emarketer uk mobile ad spending 2014-on course to dent desktop and topple tv as leading channel

8/10/2019 EMarketer UK Mobile Ad Spending 2014-On Course to Dent Desktop and Topple TV as Leading Channel

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UK MOBILEAD SPENDING2014On Course to Dent Desktop andTopple TV as Leading Channel

SEPTEMBER 2014

Robert Andrews

Contributors: Jennifer Jhun, Natalie Marin-Sharp

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UK MOBILE AD SPENDING 2014:ON COURSE TO DENT DESKTOP AND TOPPLE TV AS LEADING CHANNEL 2014 EMARKETER INC. ALL RIGHTS RESERVED 2

CONTENTS

2 Executive Summary

3 Mobile Spending Trends

6 Mobile Spending Growth Drivers7 Mobile Spending by Format

10 Digital Titans Rule Mobilewith Some Twists

14 Conclusions

14 Related eMarketer Reports

14 Related Links

15 Editorial and Production Contributors

EXECUTIVE SUMMARY

Digital advertising executives used to make the

perennially hopeful proclamation that next year will

be the year of mobile. In the UK, not only has that

year already come to pass, but mobile advertising

momentum is now so strong that every year for the

foreseeable future looks to be dominated by it.

Encouraged by fast-growing smartphone adoption

that has created a direct, visually-rich and engaging

route to target audiences, UK mobile ad spending is

booming. Advertisers nearly doubled their total mobile ad

investment in 2013 and are expected to do so again this

year, with spending forecast to pass 2 billion (more than

$3 billion).

174716

Although this growth rate is expected to tail off in the next

few years, mobile will remain by far the fastest-growing

of all advertising media in the UK, taking more spending

than print in 2015 and surpassing even TV by 2016, when

it will become the single-biggest advertising channel in

the country.

Yet while mobile appears an effective device through

which to reach younger consumers in particular, questions

remain over its effectiveness relative to the channels it is

set to overtake. Advertisers should be assured of likely

returns before they invest blindly.

KEY QUESTIONS: How much will UK advertisers spend on mobile

devices between 2014 and 2018?

What is driving UK mobile advertising growth?

Which formats are performing best?

What is mobiles place in the overall UK

marketing mix?

millions of and % changeUK Mobile Ad Spending, 2012-2018

2012

526

158.9%

2013

1,031

96.0%

2014

2,021

96.0%

2015

3,233

60.0%

2016

4,462

38.0%

2017

5,756

29.0%

2018

6,907

20.0%

Mobile ad spending % change

Note: includes display (sponsorship, standard display, video and otherdisplay formats), search, and other (classified, mobile SMS/MMS, tenanciesand other); ad spending on tablets is includedSource: eMarketer, June 2014; confirmed and republished, Sep 2014

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MOBILE SPENDING TRENDS

With UK advertisers predicted to spend more than

2 billion ($3.16 billion) on mobile ads in 2014, this

channel is now a heavyweight platform in the throes

of a boom that will shift the center of gravity in

UK marketing.

eMarketer estimates that UK advertisers will invest

96.0% more on mobile in 2014 than in 2013. Already

responsible for the largest proportion of mobile ad

spending in Europe, the UK this year will become the

worlds second largest mobile ad market by share of

global spend.

By 2018, annual mobile ad spending in the UK will be

more than three times greater still, at nearly 6.91 billion

($10.79 billion), eMarketer expects. This level of growth

has not been seen since the early days of internet

advertising itself. Mobile advertising spend alone has now

reached the same volume that UK internet advertising

as a whole saw in 2006, according to data that year

from the Internet Advertising Bureau UK (IAB UK) and

PricewaterhouseCoopers (PwC).

millions of , % of total digital ad spending and % of totalmedia ad spending

UK Mobile Ad Spending, 2012-2018

2012

5269.7%

3.9%

2013

1,031

16.4%7.3%

2014

2,021

27.9%

13.4%

2015

3,233

40.6%

20.5%

2016

4,462

51.6%

27.1%

2017

5,756

62.2%

33.7%

2018

6,907

70.4%

39.1%

Mobile ad spending

% of total digital ad spending

% of total media ad spending

Note: includes display (sponsorship, standard display, video and otherdisplay formats), search, and other (classified, mobile SMS/MMS, tenanciesand other); ad spending on tablets is includedSource: eMarketer, June 2014; confirmed and republished, Sep 2014

174721 www.eMarketer.com174721

Furthermore, sharply rising mobile ad spending is

propelling overall UK digital ad investment to new heights

UK mobile advertising is now forecast to grow six times

faster than overall digital ad spending (up 15.0%) in 2014.

The result will see digital increasingly reshaped as a

mobile world.

In 2016, mobile will become the UKs majority digital

ad channel, up from a 16.4% share in 2013. And it willrise even further in subsequent years, representing an

astonishing 70.4% of all UK digital spending by 2018,

moving the country from an expected third place this

yearbehind South Korea and the USto first place

among countries analyzed by eMarketer for share of

digital spending dedicated to mobile devices.

Compared with other researchers, eMarketers mobile

ad spending forecast is highly optimistic. eMarketers

spending figure for 2014 is nearly 12% higher than the

next nearest estimate, and is more than 50% greater than

the lowest. Moreover, our 6.91 billion ($10.79 billion)forecast for UK mobile ad spending in 2018 is more than

three times that of PwCs estimate.

There are several reasons for this. For one thing, mobile

adoption trends encourage an optimistic projection. We

estimate that in 2018, 85.0% of UK mobile phone users

will have a smartphone, and 72.0% of internet users will

have a tablet. In addition, our calculations indicate that

UK residents will spend more time with mobile devices

than with desktops or laptops in 2014. Advertisers will be

following consumers onto mobile platforms. Company-

level ad revenue figures point to very strong growth, too.

