Mobile advertising – on phones, tablets, and other mobile internet-connected devices – is expected to take up two-thirds of U.S. companies’ digital budgets this year and grow even more in years to come, according to a recent report from eMarketer.
The report, Breaking Down Mobile Video Ad Spending, finds that in the United States, where some of the world’s top tech companies are headquartered, mobile has dominated digital spending since 2015, when desktop spending took a dive and mobile rose by 62.9 percent.
The growth of smartphones played a central role in the spending hike, as advertisers work harder to better target digital consumers.
By the numbers
Still, despite predictions, advertisers have not yet realized how connected U.S. users are to their smartphones.
That thinking is shown in overall mobile video ad spending, which is the only digital ad format that doesn’t have a mobile majority.
While advertisers are expected to spend more than $16 billion on mobile video advertising this year, that number is less than half of the total budget going toward video advertising, which only reflects how advertisers have been slower than consumers to adapt to mobile video.
Because 81 percent of the nation’s cell phones are smartphones, U.S. consumers expect video advertising to be formatted to suit the platform. However, most advertisers are still looking at video as more suitable for PCs or laptops since mobile is considered a less desirable format for YouTube, Twitch or Tik Tok videos due to data usage.
Earlier this year, eMarketer predicted that by 2020, mobile video ads will help propel U.S. mobile ad spending so that it surpasses all traditional media advertising. By 2022, mobile video ad spend is expected to double from today’s numbers.
Currently, the only platforms where mobile video ad spend has a majority is on social media, largely because of Facebook, where a whopping 93 percent of all social video ad spending is currently diverted to mobile.
What’s slowing down video advertising?
Given the numbers, it seems smart to ask what is slowing down video ad spend.
According to the eMarketer report, a rise in over-the-top (OTT) TV advertising – spending on Hulu, for example, reached $2 billion this year – is responsible for the diversion of video ad dollars.
OTT video content is that which is streamed through the internet to a laptop, mobile device, tablet, or connected TV. It differs from connected TV, which requires cable or satellite services because users of streaming services such as Netflix, Hulu and Amazon TV only need internet to watch.
Users have been breaking the cord to connected TV in record numbers since the mid to late 2000s, when streaming services became more mainstream, especially among younger users.
In 2017, 61 percent of those ages 18 to 29 said streaming services were their primary method of watching TV, according to a survey from Pew Research Center.
While some streaming services are viewed on mobile devices, the majority is watched on connected TV, making this nonmobile segment a robust part of the video ad market despite video ad spending’s slow overall growth.
On the horizon
Still, despite the hesitation shown in video advertising dollars, mobile advertising numbers have seen a considerable growth spurt that video is expected to soon follow, suggesting a clear takeaway.
By 2023, mobile video is expected to take 51.4 percent of the total video ad spend, up from 49.5 percent this year.
That means advertisers who decide to invest in mobile video now will have a leg up on the competition since the numbers – especially the use of smartphones – reflect mobile’s clear move to dominate over desktop in the near future.
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