1. Market Research
  2. > Business Services
  3. > Advertising and Marketing
  4. > Advertising Market Trends

Mobile Advertising Insight

  • October 2013
  • 11 pages
  • Frost & Sullivan
Report ID: 1859005

Summary

Table of Contents

Demanding More from Digital Advertising

This Frost & Sullivan insight presents an analysis of the current state of the U.S. mobile advertising market. Specifically, it comments on the emerging trend of programmatic mobile ad buying and ad serving in the United States, and presents details of the leading U.S. mobile operators’ advertising initiatives.

U . S . M o b i l e A d v e r t i s i n g M a r k e t

Introduction and Overview

This Frost & Sullivan insight presents an analysis of the current state of the U.S. mobile advertising market. Specifically, it comments on the emerging trend of programmatic mobile ad buying and ad serving in the United States, and presents details of the leading U.S. mobile operators' advertising initiatives.

Mobile advertising is the process of describing or presenting a product, a service, an idea, or an organization through mobile communication channels to induce mobile subscribers to buy, interact, or support the item being advertised. Following are the main channels of mobile advertising:

• Messaging-based mobile advertising
• Mobile Internet-based display advertising
• Mobile video advertising
• In-application mobile advertising
• Performance-based mobile advertising

Advertising in these mobile channels could be served by ad networks, ad exchanges, ad mediators, or publishers (with the help of white-label mobile advertising platforms).

M o b i l e A d v e r t i s i n g M o d e l s

Existing and Emerging Models for Mobile Advertising

Penetration of next-generation smartphones and connected tablets continues to increase at a rapid pace in the United States. Frost & Sullivan expects the total number of smartphones in use to exceed million by 2017 in the United States, while the number of tablet users is expected to approach million by 2017. Virtually every connected display device— including smartphones, tablets, e-Readers, portable gaming consoles, and in-car entertainment systems—is used regularly for a wide range of content and multimedia services. This "screen fragmentation" has important implications for digital advertisers who want to show the right ad to the right audience in the right context, and on the right screen. In most cases, advertisers want to leverage targeting and content presentation capabilities of each medium to enhance the ad experience and maximize the desired campaign results for a particular audience.

The U.S. mobile advertising industry has changed dramatically in the last five years. Advertisers are spending more than dollars (on average) per smartphone user per year in the United States, which helps support the growth of this industry. At the same time, it is more important than ever for advertisers and agencies to measure the performance of their ad spends in order to justify this spending. While the mobile channel offers several unique ways to deliver effective and relevant advertising, the following challenges continue to restrict market growth: 1) device, and operating system (OS) fragmentation; 2) lack of detailed user targeting,; 3) limited screen real estate; 4) multiplicity of advertising platforms; 5) a complex mobile advertising value chain; 5) falling ad rates; and 6) a virtual glut of ad inventory.

Programmatic Mobile Advertising

Looking at entire spectrum of mobile advertising, there are three main business models for inventory monetization. There is the Direct Sales model, where the publishers have direct sale teams and sell to advertisers directly. Then there is the Network business model which has ad networks such as Millennial Media and Jumptap (though they may also have other products as well) selling directly. Then there is the Programmatic Market, defined as mediation and Real time Bidding (RTB) which is really going forward as RTB dominated space. With advertisers and agencies (collectively referred to as the "buy side") demanding more out of their mobile campaigns, the programmatic model continues to see good traction in the United States. The programmatic model is based on establishing a dynamic, real-time bidding environment in which the buy side and the "sell side" (content owners and content publishers) establish the value of ad inventory based on parameters such as placement of the ad inventory, user demographics, location, time of day, and even the type of device in real time. In an exchange-based programmatic environment, the buy side allows real-time bidding for inventory by several potential buyers, which allows the buy side to sell inventory to the highest bidder (thus allowing for revenue maximization from mobile ads). According to Mobclix, a Velti company, "Ad exchanges are online marketplaces for buying and selling advertising impressions. Developers maximize their revenues by auctioning their inventory to a combination of advertisers, ad networks, and agencies. Advertisers maximize their click-throughs by bidding on precisely targeted audience segments."

Private vs. Public Exchanges

Private and public mobile ad exchanges are the two important forms of mobile exchanges. Private exchanges—as the name indicates—allow publishers to 1) specify who is able to see and bid on their inventory; and 2) exert greater control (such as pricing floors) over the types of ads that could be served on their digital properties. These exchanges are also "transparent," meaning that advertisers specify exactly where their ads should run. They can also see full details of where they did run following a campaign. Demand for such exchanges is led by leading publishers who want greater efficiency, quality, scale, and overall control over the advertising experience delivered to their customers. More recently, private exchanges are also being considered by organizations that want to connect directly with advertisers in order to control the advertising workflow (and to generate higher margins).