In Q2 2014, Facebooks worldwide mobile ad revenue

accounted for 62% of its global total ad revenues; for

Twitter, 81% of ad revenues derived from mobile.

All these trends point in the same direction: massive

increases in mobile ad spending, especially in a market

such as the UK, where mobile penetration is so high.


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Comparative Estimates: UK Mobile Ad Spending,2013-2018

Mobile ad spending (millions)

eMarketer, Sep 2014

AA*, July 2014

GroupM*, June 2014

PwC, June 2014

IAB UK*, April 2014Mobile ad spending growth (% change)

eMarketer, Sep 2014

AA, July 2014

GroupM, June 2014

PwC, June 2014

IAB UK, April 2014

2013

$1.61

$1.61

$1.57

$1.57

$1.61

96.0%

95.2%

101.9%

97.5%

93.3%

2014

$3.16

$2.83

$2.50

$2.09

-

96.0%

75.2%

59.4%

32.9%

-

2015

$5.05

$4.14

$3.67

$2.50

60.0%

46.6%

46.9%

19.8%

-

-

2016

$6.97

-

-

$2.86

-

38.0%

-

-

14.5%

-

2017

$8.99

-

-

$3.19

-

29.0%

-

-

11.5%

-

2018

$10.79

-

-

$3.46

-

20.0%

-

-

8.4%

-

Note: *converted at the exchange rate of US$1=0.64Source: eMarketer, Sep 2014; various, as noted, 2014


MOBILE WILL DOWNSIZE

DESKTOP INVESTMENTMobile advertisings expansion in the UK will not occur

in isolation. Ad spending growth on mobile devices will

displace and diminish the historically dominant channel of

desktop digital advertising.

eMarketer believes the UKs 5.27 billion ($8.23 billion)

in desktop digital ad spending in 2013 was the channels

spending peak. While mobile ad spending is forecast to

almost double in 2014, this year will also see the first

decline in UK spending on desktop ads.

millions of

UK Digital Ad Spending, by Device and Format,2013-2018

Desktop/laptop

Display

Bannersand other (1)

VideoSearch

Other (2)

Mobile (3)

Display

Bannersand other (1)

Video

Search

Other (4)

Total

2013

5,269.0

1,429.6

1,174.1

255.52,912.4

930.0

1,031.0

432.4

363.0

69.4

582.6

13.0

6,300.0

2014

5,224.2

1,549.8

1,122.2

427.62,700.9

973.5

2,020.8

949.8

727.5

222.3

1,044.7

26.3

7,245.0

2015

4,736.3

1,309.6

852.8

456.72,455.1

971.6

3,233.2

1,519.6

1,099.3

420.3

1,665.1

48.5

7,969.5

2016

4,185.1

1,191.5

709.0

482.52,092.3

901.2

4,461.8

2,007.8

1,338.6

669.3

2,378.2

75.9

8,646.9

2017

3,496.4

1,029.6

547.6

482.01,601.2

865.6

5,755.8

2,532.5

1,554.1

978.5

3,108.1

115.1

9,252.2

2018

2,900.4

854.9

376.9

477.91,223.6

821.9

6,906.9

2,970.0

1,726.7

1,243.2

3,778.1

158.9

9,807.3

Note: numbers may not add up to total due to rounding; (1) banners, richmedia, sponsorships and other display formats; (2) classified, leadgeneration and Solus email; (3) ad spending on tablets is included;

(4) classified, lead generation, mobile SMS/MMS and Solus emailSource: eMarketer, Sep 2014


While the 2014 spending dip will be slightjust 0.8%

flagging desktop investment is expected to continue and

accelerate in the coming years. During 2018 alone, UK

advertisers will pare 17.0% of their desktop spending,

while nevertheless spending more than 20% on mobile,

eMarketer predicts. A significant tipping point will occur

in 2016, when UK mobile ad spending is expected to

surpass UK desktop ad spending for the first time.

eMarketer foresees the same trends on the sametimeline in the US, but with one slight difference in

emphasis. While the initial pace of displacement in the

UK will be slower than in the US, its acceleration will be

fasterin 2018, US desktop ad spending is expected to

shrink by just 10.4%, compared with the UKs 17.0% drop

These predictions might make for shocking reading

among digital veterans who have only ever known

spending growth. But the nuances of this story

are intriguing.


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Many marketers lately have begun wringing their hands

at the diminishing performance of desktop ads, notably

display banners, whose clickthrough rates (CTRs) fell

to a disappointing 0.07% of all impressions in the UK

at last count, according to Googles 2009 DoubleClick

Benchmarks report; performance since has likely

worsened. In this sense, marketers are welcoming the

emergence of new devices with new ad formats and new

prospects for heightened consumer engagement. Indeed,eMarketers mobile spending forecast includes numbers

for devices and formats which simply did not exist a few

years ago, like tablets, Facebooks Sponsored Stories and

Twitters Promoted Tweets.

That is why the industry is not witnessing a simple

correlation between the growth in mobile and shrinkage

in desktop spending, or a straight desktop-to-mobile

transference. Despite the erosion of the desktop empire,

mobiles new growthincluding bringing new formats

that promise higher engagement and in return command

higher premiumswill go on, spurring overall digital

spending growth.

MOBILE AS DOMINANTADVERTISING CHANNELMobile is not just surging to dominate UK digital ad

spending; it is also on course to become the most

powerful force in UK advertising across the board.

As a relatively young medium, mobile historically has notcommanded a great share of ad spending in the country.

