Accounting for 14% year-on-year growth in 2022 to a total of $336bn (~£263bn), mobile ad networks have gone from strength to strength. A critical, and growing, part of the ad tech ecosystem, we explore the role of mobile advertising and the vast possibilities it presents for the future of digital advertising.

With nearly 60% of web traffic in Q4 2022 originating from mobile devices, and an increasingly mobile-centric population, it comes as no surprise that more and more advertisers are switching the bulk of their ad inventory from desktop to mobile. This extends into app marketers, who are increasingly shifting focus from a CPI (Cost Per Install) model to a CPA (Cost Per Action) one. In fact, according to Morgan Stanley's analysis, there remains considerable growth potential in consumer expenditure both on and within mobile applications - this trend is contributing to an increased need for advertising. The combination of elevated advertising rates and continuous growth in volume might result in a compounded annual expansion of 21%. As a result of this progression, the emerging category could achieve a whopping valuation of $130bn (~£102bn) by the year 2024.

Only a few decades ago, mobile advertising would be a small segment of a company’s marketing plan. Fast forward to today, it’s a multi-billion dollar industry, accounting for 67.9% of total digital ad spend. 

The mobile advertising marketplace

Certain mobile advertising trends are setting the stage for the future of mobile ad networks. Influenced by everything from micro-economic trends brought on by the pandemic, to the rise in popularity of online shopping, the mobile ad marketplace is in a state of flux and continued evolution.

Mobile streaming: With the global video streaming market size expected to reach $416.84 billion (~£325bn) by 2030, streaming services are making significant investments in video content across social media platforms, with a notable focus on platforms like YouTube. This suggests that the trend of streaming video content, whether it involves highly popular streaming shows, promotional trailers on YouTube, or a variety of TikTok video responses from fans, will persist in captivating global audiences. The rise of mobile streaming also aligns closely with the expansion of companies such as Netflix, Hulu, Amazon, Peacock, and Disney+. These companies are producing increasingly distinct video content, attracting individuals to their platforms with exclusive movies and TV series not available elsewhere. This creates a larger arena for mobile advertising by brands. However, simultaneously, the competition for capturing people's attention also intensifies.

The rise of m-Commerce: As consumers rely more and more on their digital devices, Insider Intelligence predicts that mobile will ‘inch closer to becoming consumers’ preferred channel for online shopping within the next five years.’ Social networking platforms such as Facebook, Instagram, and Pinterest have all incorporated "buy buttons," allowing shoppers to complete purchases. Additionally, numerous retailers have implemented a streamlined one-click checkout process on their websites. This approach entails shoppers entering their payment details once, enabling subsequent purchases through the convenient one-click option, eliminating the need for repeated entry. 

With the ongoing surge in app utilisation, this trend is poised to significantly contribute to sales expansion, particularly benefiting from the purchasing power held by Millennials and Gen Z. These digitally adept consumers possess the potential to amplify sales volumes, given their more natural inclination to shop using mobile devices - a Chinese shopping app called Temu has been downloaded over nine million times since it launched in the UK four months ago. This trend extends into location-based campaigns. For mobile, GPS has a 100% penetration into the smartphone world. Utilising GPS location information, marketers have the ability to deliver highly localised content that is tailored for consumers originating from precise cities or even entire countries.

Mobile games: Widely recognised as the last untapped market, we have not fully actualised the growing potential of ad networks present in mobile gaming. With nearly 3.2 billion people estimated to have played games in 2022, the number will further grow to 3.5 billion by 2025.  In-game advertising differs markedly from conventional advertising. It all takes place within an interactive, real-time, and attention-demanding setting, rendering the conventional rules of media strategy largely inapplicable. 

The advertising potentials range from interstitial ads between game levels, reward videos, and of course, native ads. Amidst the ongoing evolution of the gaming industry, advertisers have the opportunity to harness intricate consumer data for well-informed choices and the formulation of comprehensive closed-loop marketing approaches. The usage patterns of in-game consumers illuminate key factors of interest for advertisers. According to EY, this includes extracted insights from consumer data that can provide essential answers, the identification of retention issues or indicators, identification of zones where novel in-game revenue-generating attributes could amplify profitability, and the determination of game genres to prioritise when promoting a particular product category.

AI-powered mobile marketing: An article on trends to consider within mobile advertising would not be complete without mentioning AI - AI's potential to curate user experiences reaches unprecedented levels, introducing a transformative dimension to marketing practices. This encompasses not only refined user segmentation and data scrutiny by marketers, but also the provision of insights into the utilisation patterns of specific applications. Moreover, AI-fueled mobile marketing solutions furnish marketers with a comprehension of user desires, inclinations, and decision-making processes. This understanding equips them to target individuals with precisely tailored content at the most opportune junctures. Beyond this, it automates the intricacies entailed in segmentation, targeting, and optimisation, thereby amplifying operational efficiency. 

Effective integration

What does the future hold for mobile advertising? Brands are poised to focus extensively on the creation of tailored ad experiences, meticulously designed to resonate with the preferences of end users. This includes the heightened adoption of location-based campaigns to ensure optimal targeting and engagement, utilising in-game advertising, as well as the usage of AI for programmatic. 

If a single truth is to emerge for mobile advertising, a multi-faceted approach is key. Focusing on any singular issue, such as content, ad placement, or engagement, will no longer be enough for companies to break through the noise and resonate with customers for time to come.

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