Google and Facebook have been raking in mobile ad revenue in the United States at a higher rate than was expected earlier this year, resulting in both companies outperforming earlier analyst estimates, according to a new research study by eMarketer.
"Overall spending on mobile advertising in the U.S., including display, search and messaging-based ads served to mobile phones and tablets, will rise 180 percent this year to top $4 billion," according to a Dec. 17 announcement from eMarketer. "eMarketer's previous forecast, made in September 2012, was for substantially smaller growth of 80 percent, to just $2.61 billion. Now eMarketer expects U.S. mobile ad spending to reach $7.19 billion next year and nearly $21 billion by 2016, a significant upward revision."
The main reason for the significant increases is "due in large part to the success of so-called 'native' ad formats like Facebook's mobile newsfeed ads and Twitter's Promoted Products," according to the study.
A major reason for the increase is Facebook's third quarter ad revenue increase. To start the year, Facebook didn't have much of a mobile ad business, with analyst estimates of between $45 million and $100 million, eMarketer said. Instead, though, Facebook blew those numbers out of the water "at an astonishing—and unexpected—rate," according to the report.
Now eMarketer estimates that Facebook's U.S. mobile ad revenues are on track to hit $339 million for the fiscal year, a huge change.
Then there is Google, which also is outperforming analyst estimates for the third quarter, said Clark Fredricksen, a spokesman for eMarketer.
After the company's earnings call, analysts now estimate that Google will bring in between $5.8 billion and $7 billion globally in mobile ad revenue, with most of the analysts revising their estimates upward after the call, said Fredricksen.
"We did not expect several things, including that Google's disclosures indicate that the mobile advertising market is growing faster than anyone previously thought," he said. "A big portion of that is fueled by direct response advertising," where users buy goods or services by clicking on an ad on a Google Search page.
Fueled primarily by direct-response advertisers, Google now controls a 56.6 percent share of the U.S. mobile advertising market, eMarketer estimates.
The big shock, though, was "how quickly Facebook has been able to scale its mobile business, from essentially zero to $331 million this year," Fredricksen said.
"No one really expected that," he added. "They were on a much faster trajectory than anyone had thought."
Most of Google's mobile ad revenue come from search, and eMarketer estimates Google maintains a 93.3 percent share of the overall $1.99 billion U.S. mobile search ad market. Spending on mobile search ads in the United States is expected to jump 55 percent, to $3.6 billion next year—of which Google is expected to earn a 92.4 percent share.
Twitter’s 2012 U.S. mobile ad revenues have also been revised upward, to $134.9 million from $116.8 million expected as of September, representing about 3.5 percent of the total U.S. mobile ad market and 7.3 percent of the mobile display ad market, according to eMarketer.
Earlier this year, another analyst firm, Piper Jaffray, estimated that Google's mobile ad business could top $4.5 billion this year, an 80 percent boost over the mobile platform provider's 2011 mobile revenues of $2.5 billion. Piper Jaffray analyst Gene Munster said at that time that the mobile ad revenue could help account for 10 percent of Google's gross sales in 2012, up from 7 percent in 2011.