But this is changing rapidly. Already, UK advertisers

are spending more in mobile than they are in radio or

magazines, eMarketer estimates. In addition, mobile

spending is expected to essentially match newspaper

spending in 2014. Next year, it will surpass all print

advertising combined.

millions of UK Total Media Ad Spending, by Media, 2013-2018

2013 2014 2015 2016 2017 2018

Digital 6,300 7,245 7,970 8,647 9,252 9,807

Mobi le 1,031 2,021 3,233 4,462 5,756 6,907

TV 3,618 3,712 3,768 3,813 3,851 2,529

Print 2,952 2,805 2,695 2,610 2,565 672

Newspapers* 2,167 2,059 1,977 1,913 1,883 1,856

Magazines* 785 746 718 696 682 1,117Outdoor 990 1,024 1,050 1,076 1,098 335

Radio** 318 328 330 333 334 3,890

Total 14,178 15,114 15,812 16,479 17,100 17,678

Note: numbers may not add up to total due to rounding, *print only;**excludes off-air radio & digitalSource: eMarketer, Sep 2014


But an even more significant milestone is on the

horizon. In 2016, UK spending on mobile ads will surpass

spending on TV ads, eMarketer estimates. Two years

later, mobile will dominate the ad landscape, grabbing

39.1% of all spending. Taken together, desktop and

nondesktop digital channels will command the majority ofadvertiser investment.

% of total and billions of

UK Total Media Ad Spending Share, by Media,2013-2018

2013 2014 2015 2016 2017 2018

Digital 44.4% 47.9% 50.4% 52.5% 54.1% 55.5%

Mobile 7.3% 13.4% 20.4% 27.1% 33.7% 39.1%

TV 25.5% 24.6% 23.8% 23.1% 22.5% 22.0%

Print 20.8% 18.6% 17.0% 15.8% 15.0% 14.3%

Newspapers* 15.3% 13.6% 12.5% 11.6% 11.0% 10.5%

Magazines* 5.5% 4.9% 4.5% 4.2% 4.0% 3.8%

Outdoor 7.0% 6.8% 6.6% 6.5% 6.4% 6.3%

Radio** 2.2% 2.2% 2.1% 2.0% 2.0% 1.9%

Total 14.18 15.11 15.81 16.48 17.10 17.68

Note: numbers may not add up to 100% due to rounding, *print only;**excludes off-air radio & digitalSource: eMarketer, Sep 2014


The reasons for this changing of the guard are a tale of

rise and fall. Incumbent print media channels in particular

have been steadily losing advertising revenue, recording

annual ad spending declinesand will continue to do so,

even if at a slowing rate. After ups and downs in recent

years, TV and radio, by contrast, will both see consistent

but small gains between 2014 and 2018.


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% change

UK Total Media Ad Spending Growth, by Media,2013-2018

2013 2014 2015 2016 2017 2018

Digital 16.3% 15.0% 10.0% 8.5% 7.0% 6.0%

Mobile 96.0% 96.0% 60.0% 38.0% 29.0% 20.0%

Outdoor 2.0% 3.5% 2.5% 2.5% 2.0% 1.8%

TV 2.0% 2.6% 1.5% 1.2% 1.0% 1.0%

Radio* -4.0% 3.0% 0.6% 0.9% 0.2% 0.3%

Print -6.3% -5.0% -3.9% -3.1% -1.7% -1.4%

Magazines** -5.0% -5.0% -3.7% -3.0% -2.0% -1.5%

Newspaper s** -6.7% -5.0% -4.0% -3.2% -1.6% -1.4%

Total 5.7% 6.6% 4.6% 4.2% 3.8% 3.4%

Note: *excludes off-air radio & digital; **print onlySource: eMarketer, Sep 2014


Against that backdrop, mobiles surge is all the more

impressive. While TV continues to attract more spending,

mobiles growth puts the living rooms screen to shame,

with investment expected to inflate 40 times faster than

TV ad spending in 2015, for example. Moreover, mobile is

expected to be the fastest-growing ad medium every year

through 2018, showing consistent double-digit growth

while all other media will see gains in the low single

digitsif any at all.

All of this means mobile will play a proportionally greater

role in the UKs ad economy than it will in the US. While

in the UK, 39.1% of all ad spending will go to mobile in

2018; in the US it will contribute just 26.4% and still play

second fiddle to TV.

MOBILE SPENDINGGROWTH DRIVERS

For most of the first decade of the 21st century, it

seemed like the mobile advertising boom might never

happen. In the rearview mirror of todays landscape, it

is clear that the prerequisite conditions of widespread

mobile adoption and a well-used ecosystem of

ad-supporting services were not in place. Today,

however, the segment is lifting off, because the

mobile environment can finally support large-scale

marketer interest.

UK mobile adoption, estimated to reach 80.7% of the

countrys population in 2014, is already high and growing

not only larger but the devices owned more advanced

as well. Smartphone adoption is expected to grow by

another 9.7% in 2014, with 69.5% of UK mobile phone

owners and 56.1% of the population forecast to own

such a device by the end of the year. eMarketer expects

the latter figure to swell to 69.1% in 2018. The fast

replacement cycle for mobile devices, typically within

two years, is removing old feature phone handsets with

rudimentary interactive and messaging features from the

market. In their place are models boasting vastly more

sophisticated capabilities, including the display of notably

more attractive advertising assets.

