Brands to spend $99.3bn on mobile ads depsite rise of ad-blockers

Brands are set to spend $99.3bn on mobile advertising next year after a growth of 95% in 2016, despite 22% of the world's mobile owners using ad-blockers. Around 14 million people are using them in North America and Europe, 38 million in Indonesia, 122 million in India and 159 million in China. The numbers are set to rise as ad-blockers "greatly improve" loading times, with webpage speeds increasing from 27% to 49%, according to Catchpoint Systems.

by Jack Loechner , Staff Writer @mp_research, July 7, 2016

It has long been predicted that mobile ad revenue would overshadow that of desktop. According to ZenithOptimedia’s new Advertising Expenditure Forecast, mobile’s dominance has arrived early; the agency sees brands spending $99.3 billion on mobile advertising next year, versus $97.4 billion on desktop ad spend. The study expands on recent figures that highlight just how massive mobile advertising has become.

Over the last year, mobile ad revenue has grown 95%, at the expense of nearly every other medium, from desktop to radio. The report shows an additional 46% this year, followed by 29% the two subsequent years, resulting in 58% of the total ad market by 2018.

Share of Global Adspend (% of Total) Medium 2015 2018 Television 36.9% 33.7% Desktop internet 19.5 16.0 Mobile internet 10.4 22.4 Newspapers 12.6 9.6 Magazines 6.5 5.0 Radio 6.7 6.1 Outdoor 6.8 6.6 Cinema 0.6 0.7 Source: ZenithOptimedia/ClickZ, June 2016

Mobile’s growth is happening faster in some regions than others. Mobile advertising already accounts for 56% of Chinese ad spend, a number the study expects to swell to 78% by 2018. Before that happens, China is predicted to become the world’s largest mobile ad market, spending $32.7 billion to the U.S.’ $30.5 billion, says the report.

The U.K. is the only other place in the world where mobile makes up more than half of the national ad spend, but that may be affected by its decision to leave the European Union, which can cost as much as the equivalent of $96 billion in ad spend growth.

According to last month’s ClickZ Intelligence Report, only 18% of respondents in North America and 14% in Europe believe their organization has an advanced approach to mobile advertising. In North America, the largest number of people consider themselves intermediate mobile advertisers.

Characterization Of Organization’s Mobile Ad Efforts Characterization North America Europe Advanced… A mobile first approach as part of integrated ad strategy 18% 14% Intermediate… Mobile advertising successful, but ad hoc and not properly integrated 40 29 Beginner… Mobile advertising is “bolt-on” to desktop focused activities 42 57 Source: ZenithOptimedia/ClickZ, June 2016

The shift toward mobile has affected different ad formats. Banner ads don’t work as well on the smaller mobile screens and as a result, the report says they are expected to shrink by 3.1% this year, despite increasing by 8.6% in 2015.

Online video, says the report, is getting better and better from a user experience standpoint and as a result, video ads are projected to grow by 20.1% each year until 2018. And, paid social growing 23.6% over that period.

The report shows that paid search trumps all the mobile formats when it comes to ROI, according to the majority of respondents. Paid search comes with less uncertainty than either display or social advertising; 30% don’t know how to rate their ROI, compared with a respective 37 and 35%. Of those who do understand, only 12% say that mobile paid search results in poor ROI. Nearly one-third think it’s at least good; 15% said the same about display.

On another front, ad blocking is primarily seen as a desktop issue, but recent research shows that its mobile adoption is increasing at an alarming rate. Around the world, 22% of smartphone users, 419 million people, are blocking ads on the mobile web.

In North American and Europe, there are 14 million people using mobile ad blockers on a monthly basis, says the report. However, in Indonesia, the number of monthly blockers is 38 million, roughly the population of California. But a drop in the bucket, compared with China and India, where there are a respective 159 and 122 million blockers, says the report.

The frequently-cited reason for using ad blockers include irrelevant ads and disruptive ads, notes the report. On mobile, they greatly improve loading time, according to Catchpoint Systems, analyzing the loading times of 20 mobile sites from five publishers and 15 brands, with and without ad blockers turned on. On publishers’ websites, loading speed increased 27 to 49% with ad blockers.

CNN had the slowest site of the study, with a page taking an average of 14.8 seconds to load without an ad blocker; with, the time dropped down to 7.6%. Brand pages generally loaded faster than those of publishers, even without an ad blocker, Amazon’s site loaded in 1.68 seconds.

For additional information from ClickZ please visit here.