further points out that mobile devices provide narrower end user error margin, and end users set the expectations bar high, basing on their experience with state of the art iOS and Android applications they use every day on the same device. This requirement is so important that it can easily overshadow the old and simple relationship between page size and user wait time.

Another area Gartner notes is that mobile display advertisement spending will grow and take over from mobile search, which currently tops the mobility chart in terms of usage. It will initially remain divided between in-app and mobile Web (in-browser) placements — reflecting consumer usage — although after several years of in-app dominance, Web display spending will take over in-app display from 2015.

Gartner research also notes that different types of mobile advertising are evolving at their unique pace and in different directions. Mobile search including paid positioning on maps and various forms of augmented reality, all of which can be informed by location will drive mobile ad spending across the forecast period.

Experts believe that originally a large adoption of handsets for digital content consumption in Japan and South Korea has given the APAC region an early lead in mobile advertising worldwide. Going forward, the high-growth economies of China and India are expected to contribute significantly to mobile advertising growth. However, with more mobile channels getting integrated with 360-degree advertising campaign, Gartner believes that more enterprises in North America and Western Europe are expected to embrace mobile advertising as a growth channel in the coming months.

As far as Latin America, Eastern Europe, Middle East and Africa are concerned mobile advertising growth will be aligned with technology adoption and the stabilization of emerging economies.

Ralph Simon, CEO and founder, Mobilium Global believes that although mobile advertising has become the key to a company’s competitiveness, in the age of MoSoLo or mobile, social and local, if app developers have to target businesses with mobile advertising apps, they should have enough local relevance.