UK Smartphone Users and Penetration, 2013-2018

2013 2014 2015 2016 2017 2018

Smartphone users (millions) 33.2 36.4 39.4 42.4 44.9 46.4

% change 24.6% 9.7% 8.3% 7.6% 5.9% 3.4%

% of mobile phone users 64.3% 69.5% 74.1% 78.9% 82.7% 84.8%

% of population 51.6% 56.1% 60.2% 64.2% 67.4% 69.1%

Note: individuals of any age who own at least one smartphone and use thesmartphone(s) at least once per monthSource: eMarketer, Aug 2014


UK mobile phone owners are heavy users of the

advanced but increasingly everyday features and

services available on their smartphones. According to

InMobis Global Mobile Media Consumption report,

UK mobile internet users spent more minutes per day in

January 2014 using their mobile devices than watching TV

(168 minutes vs. 132 minutes).


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Furthermore, smartphones are fast becoming UK mobile

owners most valued digital device. Smartphone owners

in Great Britain polled by Ipsos MORI in September 2013

said they would miss their mobile device more than their

TV if they had to give up one or the other. Additionally, in a

survey conducted from March to April 2014 by the Office

of Communications (Ofcom) and Jigsaw Research, 28% of

UK consumers said they considered the internet from their

smartphone an essential service, compared with thosewho said the same of the countrys Freeview free-to-air TV

platform (26%), pay TV platforms (20%) or radio (16%).

This heightened exposure to mobile experiences may be

encouraging consumer acceptance of advertising in that

realm. In the InMobi survey, 35% of UK mobile internet

users said they were more comfortable with mobile ads

than ads in other media, a rate 2 percentage points higher

than the worldwide average. In addition, only 14% of UK

respondents said they were less comfortable with mobile

ads than other types5 percentage points lower than the

worldwide average.

MOBILE SPENDING BY FORMAT

More attractive devices and services, growing

adoption and better attitudes to mobile advertising

have given advertisers and their agencies greater

reason and confidence to invest in mobile. Marketers

have witnessed the conversion of consumers media

time from broadcast to smart device, and they are

now moving their money in an effort to follow. Overal

segment growth will evolve in different ways as

marketers place greater or lesser emphasis on the

individual mobile channels.

Within the core ad categories of search and display,

mobile spending closely resembles the profile of overall

digital spending in the country, as historically dominated

by desktop. The majority of UK mobile advertising money

is spent on search; eMarketer estimates spending will

swell to about 1.04 billion ($1.63 billion), or 51.7% of totamobile ad spending.

millions of UK Mobile Ad Spending, by Format, 2013-2018

Search

Display*

Video

Other**

Total

2013

582.6

432.4

69.4

13.0

1,031.0

2014

1,044.7

949.8

222.3

26.3

2,020.8

2015

1,665.1

1,519.6

420.3

48.5

3,233.2

2016

2,378.2

2,007.8

669.3

75.9

4,461.8

2017

3,108.1

2,532.5

978.5

115.1

5,755.8

2018

3,778.1

2,970.0

1,243.2

158.9

6,906.9

Note: numbers may not add up to total due to rounding; ad spending on

tablets is included; *includes sponsorship, standard display, video andother display formats; **includes classified, mobile SMS/MMS, tenancies,and otherSource: eMarketer, Sep 2014


On the desktop, search advertising has led investment

because it offers marketers performance-based

outcomes, principally delivered by market-leading Google.

Searchs place in the mobile ecosystem is cemented

especially by the pervasiveness of Googles Android

operating system (OS).


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The leading installed mobile OS in the UKgrabbing

a 53.0% share of total users in 2014 and still growing,

eMarketer estimatesAndroid is tied tightly into Googles

services. It is frequently delivered with a search box

on phone home screens and was recently upgraded to

feature the Google Now voice interaction feature, which

leverages Googles Knowledge Graph semantic search

feature to return direct results. Androids growthdriven

by shipment success for major original equipmentmanufacturers (OEMs) led by Samsungis maximizing

the volume of UK mobile web search results and, with

them, adjacent paid search ads.

While these underlying changes have helped to increase

mobile search ad sales, mobile display ad spending is

now happening more than three times as fast, moving

the overall UK mobile ad market toward equivalence

between display and search.

In fact, the rate at which advertisers are piling in to mobile

display is one of the key factors behind the growth indigital display ad sales overall across device formats.

eMarketer expects that UK mobile display ad spend

will grow by 119.6% this year, a rate more than three

times faster than overall digital displays 34.2% growth.

Yet the current surge in this segment is expected to tail

off, becoming more modest than that of search in the

years ahead.

% changeUK Mobile Ad Spending Growth, by Format, 2013-2018

2013 2014 2015 2016 2017 2018Display* 189.2% 119.6% 60.0% 32.1% 26.1% 17.3%

Video 433.8% 220.3% 89.1% 59.2% 46.2% 27.1%

Search 59.6% 79.3% 59.4% 42.8% 30.7% 21.6%

Other** 13.0% 102.1% 84.6% 56.4% 51.8% 38.0%

Total 96.0% 96.0% 60.0% 38.0% 29.0% 20.0%

Note: ad spending on tablets is included; *includes sponsorship, standarddisplay, video and other display formats; **includes classified, mobileSMS/MMS, tenancies, and otherSource: eMarketer, Sep 2014


DISPLAYS GRAVITY SHIFTING FROM WEBTO APPSDisplay advertising to fund free consumer access

to content sites like newspapers has long been the

internets most common operation mode. Likewise,

it has been the template adopted on the mobile

web as publishers seek audiences of scale in the

mobile environment.

The UK audience for mobile web content has boomed as

mobile device adoption and sophistication have grown.

For instance, monthly visits to newspaper sites accessed

via mobile phone in the UK swelled past 1 billion in June

2014a 10% rise from June 2013, according to findings

from comScore GSMA Mobile Media Metrics. Now that

each mobile web page view brings another ad view,

UK mobile display volume is rocketing on the web as

a consequence.

