(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
By Robert Cyran
NEW YORK, Dec 18 (Reuters Breakingviews) - An advertising
boom could play out on every smartphone screen in 2013. Internet
firms moaned for years that users spent lots of time surfing the
Web on their desktops, but marketing dollars weren’t following
from print and TV. Time and the growth of broadband have mostly
closed the gap. The surge in smartphone and tablet use is now
providing similar fuel for mobile advertising.
There’s no iron rule, but what advertisers spend and how
people consume media seem related over the longer run. Five
years ago, 29 percent of users' media time involved the Internet
but their screens attracted only 8 percent of ad spending,
according to Forrester Research. Now, 26 percent of time is
devoted to Internet browsing, and that brings a much closer 22
percent of ad dollars, as Mary Meeker of Kleiner Perkins noted
recently. U.S. ad spending on the Internet has ballooned to $30
billion, the Interactive Advertising Bureau reckons, up 76
percent since 2006.
Web advertising really took off after 2007, when for the
first time half of U.S. homes had broadband access, according to
the Department of Commerce. Ads loaded faster, companies became
more comfortable promoting themselves on the Web, and the
development of better analytics meant improved customer
A new mismatch has emerged. Some 10 percent of media time
was spent on mobile devices in 2011, yet they only attracted 1
percent of ad spending. Closing that gap would result in nearly
$15 billion in mobile ad revenue in the United States alone.
That’s a conservative estimate, as mobile gadgets continue to
proliferate and draw more of users' attention.
This gap, too, should close. Half of U.S. cellphone
customers now have smartphones, and the number is growing
rapidly. That means faster downloads and larger screens to view
promotions – echoes of the shifts in desktop Web use five years
ago. Analytics have improved for mobile ads, too.
Facebook (FB.O) only started gunning for smartphone and
tablet ads earlier in 2012. By the end of the third quarter that
business was running at $1 billion a year, with sales still
increasing. Google (GOOG.O) expects to reap $8 billion this year
worldwide from mobile ads, three times as much as last year.
Smaller concerns like Pandora (P.N) and Yelp (YELP.N) are
reporting similar trends. Expect much more of the same, coming
to a smallish screen near you.
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