A public ad exchange, on the other hand, is more "open" and can be used by a large(r) number of buy side participants to place bids on the available inventory in order to place ads. In an ideal scenario, both public and private ad exchanges should run in conjunction, with publishers leveraging private ad exchanges for specific types of inventory and then, using public ad exchanges to monetize any remnant or unsold inventory. Leading industry participants— such as Google, Millennial Media, Jumptap, Inc., Medialets, Nexage, Inc., and Mobclix (a Velti company)—are involved in the programmatic side of things and are rapidly enhancing their capabilities to provide for increased scale, and compatibility with the established online demand side platforms (DSPs). The challenge in such scenarios is to ensure a consistent way to allow the buy side to reach the desired audience across different devices. With users increasingly beginning a task on one device (such as a laptop) and completing it on another (such as a smartphone), it has become extremely important to be able to follow a user across different connected environments. There are various approaches that are currently being used to address this challenge, including leveraging various probabilistic mechanisms and leveraging massive sets of online and offline audience data to determine audience characteristics.

Get Industry Insights. Simply.

  • Latest reports & slideshows with insights from top research analysts
  • 60 Million searchable statistics with tables, figures & datasets
  • More than 25,000 trusted sources
  • Single User License — provides access to the report by one individual.
  • Department License — allows you to share the report with up to 5 users
  • Site License — allows the report to be shared amongst all employees in a defined country
  • Corporate License — allows for complete access, globally.

Veronica helps you find the right report:

Testimonials

The research specialist advised us on the best content for our needs and provided a great report and follow-up, thanks very much we shall look at ReportLinker in the future.

Kate Merrick

Global Marketing Manager at
Eurotherm by Schneider Electric

We were impressed with the support that ReportLinker’s research specialists’ team provided. The report we purchased was useful and provided exactly what we want.

Category Manager at
Ikea

ReportLinker gave access to reliable and useful data while avoiding dispersing resources and spending too much time on unnecessary research.

Executive Director at
PwC Advisory

The customer service was fast, responsive, and 100% professional in all my dealings (...) If we have more research needs, I'll certainly prioritize working with ReportLinker!

Scott Griffith

Vice President Marketing at
Maurice Sporting Goods

The research specialist provided prompt, helpful instructions for accessing ReportLinker's product. He also followed up to make sure everything went smoothly and to ensure an easy transition to the next stage of my research

Jessica P Huffman

Research Associate at
American Transportation Research Institute

Excellent customer service. Very responsive and fast.

Director, Corporate Strategy at
Ingredion

I reached out to ReportLinker for a detailed market study on the Air Treatment industry. The quality of the report, the research specialist’s willingness to solve my queries exceeded my expectations. I would definitely recommend ReportLinker for in-depth industry information.

Mariana Mendoza

Global Platform Senior Manager at
Whirlpool Corporation

Thanks! I like what you've provided and will certainly come back if I need to do further research works.

Bee Hin Png

CEO at
LDR Pte Ltd

The research specialist advised us on the best content for our needs and provided a great report and follow-up, thanks very much we shall look at ReportLinker in the future.

Kate Merrick

Global Marketing Manager at
Eurotherm by Schneider Electric

Purchase Reports From Reputable Market Research Publishers

Global Online Advertising Market Analysis & Trends - Industry Forecast to 2025

  • $ 4200
  • Industry report
  • March 2017
  • by Accuray Research LLP

The Global Online Advertising Market is poised to grow at a CAGR of around 12.8% over the next decade to reach approximately $462.7 billion by 2025. This industry report analyzes the market estimates and ...

Worldwide Advertising Software Revenue Forecast, 2017-2021

  • $ 3960
  • Industry report
  • May 2017
  • by IDC

This IDC study explores global trends in advertising software usage and spending. It covers spending in the United States, Canada, Western Europe (WE), Central and Eastern Europe (CEE), the Middle East ...

Global Outdoor Advertising Market 2017-2021

  • $ 3500
  • Industry report
  • March 2017
  • by Infiniti Research Limited

About Outdoor Advertising Outdoor advertising is a mass market medium used to broadcast messages for branding and support campaigns. The expenses of outdoor advertising are split between traditional physical ...


ref:plp2013

Reportlinker.com © Copyright 2017. All rights reserved.

ReportLinker simplifies how Analysts and Decision Makers get industry data for their business.