These Graphs Show How Tablet Ad Spending Will Crush Smartphones Over The Next Four Years

Business Insider

This is the first of a five-part series called "The Tablet Effect." This series takes a look at how tablet devices are changing the way advertisers think about advertising dollars. "The Tablet Effect" is sponsored by Yume.

As multi-screen usage becomes more and more integrated into America's everyday life, advertisers are recalibrating how to allocate their ad dollars.

This doesn't just mean what portion of an overall advertising budget will be spent on mobile devices — according to eMarketer, the 2012 mobile ad budget made up a tiny sliver of the digital ad spend and an even tinier 2 percent of total ad money spent — but how that specific mobile budget will be divvied up between mobile phones and tablet/eReaders.

International Data Corporation (IDC) predicted what ad spending will look like through 2016 on various mobile and tablet formats.

First and foremost, IDC predicts that what started out as a $2.1 billion industry in 2011 will grow to a whopping $14.8 billion industry come 2016. But the devices getting the most money will change. According to the IDC, while mobile phones will still dominate, tablets and eReaders' budgets will be on the rise much faster:

This shift is projected to occur for a number of reasons.

"For one, the tablet share of the installed base of mobile devices will grow a lot, and also, per device, there is more traffic on tablets than on smart phones simply because they are easier to use," Karsten Weide, IDC's program VP of digital media and entertainment, told BI. "Taken together, that means there will be a lot more traffic going through tablets than today, and traffic translates into ad inventory that publishers can sell."

Second: Tablet users engage more with ads than their smartphone counterparts. This summer, when the Interactive Advertising Bureau asked 552 smartphone and 563 tablet owners if they clicked on ads for more information, 47 percent of tablet users said yes while 25 percent of smartphone users said no.

And third: The size difference sweetens the deal. Advertisers can simply do more with more space, and good ads allow consumers to interact with the spots.

Thus, as shown in the graph below, the compound annual growth rate (CAGR) will rise for both mobile phone and tablet/eReader devices, but the latter will be increase 30 percent more.

The next thing for advertisers to take into consideration is whether advertisers will spend more on app or browser-based advertising on said mobile devices.

IDC's estimates, shown in our graph below, predict that while app-based advertising will increase, browser-based advertising will decrease:

This disparity is, in large part, due to apps' easy functionality on mobile devices.

But Weide explained:

Going forward, we think the gains of app-based advertising will weaken a little because tablets will attract more traffic, and tablets support a better browsing experience. So there will be more browser-based traffic, and therefore more browser-based advertising.

He continued, however, that the wild card in this scenario is HTML5 (emphasis is ours):

If HTML5 finds wide-spread adoption, this could support more browser-based ad spending. But there has been a lot of talk about HTML5 in the past couple of years, but only limited adoption. Facebook abandoned their HTML5 for a reason: there are still HTML5 kinks to be worked out.

The CAGR figures are as follows:



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