But mobile internet usage is dichotomousunlike on

the desktopas mobile users are spending increasingly

more time with apps and less with the web, studies are

starting to show. UK-specific figures are difficult to come

by, but in the US, apps accounted for 86% of consumers

daily mobile time in March 2014, according to a study by

mobile analytics firm Flurry. This was up from 80% a year

earlier, pushing time spent in mobile web browsers down

to just 14%.

As mobile devices displace desktop consumptiongenerally, the popularity of apps will be amplified.

According to May 2014 findings from comScore Media

Metrix Multi-Platforms, mobile apps accounted for the

majority (51%) of time spent with all digital media by US

internet users.

Publishers are carving out ad space in the free,

mass-market versions of their apps in order to help

monetize those efforts, often in place of charging for initia

app downloads or ongoing subscription fees.

In a July 2014 survey from consultancy Voxburner, 54% of

UK internet users ages 16 to 24 said they preferred these

free, ad-supported apps, while 97% preferred some form

of free or free-plus-purchase option.

% of respondents in each group

Preferred Type of App According to UK MillennialInternet Users, by Gender, July 2014

Ad-supported (a free app with ads)

Freemium (a free version with option tobuy full version)

In-app purchases (a free app with things tobuy inside)

Paid

Female

56%

21%

22%

2%

Male

50%

23%

21%

6%

Tota

54%

22%

21%

3%

Note: ages 16-24Source: Voxburner, "Young people and apps" as cited in company blog,July 16, 2014



9/16


This app monetization paradigm is shifting the weight of

UK mobile display ad spending. Whereas in 2012 when

the mobile web and apps enjoyed an equal share of UK

mobile display revenue, the scales tipped in the favor of

apps in 2013, which took 60% vs. mobile webs 40%,

according to an IAB UK/PwC study of mobile standard

display ad revenue among 50 UK major media companies.

And this trend will continue, at least for the time being.Many mobile practitioners hold hopes for new web

publishing technologies, such as HTML5 enabling

production of mobile websites (web apps) as sophisticated

as their native app counterparts. For now, few industry

observers believe this will happen soon. However, if

publishers continue attempting hybrid strategies, such as

releasing native mobile apps that are merely wrappers

for underlying websites, then web-delivered display

will continue to enjoy a significant placeeven in an

app world.

MOBILE WILL LOOK MORE LIKE TV ASVIDEO AND TABLETS TAKE OFFUK mobile advertisings fastest growth will come not

from display advertisings traditional static formats, but

from ads placed in videos.

Despite pulling just 69.4 million ($108.4 million) in

2013, video ad spending more than quadrupled as

brand advertisers poured money into the format,

eMarketer estimates. While growth in all mobile adcategories will slow up from these kinds of spikes as

the medium matures, video will continue to be mobiles

fastest-growing single stream in the UK, growing 220.3%

this year before moderating to 27.1% growth in 2018,

eMarketer predicts. At this rate, video will represent 18%

of all UK mobile advertising by the end of the forecast

period, smashing through the billion-pound mark.

In 2014, mobile video ad spending will multiply twice

as fast as spending on digital video generally220.3%

vs. 107.3%as consumers and advertisers alike take to

mobile delivery with gusto.

It is only fairly recently that advanced mobile handsets

with touchscreens, vivid displays and large viewing

areashave supported the mobile video opportunity in

any real sense. Consumption boomed in 2012 as these

devices achieved wider circulation. eMarketer expects

30.7% of the UK population will watch video on a mobile

phone this year, a rate projected to rise to 42.4% in 2018.

UK Mobile Phone Video Viewers, 2013-2018

Mobile phone videoviewers (millions)

% change

% of mobile phone users

% of digital video viewers

% of population

2013

17.2

37.1%

33.3%

49.3%

26.7%

2014

19.9

16.0%

38.1%

54.1%

30.7%

2015

22.8

14.2%

42.8%

59.2%

34.8%

2016

25.3

11.0%

47.1%

63.3%

38.3%

2017

27.2

7.6%

50.1%

66.1%

40.8%

2018

28.5

4.7%

52.0%

67.4%

42.4%

Note: mobile phone users of any age who watch video content on mobilephones through a mobile browser, subscriptions, downloads or applicationsat least once per monthSource: eMarketer, Aug 2014


In addition to chasing a ballooning audience, burgeoning

ad spend is a product of the growing number of premium

video services available across mobile devices. Following

the template of the BBCs iPlayer catch-up service being

available across multiple devicesincluding mobile

commercial broadcasters including ITV, Channel 4 and

Channel 5 are also determinedly seeking more viewers

for their comparable catch-up services in order to sell

more video ads.

In its half-year interim results published in July 2014,

the UKs leading commercial network broadcaster ITV

reported that mobile and tablet viewing of its ITV Player

service was the main driver behind a 20% year-over-year

jump in long-form video views, to 328 million, leading to

strong demand from advertisers holding up rates and

driving revenues.

Unlike on desktop, mobile video is a particularly

appealing channel to buyers in the UK because, just

like with television, viewers must typically devote theirentire attention to the main content on the screen.

Likewise, linear video is familiar both as content and as

an advertising construct to everyone in this value chain.

Creatives know how to make it, buyers know how to

secure it, publishers know how to sell it and consumers

even if they often chafe at pre-rollshave inherited the

rules of this game from years spent watching linear TV.

In fact, UK mobile phone owners surveyed in November

2013 by PwC said video was their second most preferred

mobile ad format, behind only banners.

Despite the many variables moving in mobile video adsfavor, agencies continue to complain that there remains

an insufficient supply of premium inventory to enable

them to reach the right consumers. Publishers, then, will

likely find buyers ready and waiting, if they can guarantee

agencies sufficient reach and targeting.


