Mobile-Ad Spending Projected to Reach $2.61B in 2012

Mobile-ad spending in the U.S. is rising at a much faster clip than previously forecast and is projected to grow 80% this year, to $2.61 billion.

A new report by eMarketer estimates that mobile-ad spending reached $1.45 billion in 2011, up from $769.6 million in 2010, and that Google is getting more than half of the pie. The numbers are a significant upward revision from a previous projection that mobile would reach $1.8 billion this year, up from $1.2 billion in 2011.

eMarketer, Jan. 2012

Note: Includes display (banner, rich media and video), search and SMS/MMS/P2P messaging

The report partly attributes the change to the explosive growth of Google's mobile-search business and heightened interest in display inventory for both tablets and smartphones. EMarketer's mobile analyst Noah Elkin noted that the widespread adoption of both iPhones (37.04 million were sold worldwide in the last quarter, which was documented in Apple's earnings call last night) and Android devices in the past year was also a contributing factor.

"As mobile devices become a remote control for our lives, the more indispensable they become; the more they're being used for search, to browse the web and use applications, and the more that drives up impressions and overall activity," Mr. Elkin said.

Google had a 51.7% share ($750 million) of U.S. mobile-ad spending, driven largely by its dominance in mobile search, where it captured 95% of revenues, according to eMarketer. Mobile-search spending is projected to reach $1.28 billion this year, up from $652.5 million in 2011. Google acquired mobile-ad network AdMob in 2010, and Apple bought Quattro Wireless the same year.

eMarketer, Jan. 2012

Note: Includes ad spending on tablets

The second-largest overall share belongs to Millennial Media (6.3%), which filed to go public earlier this month but still isn't profitable, followed by Apple's iAd mobile-ad business.

Neither Apple nor Millennial are in the search business, and the mobile-display market -- where spending is projected to grow to $861.7 million this year from $445.4 million in 2011 -- is more competitive. EMarketer estimated that Google earned $127.5 million in mobile display in 2011, which represents a 24.8% share, compared with Apple's 18% and Millennial's 17.7%. Smaller players such as Jumptap and India-based InMobi are vying for U.S. display ad dollars too.

"The fluidity and level of competition in the display market means new entrants can come in and be successful," Mr. Elkin said.

Search, display (which includes spending on banner and rich-media ads) and video are expected to grow their share this year at the expense of SMS, MMS and P2P messaging, which will drop to 12.2% from 19.6%, according to eMarketer's estimate.