Online ad spending market dominated by growth in mobile advertising

Press Release   •   Jul 26, 2013 11:32 BST

The online ad spending market has been forecast to increase at a compound annual growth rate (CAGR) of 11.54% through to 2016, driven by the increase in online ad spending, and the shift from direct response advertising to brand advertising.

Latest figures show online ad spending hit $9.3 billion in the first quarter of 2013, which is up from $8.3 billion from the same period a year before. The 16% growth is smaller than a recent Q3 comparison, which showed an 18% year-over-year growth figure, but reflects a steady double-digital growth pattern.

Mobile ad spend grew 111% compared to 2011, the second year of triple-digit growth, accounting for 9% of total internet advertising revenue at $3.4 billion. Digital video revenue increased 29% to $2.3 billion, up from $1.8 billion in 2011.

According to a recent report, 'Global Online Ad Spending Market 2012-2016,' as a result of rapid digitalisation, marketers have started using the online medium for branding their product offerings rather than waiting to receive a direct response.

The advertising spend on branding through online mediums has been increasing in the past few years, mainly because of the increased adoption of broadband, smartphones, and tablets.

There has been increased ad spending on branding through online mediums because companies have started realising the opportunities online mediums bring to them in the form of consumer insights, which can be used for creating superior value propositions. Also, as a result of higher consumer-brand involvement in the online medium, companies get more consumer insights.

The impact of multiple screens and people spending more time in front of multiple devices is one of the trends believed to be driving such a large growth rate. That's increasing the amount of inventory that is available and is forcing marketers to shift their dollar spend as well.

One of the key challenges in this market is the growing concerns of data security among consumers. Consumers are reluctant to share their personal information online or make online transactions because there is a risk of their personal data being shared by companies that could lead to a lack of privacy and in worse cases, fraudulent transactions. Moreover, consumers are unaware about how and when their information is being shared.

The key vendors dominating this space include AOL Inc., Facebook Inc., Google Inc., Microsoft Corp., and Yahoo! Inc.

For more information on the online ad spending market, see the latest research: Online Ad Spending Market

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