By 2019, the mobile ad market will reach $65.8 billion USD annually (eMarketer) and 70 percent of digital spend is expected to come out of mobile. In a market so dynamic yet nascent, where nothing is set in stone and unpredictability rules the day, how can mobile marketers prepare for what’s to come?
The first step is to understand some of the issues that are driving the extreme evolution of the market. Innovation cycles are short and fast; players need to adapt quickly or disappear. Take Millennial Media, for example — following its spectacular IPO a few years ago, it couldn’t adapt to the changing market and quickly slid into obscurity.
Rapid hardware innovation has an impact on the evolution of the mobile ad market as well. The iPhone 5 increased screen sizes, and the 6 and 6+ took them even further, to the point they now resemble the Android. Those larger screen sizes allow for a lot of innovation in ad formats, which have grown to make it easier for consumers to complete transactions on their mobile devices.
What’s Got to Be Done To Get Ready For Tomorrow
Soon, the desktop trends of RTB programmatic or non-RTB programmatic will be going mobile, as well. If this seems far-fetched — perhaps that we’re just not ready yet — consider this: five years ago, no one was really talking about native ads, either.
But before we get there, we need to understand which complexities and challenges have to be resolved by the time the market is three or four times the size it is today.
One of the biggest challenges, of course, is the wide variety of players in the market. This is great for innovation, but increases complexity for publishers and advertisers. It’s good for the ecosystem, but not necessarily for the clients.
Driving this complexity is the fact that mobile is truly global; that we’re seeing an influx of mobile-first, global companies. Where desktop publishers typically evolved from print publishing to online, publishers and advertisers in mobile are often completely new companies; their business models may not even have existed just a few years ago.
This calls for a consolidation across borders, which will be the new wave over the next few years. We’re already seeing this in meaningful acquisitions like Norwegian Opera Mediaworks, which has acquired several companies in Latin America, Germany, South Africa, the United States and more.
Some players will disappear, some will be bought out and some will merge, but this wave of consolidation will lead to global giants: Google, Facebook, possibly Twitter or AOL. In addition, we can expect to see large platforms on the supply or demand side, but they need to focus on one end of the market to stay relevant against the giants. The demand side will allow buyers to purchase any inventory available in the market through one platform.
Mobile ad spending continues to grow, at the expense of desktop. This year alone, mobile spending in the U.S. will increase by 50 percent, to 28.72 billion dollars, or 49 percent of all digital ad spend. It’s clear the desktop market is stagnating and being overtaken by mobile at a rapid pace.
Desktop Gets Dusted
The whole market is talking about cross-device and extending to mobile, especially the desktop players. But in five years, desktop will have become completely irrelevant in many of the markets, especially emerging economies, and cross-device won’t matter to mobile-first companies either.
Desktop players serious about their survival need to get into mobile by buying in, or merging with other companies. Smaller mobile players should prepare for acquisition as the consolidation wave rolls across the industry. Larger mobile companies are in the best position to become the industry’s next giants; to innovate, adapt and acquire their way into leading the demand-side marketplace over and beyond the next five years.