Smartphone usage more than doubles mobile advertising expenditure in 2010. New research from the IAB and PwC shows UK mobile advertising market grew 116% to £83 million in 2010. Traditional advertisers invest in mobile as finance, telecoms and FMCG increase spend.
Well, this is good news for the mobile advertising sector on the face of it. At last, we’re seeing mainstream adoption of mobile advertising – largely boosted by the adoption and usage of smartphones (and I suspect the iPhone had a large part to play in that too).
According to the research, mobile advertising has experienced a staggering 116% year on year growth (on a like for like basis), up from 32% growth in 2009. Advertisers spent £83 million on mobile advertising in 2010, according to the third annual IAB and PwC mobile study.
Entertainment and media has dominated the spend for the past couple of years, but its dominance is reducing as other advertisers – in particular financial, telecom providers and consumer good brands – see the opportunity the sector has to offer.
Smartphone adoption isn’t the only driver for the growth in spend. The way consumers are using mobile to access media has changed dramatically over the past few years.
Advertisers’ spend on search on mobile has nearly tripled from 2009, going up from £20.2 million to £54.9 million. Display advertising in the form of banner ads, text links, and tenancies experienced a rise of 62% to £23.7 million, from £14.6 million in 2009. The mobile format of pre-and post-roll adverts also experienced a rise of 492% to £1.1 million, up from £0.2 million in 2009, showing that the rich media opportunities that smartphones offer are being taken advantage of by advertisers.
Jon Mew, director of mobile and operations at the IAB, said: “This year’s research shows that traditional advertisers such as finance, telecoms and consumer goods are really starting to understand the opportunities that mobile, and only mobile, offers. Mobile advertising allows advertisers to target people on the move, and capture them when they’re most receptive. It’s an exciting time for mobile advertising, and for advertisers who use the opportunities.”
Anna Bartz, strategy manager at PwC, said: “We are witnessing patterns of growth similar to online advertising in its early stages. Increasing technology packed into handsets coupled with decreasing costs, presents brands with a tempting opportunity to target mobile consumers.”
Top spenders
The report shows the top five display advertising categories in 2010:
- Entertainment & Media – 32.9% (61.5% in 2009)
- Finance – 18.6% (8.1% in 2009)
- Telecoms – 14.3% (14.7% in 2009)
- Consumer Goods – 11.8% (3.2% in 2009)
- Automotive – 6.5% (2.5% in 2009).
Expenditure on Mobile advertising formats
Search - £54.9 million, up from £20.2 million in 2009, a growth of 172%
Display advertising - £28.1 million, up from £17.4 million in 2009, a growth of 61%
This category is broken down into:
· Banners and text links were up 62% year-on-year to £23.7 million (£14.6m in 2009).
· Tenancies were up 18% year-on-year to £1.7m (£1.4m in 2009) and a market share of 2% (3.8% in 2009).
· Pre- and Post-roll advertising was up 492% year-on-year to £1.1 million, (£0.2m in 2009) and a market share of 1.3% (0.5% in 2009).
· Other formats - including display advertising within SMS / MMS - £1.6 million, up from £1.2 million in 2009, a growth of 32% year-on-year.
Market Shares
Search continues to dominate with a market share of 66% (54% in 2009)
Display advertising (banners and text) - market share of 29% (39% in 2009)
Other formats (tenancies, pre/post roll, SMS and other) - market share is 5% (7% in 2009).
KEY DRIVERS AND INSIGHTS
· In 2008, the year records began, mobile phone advertising accounted for £28.6 million.
· In 2009 mobile phone advertising increased 32% year on year to £37.6m.
· *UK Smartphone ownership in 2010 was up 58% year-on-year to 36% of the UK (Dec 2010, Comscore)
· There are 23.3m mobile users in the UK (Dec 2010) – up 21% year-on-year (3 month av. ending Dec 2010 Comscore)
· In December 2010, 6.3 billion minutes have been spent browsing the mobile internet (Comscore GSMA MMM, 2010)
· The number of minutes spent per user, per month went up 32% over 2010 to 301 minutes per person (Comscore GSMA MMM, 2010)
· Mobile media users pick up their phone 18 times a day to consume content via apps/browser. (Mobile in the Media Day, IAB Research Jan 2011)
· 40% of mobile media users agree they often use their mobile if they see an interesting ad (Mobile in the Media Day, IAB Research Jan 2011)
· 51% of the UK population has engaged in M-Commerce (IAB Consumer M-Commerce Study Oct 2010)
o Used mobile for research for purchasing (43%)
o Used mobile for enhancing a purchasing experience (35%)
o Paid for something on mobile straight to bill (37%)
o Paid for something on mobile via card/bank/PayPal (27%)
Let’s get a little perspective
This is all great – really useful information, solid growth patterns and clear reasons for adopting mobile if you’re a consumer brand.
However, let’s look at the figures a little more… £82m sounds like a lot, right?
Well, for the mobile advertising world, yes it’s a lot. But not if you’re in TV advertising. A single 30-second spot across the UK in primetime is going to cost you something like £60k to £80k at rate card. Add those up for however many ad spots there are, by number of ad breaks, and you soon get into big money pretty quickly. And that doesn’t include production which can be 5, 6 or even 7 figures to produce. Admittedly, savvy buyers are not going to be paying rate card, but it puts it into perspective why above the line agencies haven’t been exactly embracing mobile technology with open arms. The maths doesn’t (yet) stack up for them. The commission they would make on mobile is still small compared with what they can make on TV. Even today in this digital world we inhabit.
It’s changing of course. And I’m hugely encouraged by this latest study. But we still have some way to go.
Background to the IAB/PwC Mobile Study
The IAB has been working with PwC since 1997 to survey the value of the online advertising market. This is the third time they have collaborated to find out the size of mobile advertising in the UK. Eighteen companies have participated in the survey, representing hundreds of websites. Total advertising revenue is reported on a gross basis. The figures are based on participants’ data and modelling and industry estimates.
