Asia-Pacific leads globe in 2012 mobile ad revenue with US$4.3 billion: Gartner

The high adoption of handsets in Japan and South Korea has given the Asia-Pacific region an early lead in advertising worldwide and the region is expected to continue leading the globe through to 2016 with the growth economies of China and India expected to contribute increasingly. 

However, North America and Western Europe are expected to close the gap on Asia-Pacific as the mobile channel gets more integrated, with 360-degree advertising campaigns eating up budgets historically allocated to print and radio. 

In the rest of the world—Latin America, Eastern Europe, and the Middle East and Africa—mobile advertising growth will be aligned with technology adoption and the stabilisation of emerging economies, but will mostly be driven by large markets such as Russia, Brazil and Mexico.

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Globally, mobile advertising revenue is forecast to reach $11.4 billion this year, up from $9.6 billion in 2012. Worldwide revenue is expected to reach $24.5 billion in 2016, with mobile advertising revenue creating new opportunities for app developers, ad networks, mobile platform providers, specialty agencies and even communications service providers in certain regions.

"The mobile advertising market took off even faster than we expected due to an increased uptake in smartphones and tablets, as well as the merger of consumer behaviours on computers and mobile devices," said Stephanie Baghdassarian, research director at Gartner. "Growth in mobile advertising comes in part at the expense of print formats, especially local newspapers, which currently face much lower ad yields as a result of mobile publishing initiatives."

Mobile advertising growth is also driven by consumer multitasking, which favours the multiplatform approach and blurs the lines between channels. 

"Smartphones and media tablets extend the addressable market for mobile advertising in more and more geographies as an increasing population of users spends an increasing share of its time with these devices," said Andrew Frank, research vice-president at Gartner. "This market will therefore become easier to segment and target, driving the growth of mobile advertising spend for brands and advertisers."

Frank advises advertisers to therefore integrate mobile advertising into marketing campaigns to connect with audiences in "specific, actionable ways". 

Gartner's report also found that different types of mobile advertising are evolving at different speeds. Mobile search, including paid positioning on maps and various forms of augmented reality, all of which can be informed by location, will contribute to drive mobile ad spending across the forecast period, although it will diminish in strength as the period progresses.

The research firm believes that search will be overtaken by mobile display ad spending and will remain divided between in-app and mobile web placements. Although, after several years of in-app dominance, web display spending is expected to overtake in-app display from 2015.

Gartner also highlighted a potential 'bubble' in the mobile advertising market with a significant portion of mobile ad inventory taken up by app developers paying for ads to promote their apps and get them more downloads, a category known as 'paid discovery'.

As developers are taking advantage of currently low prices and many are spending close to their maximum ad income on this category, this leads to cyclical advertising arrangements among websites, which produces an inflated picture of revenue, concluded the report. 

"Some correction in the growth rate must occur before demand from brand and local advertisers catches up with supply, and more sustainable economics support a faster growth rate commensurate with consumer adoption," said Baghdassarian.