10/16


But the context of this consumption will matter. While

smartphones have been eating into desktops leading

share of UK video views, tablet devices have fast

been gaining share. InMobi, one of the worlds largest

independent mobile ad networks, found that 39.3% of

the UK ad impressions it served during Q2 2014 were

from tablet and connected devices, up 14.4% from a year

earlier, with iPads responsible for the largest share of

impressions by any mobile device. Since tablets are morecommonly used at home than on the go, this means the

mobile video advertising opportunity is becoming more

of a customers-on-the-couch situationand with that a

more TV-like experience.

% of totalUK Mobile Ad Impression Share, by Device, Q2 2014

Smartphones56.7%

Tablets &connected devices39.3%

Feature phones4.0%

Note: represents activity on InMobi's network, broader industry metricsmay varySource: InMobi, "United Kingdom Market Overview," July 2014


DIGITAL TITANS RULE MOBILEWITH SOME TWISTS

The mobile internet may be changing the overall

digital landscape, but the winners of consumers

mobile media time are, broadly, the same as on

the desktop.

According to comScore GSMA MMM, in a top 10

ranking by unique visitors in March 2014, mobile web

properties were essentially the same as for the desktop.

Unsurprisingly, Google sites led in both environments.

millions

Top 10 UK Mobile Web Properties, Ranked by UniqueVisitors, March 2014

Google sites 28.0

Yahoo sites 26.2

BBC sites 19.4

Facebook 19.1

Amazon sites 17.3

Wikimedia Foundation sites 13.7

Glam Media 13.5

eBay 13.3

Apple 12.3

Microsoft sites 11.3

Note: includes on- and off-network browsing via browser and app;excludes Wi-Fi data for untagged mobile apps

Source: comScore GSMA Mobile Media Metrics (MMM), "UK Digital MarketOverview," June 4, 2014


However, some variations between the platforms point

to an enhanced position for certain properties on mobile

vs. desktop.

First, Microsoft sites fared considerably worse on

mobile than they did on desktop. This is mostly

because Microsoft lacks the same kind of browser

on-ramp traction on mobile devices that it does on

Windows computers. Its acquisition of Nokia has done

little, apparently, to move its mobile fortunes forward.Additionally the BBC, which was the No. 3 UK mobile

property in terms of traffic, fared notably better on

mobile than on desktop, where it ranked seventh.

Its mobile appeal, however, is a hollow victory in the

advertising stakes, as the BBC is prohibited by Royal

Charter from running advertising to UK license fee payers,

meaning a large chunk of UK mobile video consumption

goes unmonetized.


11/16


The mobile web portals of network operators did not

figure on either list. Mobile operators have frequently

been disintermediated from the value chain they helped

create, turned in to mere access points. But they are

currently deploying jointly-operated mobile display ad

network Weve, which could help them regain a seat at

the table by utilizing their trump card: access to user data,

including location and browsing behavior.

Owning the physical device in consumers hands is no

guarantee of advertising success, however. Apples iOS

devices are responsible for more UK ad impressions

than those of any other manufacturer56% in Q2

2014, ahead of a range of Android devices, according to

findings from InMobi. Despite this, Google is the mobile

ad ecosystems biggest winner. This is Googles prize for

operating a series of leading online servicesplus its

own DoubleClick and AdMob ad networksleveraged

across handset types.

The trio of Google, Facebook and Twitter leads the packwhen it comes to global mobile ad revenue, eMarketer

found in its analysis of company reports. However, none

of the three breaks out its UK earnings from mobile

advertising, so ascertaining the true winners of UK mobile

ad spending is difficult.

SOCIAL ADS: FROM MOBILE-FIRST TOMOBILE-MOSTWithin cross-platform display ad sales in the UK,eMarketer expects Facebooks share will reach 22.8% in

2014, compared with Googles 22.2%. Meanwhile Twitter,

if only by virtue of being later to develop, is growing

faster still.

In recent years, Twitter has made inroads building out

both its commercial team and delivery for its advertising

propositions, including Promoted Tweets, Accounts and

Trends. According to IAB UK and PwC, while only

one-third of UK social display ad spending was on mobile

last year, in-stream formats like Twitters will grow

mobile social revenue into new territories, alongsideconventional display. Sales are benefitting from UK

appetite for on-the-go social networking services, the

consumer value of which are multiplied when unchained

from the desk and whose ongoing status updates

promote compulsive revisits.

Despite Twitter not yet figuring in comScores analysis

of top mobile properties, September 2013 research

conducted by Kantar for Ofcom found that 23% of UK

smartphone users tweeted using the platform, giving

Twitter significant potential traction in the marketplace.

In its 2014 Q1 earnings call, Twitter reported that mobile

was playing a growing part in its overall ad sales mix,

reaching 80% of total revenueup 20% from a yearearlier. Worldwide, eMarketer estimates, Twitter will

earn $1.17 billion from advertising in 2014, with 76% of

the total from mobile. eMarketer expects Twitters UK

revenue total to reach $151.32 million (96.8 million)

in 2014. Assuming revenue from mobile continues to

be about 80% of the total, it would put mobile-derived

revenue for 2014 at $121.06 million (77.5 million).

Cross-device user analysis supports that calculation.

Twitter and Nielsen confirmed 80% of its UK users

accessed the site via mobile, the highest proportion

along with Spain among the four countries surveyed inEurope. Meanwhile, 72% of Facebooks UK users access

via smartphone, according to YouGov. Furthermore,

eMarketer expects this trend will grow to 93% of social

network users accessing Facebook via mobile in 2018.

