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July 23, 2014

Mobile and Video Ad Spending Still Too Slow

While mobile and video ad spending continues to grow faster than ever, the growth still doesn’t match up with the amount of growth found with consumer usage.

This year mobile ads will overtake print and radio. According to eMarketer , mobile advertising will account for 9.8% of ads in the US marketplace, surpassing newspapers, magazines, and radio, which account for 9.3%, 8.4%, and 8.6% respectively. Likewise, ad spending will jump 83% (almost $18 billion) for mobile ads on smartphones and tablets when compared to 2013, thus further increasing the share of digital advertising in the general marketplace.

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However, as smartphones and tablets draw out more money in spending, it still is lacking in some amount. With mobile and digital categories vastly changing the traditional advertising landscape, they are also changing the way consumers use their devices and connect with advertising campaigns and messages. In the same study, eMarketer reports that adults spend about 25% of media time on some sort of mobile device. This compares to the 2% that these same adults spend with newspapers. Nonetheless, the growth in spending only raises mobile to 9.8%, far less than the amount of consumer usage. The imbalance is also seen when newspaper spending accounts for 10% of the market, but brings in only 2% of consumed media time. As a reference, television spending is around 40% of the ad market and similarly accounts for an equal proportion of adult media time usage.

This slow growth can be attributed to various factors that marketers commonly face. The Wall Street Journal reports that print triumphs as a reflection of marketer preference and familiarly with what they know and a slowness to change. In addition, some steer away from mobile advertising as they are weary of how effective they are, along with dissatisfied mobile ad formats. As investment in mobile tracking and display increases, some of these marketer concerns may be eased. For the time being however, as mobile advertising explodes, any increase in spending towards consumer usage is likely to target receptive consumers at the optimal time and in the optimal way.

When talking about the mobile boom we will see this year and next, Yariv Ron (CEO of mobile ad company Appwiz) says, “I think it’s going to take a very big bite out of all the advertising dollars. The infrastructure is not there yet. Only now is it starting to take form and shape.”

Unfortunately, mobile spending is not the only medium trailing behind current times. Digital video spending, while it has seen big increases by companies in the previous year, is still not on par with where it needs to be. Digital video has significant higher value than print with most audiences and its transition is occurring much too slowly.

Budget shifting towards digital video ads is likely to occur ahead of adult usage and industry predictions because of the unique way value can be created through strategically capitalizing on the “5 Ts”; Targetable, Tailorable, Tolerable, Trackable, and Tweetable.

As both mobile and online video advertising continue to emerge from their beginning stages, there needs to be an increase in spending and a reconfiguration of budget allocation to keep up. As long as things remain constant, marketers can expect a downward trend and more wasted resources to follow as a result. This is likely to occur until each spending category becomes reflective of the amount of time spent with each channel, medium, and mobile device platform.