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Mobile devices are becoming the main driver of advertising growth

Puneet Sikka

Why more competition from digital media hurts TV ad sales (Part 2 of 6)

(Continued from Part 1)

Ad spending on mobile devices will surpass TV advertising by 2016

In the last article of this series, we discussed how Internet ad revenues are growing much faster than TV revenues, although TV still draws more advertising money in absolute terms. However, within Internet advertising, mobile is poised to become the leader and surpass TV ad spending by 2016. ZenithMedia shared this insight, reporting that advertisers plan to spend about $31.6 billion more on mobile Internet in 2016 compared to 2013, while spending on TV ads will increase $31.1 billion over the same period. Even spending on desktop Internet ads will increase $24.9 billion, which also makes it a close competitor to TV.

Facebook and Google will drive the mobile ad market

According to an earlier report from eMarketer, Facebook (FB) and Google (GOOG) accounted for the majority of mobile ad market growth worldwide last year. Google is the leading player in this market, with a share of about 50% in 2013, although its share declined about 3% from 2012. However, Facebook showed the rapidest growth, with its share increasing from 5.4% in 2012 to 17.5% in 2013. Twitter’s (TWTR) market share increased from 1.5% in 2012 to 2.4% in 2013, while Pandora’s (P) declined from 2.6% to 2.1%, YP’s declined from 2.9% to 2.1%, Millennial Media’s (MM) remained stable at 0.8%, and other companies’ declined from 34.2% to 25.8%.

The mobile Internet advertising market sees a boost from the smartphone boom

According to IDC, worldwide smartphone shipments increased from 725 million in 2012 to 1 billion in 2013 at a growth rate of 39%. This growth in smartphone sales has fueled growth in mobile Internet advertising. Google has directly benefited from the increasing adoption of Android smartphones. Android’s share in the global smartphone market has increased from 69.0% in 2012 to 78.6% in 2013. Google search is the default search engine on Android smartphones, and that’s how Google generates revenue from mobile Internet ads. Facebook has also grown fast, and it has about 1.2 billion monthly active users. Most of these users also access Facebook on their mobile devices, so it’s no surprise to see the company’s growth in mobile Internet advertising.

Continue to Part 3

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