Globally, Facebooks revenue from mobile ads

represented 62% of its total ad revenue during Q2 2014,

up from 41% a year earlier. This proportion likely is at

least matched in the UK market. Applied to the nearly

546 million ($853.1 million) eMarketer expects Facebook

to earn from ads in the UK in 2014, this would suggest

the site is on course to earn 329 million ($514 million)

from mobile ads this year.

News Publishers See Mobile Gains ThroughDesktop LensSome UK media publishers are undecided over their

preferred mobile monetization methods, caught between

either launching subscription apps that provide recurring

consumer revenueand in doing so limiting potential

user sizeor offering ad-funded free mobile websites

that allow ad inventory to be sold in a way that is at leastfamiliar from the desktop days. The Guardian, for instance

has frequently used its newspaper pages to promote

not its premium mobile app but its free mobile site, as

growing audience has been the order of the day.


12/16


Despite this indecision, a Deloitte survey of publishers

who are members of the UKs Association of Online

Publishers (AOP) found that Q1 2014 revenue from

mobile and tablet advertising and subscriptions rose more

than 60% from the corresponding period in 2013.

Many publishers continue to operate both revenue

channels simultaneously and are currently retooling

their first-generation, ad-funded mobile websites withresponsive design principles, ensuring viewability of

editorial and advertising across a range of devices.

This move arises out of necessityscreen size

proliferation is causing developers headachesbut

marrying the web production process may also blur the

lines between desktop internet ad sales and mobile

internet ad sales, unlocking mobile buys from existing

desktop advertisers.

Indeed, UK agencies press buyers report they are four

times more likely to buy tablet ads from publishers thanto buy smartphone ads from them, according to IAB UKs

IAB Snapshot Research 2013 report.

Agencies Will Move Money to Mobile toFollow MillennialsThere are growing signs of mobiles maturity and

acceptance within advertising agencies. IAB UK found

that a combined 57% of agencies surveyed said they

would spend more than 10% of their digital ad budgets

on mobile in 2014. A year earlier, only 33% had plannedto do so. But now the most likely scenario is that up to

a fifth of UK agency money will go on to mobile efforts

this year.

% of respondents

Percent of Digital Ad Budget to Be Spent on Mobile in2014 According to UK Agencies

None

1%

0%-1%

1%

1%-5%

15%6%-10%

26%

11%-20%

41%

21%-40%

14%

41%-60%

1%

61%-100%

1%

Source: Internet Advertising Bureau UK (IAB UK), "IAB Media AgencySnapshot Research 2013," Dec 11, 2013


Their motivations are clear. UK agencies have witnessed

the growing adoption of mobile devices and their

displacement effect on other media consumption. IAB UK

found that the majority of its respondents (78%) believed

mobile will be the primary medium for communicating

with consumers ages 12 to 24, and agencies are

adjusting their channel mix in response.

Increasing familiarity of key mobile marketing concepts

among agency staff is also encouraging greater

deployment of mobile efforts, as 38% of respondentssaid mobile had become a regular part of client proposals

Advertisers are benefitting from the increasingly relaxed

attitude of publishers and networks toward allowing

ad buys using programmaticthat is, automated

technologies. Buyers, who are enjoying increasingly

sophisticated control over their ad targeting and spending

in desktop digital outlets, are embracing this precision

with even greater gusto on mobile. In 2013, 37% of UK

mobile digital display ads were bought using either

direct- or exchange-based programmatic methods,

according to study from IAB UK conducted byMTM London.


13/16


% of total

UK Digital Display Advertising Sales Method Share,by Channel, 2013

Internet display

55% 19% 12% 14%

Mobile (display & video)

36% 27% 14% 23%

Total

51% 22% 13% 15%

Direct

Networks

Programmaticexchanges

Programmaticdirect

Note: numbers may not add up to 100% due to roundingSource: Internet Advertising Bureau UK (IAB UK), "Media Owner SalesTechniques" conducted by MTM London as cited in press release, June 25,2014

176692 www.eMarketer.com

Internet video

59% 25% 14% 2%

176692

Tim Elkington, research and strategy director at IAB

UK, explained programmatic buyings growing role in

the mobile ad economy in a June 2014 company article:

Programmatic is more dominant on mobile due tovarious factors; its a more fragmented ecosystem

and, being relatively harder to monetize, has enabled a

wide range of intermediaries to develop more quickly,

particularly having learned lessons from serving ads

programmatically on PCs.

Even if mobile is later to the programmatic buying party

than desktop was, the fact that these tools are used to an

even greater extent will encourage fast buy-side adoption,

because advertisers and agencies will value the foresight

and certainty that comes with these technologies,

increasing their comfort about results and spending.

Mobile Ad Buyer Mix Resembles DigitalThe UK is witnessing the mainstreaming of mobile

advertising in client circles, as marketers of consumer

packaged goods (CPGs) up spending in the mobile

space. According to latest available full-year data from

IAB UK and PwC, consumer goods and entertainment

and media advertisers accounted for the largest shares

of UK mobile display spending in 2013, with CPG

brands becoming the leading category in the last year,

representing a 24% stake.

% of total

UK Mobile Display Ad Spending Share, by Industry,2012 & 2013

2012 2013

Consumer goods 20% 24%

Entertainment & media 22% 22%

Retail 13% 11%

Telecom 10% 9%

Technology 8% 9%

Finance 9% 7%

Automotive 9% 7%

Travel & transport 4% 4%

Government, political organizations 2% 2%

Business & industrial 2% 2%

Leisure equipment 1% 1%

Note: numbers may not add up to 100% due to roundingSource: Internet Advertising Bureau UK (IAB UK) andPricewaterhouseCoopers (PwC), "UK Digital Adspend Study Full Year 2013,"April 8, 2014


They have, no doubt, been encouraged by the widening

use of smartphones to a broader base of consumers,

providing an opportunity to advertise a wider range of

goods. Specifically, CPG brands boosted their 2013 UK

mobile spending by 175%, ad network InMobi reported

earlier this year.

