The surge in mobile device ownership and the ability of these devices to connect to the Web will help drive the growth of mobile advertising, with worldwide revenue forecast to hit $11.4 billion in 2013, up from $9.6 billion in 2012, according to IT research firm Gartner.
As mobile advertising revenue creates opportunities for application developers, ad networks, mobile platform providers, specialty agencies and communications-service providers, worldwide revenue will reach $24.5 billion in 2016, according to the report.
"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 behaviors on computers and mobile devices," Stephanie Baghdassarian, Gartner research director, said in a statement. "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."
The large adoption of handsets for digital content consumption in Japan and South Korea has given the Asia-Pacific region an early lead in mobile advertising worldwide, according to Gartner. However, North America and Western Europe are expected to close the gap on the region as the mobile channel becomes more integrated with complete advertising campaigns, which will eat up budgets historically allocated to print and radio.
In the rest of the world, including Latin America, Eastern Europe, and the Middle East and Africa, Gartner projected mobile advertising growth would be aligned with technology adoption and the stabilization of emerging economies, but will mostly be driven by large markets, such as Russia, Brazil and Mexico. Geographical regions are expected to evolve at a different pace and in different directions.
"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," Andrew Frank, Gartner research vice president, said in a statement. "This market will, therefore, become easier to segment and target, driving the growth of mobile advertising spend for brands and advertisers. Mobile advertising should be integrated into advertisers' overall marketing campaigns in order to connect with their audience in very specific, actionable ways through their smartphones and/or tablets."
Mobile search, which includes paid positioning on maps and various forms of augmented reality, all of which can be informed by location, is expected to help boost mobile ad spending from 2012 to 2016, although it will diminish in strength as the period progresses. The revenue basis of paid-for app store downloads provides some economic justification for paid discovery, paying for ads to promote their apps and get them more downloads; however, for many developers, the outlay for ads is close to their maximum ad income or even exceeds it, the report cautioned.