Data plans, app downloads drive mobile spend over $100B

Steven Loeb · April 22, 2012 · Short URL:

Advertising on mobile apps estimated to more than double this year as smartphone apps surge

Getting sick of everyone being glued to their phones all the time? Get used to it. If the flow of money going into data plans and app downloads is any indication, activity on mobile devices is expected to remain robust.

In 2011, global spending on mobile media topped $100 billion for the first time, according to a report released by Strategy Analytics.  The total amount spent by consumers on data plans, apps and media content was $121.8 billion, and that number is projected to jump more than 13% to $138.2 billion this year.  

Of the nearly $139 billion estimated to be spent on mobile media, the lion's share, or 60%, is projected to go toward data plans as data-hungry consumers are estimated to spend $82.8 billion on data plans alone, up 9.5% form last year. This makes mobile operators key beneficiaries of the significant chunks of money being spent on mobile. 

The amount spent on smartphone apps is anticipated to jump over 30% to $26.1 billion, making apps the second biggest source of revenue in mobile media. 

More than 23 billion smartphone apps were downloaded last year, and this year could see as many as 32 billion. For this reason, apps are quickly displacing mobile display ads as the place to spend marketing dollars. In the USA and Western Europe alone, $1.7 billion was spent on in-app advertising vs just under $1 billion for display ads on the mobile Web.  

Video on mobile devices is growing as well, as 280 billion videos are estimated to be viewed this year, almost tripling the 108 billion videos watched in 2011. But even though revenue from video is expected to grow 24% this year, revenue is expected to be $3.6 billion, accounting for 2.4% of total mobile media revenue. 

Mobile ad growth nearly doubling

While spending on apps and data plans is significantly higher than the amount of money marketers currently spend to advertise on mobile devices, mobile advertising is growing at a faster clip. 

The amount advertisers and marketers are projected to spend is $11.6 billion, nearly double the $6.3 billion spent in 2011. This brings total media spending - $139 billion (for apps, data plans) plus $11.6 billion (mobile advertising) - to just below $150 billion this year, up 17% from last year.

The Strategy Analytics report says that advertising revenue on mobile apps in the U.S. will increase by 118% this year, but there is some question as to whether that money is being spent wisely.

A report by Nielsen in March of this year found that U.S. consumers were actually less likely to make purchases based on mobile ads than those in European countries. That report stated that only 6% of U.S. Smartphone owners went out and bought an item they saw advertised on their phone, compared with 18% in Italy, 15% in Germany and 14% in the UK. When asked if they made a purchase directly from their device based on an ad, only 4% of U.S. Smartphone users answered yes, while 7% of UK respondents, 8% of Germans and 12% of Italians said yes.

Nielsen also found that only 26% of U.S. consumers trusted mobile ads, while 46% trusted TV advertisements and over 50 % trusted ads on branded websites. 

Still, there is no denying that smartphones are the future and that is clearly where the money is flowing.

In October 2010, smartphones only accounted for 29% of total usage. This past February saw smartphones being used the same amount as feature phones for the first time. In a mere 18 months, smartphones are on the verge of becoming the majority choice for cellphone users in the United States. 

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