Mobile takes proportionally more ad money from

CPG brands than do digital platforms, and in general

is attracting greater investment from industries

whose products require less consumer reflection

before purchase.

There is an amusing irony within this trend. Opera

Mediaworks, an ad network deployed through 13,000

mobile sites and apps, said the largest volume of UK

mobile ad impressions it served during Q1 2014 came

from manufacturers of mobile devices themselves, with

food, drink and automotive advertisers close behind.

In this sense, it is tempting to think of the mobile ad

ecology as at least partly self-sustaining. After all, the

same relatively rapid replacement cycle that has pushed

attractive touchscreen devices into consumers hands in

the first place is not abating. Indeed, with wearables and

other new device categories expected to emerge from

handset makers, these launches can also be expected toinfluence UK ad spending patterns, as manufacturers look

to drive demand for the future of mobile consumption.


14/16


CONCLUSIONS

Advertisers are moving money to mobile faster than

any other platform.Mobile ad spending growth is

exceeding even the quick pace set by digital ad spending

during its boom days early this century. In a relatively

short timeframe, the majority of UK digital ad spending

will be on mobile channels.

Mobile will overtake TV to become the UKs

biggest ad channel by 2016.While TV will remain the

dominant advertising medium for some time, mobiles

spending surge will push it to the top of the pack in just

a few years. This will allow for deeper exploration of

synchronized second-screen ad executions that harness

the capabilities of each channel and maximize advertisers

opportunities.

Marketers will move from desktop to mobile.This

years boom in UK mobile ad spending will coincide with

the first-ever drop for UK desktop digital ad spending. This

transference will mimic the movement of consumers

media time from desktop web to mobile web and

apps. Publishers should ensure they have products and

inventory to capitalize on this trend and should adopt a

multichannel monetization strategy.

Booming consumer adoption is drawing advertisers

display spending.UK consumers are increasingly avid

mobile device users. Smartphone adoption will near 70%

of the population by 2018, and more consumers already

rate smartphones as more essential than TV. It is thegrowing presence of these engaging touchscreens that is

convincing marketers of the value of mobile advertising.

Video is the strongest driver of the mobile ad

marketer.Forecast to grow by 220.3% in 2014 alone,

mobile video is rocketing. Advertisers value video

because it creates a linear brand awareness opportunity,

while consumers are showing growing appetite for digital

video. This comes into its own on tablet devices. With UK

tablet usage at over 40% of the population in 2014, tablet

video will excite marketers in the next few years.

RELATED EMARKETER REPORTS

2014 US Mobile Ad Spending Forecast: RobustGrowth Despite Persistent Challenges

UK Ad Spending: Q2 2014 Complete Forecast

UK Mobile Advertising: Device Adoption Drives aSpending Boom

UK Mobile Ad Trends: Mobile Matures, Yet GrowingPains Persist

RELATED LINKS

Advertising Association (AA) UK

Association of Online Publishers (AOP) UK

comScore GSMA Mobile Media Metrics (MMM)

Decision Fuel

Deloitte

DoubleClick

Facebook

Flurry

GroupM

Internet Advertising Bureau UK (IAB UK)

InMobi

Ipsos MORI

ITV

Jigsaw Research

Kantar Media

MTM London

Office of Communications (Ofcom) UK

On Device Research

PricewaterhouseCoopers (PwC)

Voxburner

YouGov
http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001249http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001249http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001409http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001027http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001027http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001103http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001103http://www.adassoc.org.uk/http://www.ukaop.org.uk/http://www.comscore.com/Products/Audience-Analytics/GSMA-Mobile-Media-Metrics-MMMhttp://www.decision-fuel.com/http://www.deloitte.com/view/en_GX/global/index.htmhttp://www.google.com/doubleclick/https://www.facebook.com/http://www.flurry.com/http://www.groupm.com/http://www.iabuk.net/http://www.inmobi.com/http://www.ipsos-mori.com/http://www.itv.com/http://www.jigsaw-research.co.uk/http://kantarmediana.com/http://www.mtmlondon.com/http://www.ofcom.org.uk/https://ondeviceresearch.com/http://www.pwc.com/us/en/index.jhtmlhttp://www.voxburner.com/https://today.yougov.com/opi/https://today.yougov.com/opi/http://www.voxburner.com/http://www.pwc.com/us/en/index.jhtmlhttps://ondeviceresearch.com/http://www.ofcom.org.uk/http://www.mtmlondon.com/http://kantarmediana.com/http://www.jigsaw-research.co.uk/http://www.itv.com/http://www.ipsos-mori.com/http://www.inmobi.com/http://www.iabuk.net/http://www.groupm.com/http://www.flurry.com/https://www.facebook.com/http://www.google.com/doubleclick/http://www.deloitte.com/view/en_GX/global/index.htmhttp://www.decision-fuel.com/http://www.comscore.com/Products/Audience-Analytics/GSMA-Mobile-Media-Metrics-MMMhttp://www.ukaop.org.uk/http://www.adassoc.org.uk/http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001103http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001103http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001027http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001027http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001409http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001249http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2001249


15/16


EDITORIAL ANDPRODUCTION CONTRIBUTORS

Cliff Annicelli Managing Editor, Reports

Ben Clague Chart Data Specialist

Joanne DiCamillo Senior Production Artist

Noah Elkin Executive Editor

Stephanie Meyer Senior Production ArtistDana Hill Director of Production

Kris Oser Deputy Editorial Director

Ezra Palmer Editorial Director

Heather Price Copy Editor

Katharine Ulrich Copy Editor


16/16

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