In contrast, advertiser spend on mobile media is expected to almost double (85.4 percent) from $6.3 billion to $11.6 billion, resulting in the total mobile media economy reaching $149.8 billion in revenue in 2012 - a 17.0 percent increase on 2011 (see Chart 1).
While the lion’s share of consumer spend (60.2 percent) is on data plans and web browsing - making mobile operators the key beneficiaries to the tune of $82.8 billion in 2012, up 9.5 percent on 2011 - a key driver of growth is the apps market on smartphones, such as the iPhone and Android devices. Over 23 billion apps were downloaded globally in 2011, increasing by 38 percent to over 32 billion in 2012. Apps are now the second largest category for revenues – for both consumer and advertiser spend - and are becoming the key distribution mechanism for media on mobile phones.
Apps are expected to account for 18.9 percent of global consumer spend in 2012 – $26.1 billion, up 30.7 percent on 2011 – but the strength of the apps ecosystem is also demonstrated by advertiser spend. For example, across the USA and major Western European markets as a whole, revenue from display ads on the mobile web ($934.5 million) has been overtaken by in-app advertising ($1.7 billion).
David MacQueen, Strategy Analytics’ Director of Wireless Media Strategies, explains, "Advertisers chase eyeballs so the fact that brands spend more on in-app advertising than the mobile web is a clear sign that apps are what consumers are glued to for an increasing range of activities. In the eyes of many advertisers, web browsing on the smartphone is playing second fiddle to the app economy."
Despite remaining relatively flat in terms of spend, Music remains one of the top mobile media categories globally – accounting for $16.0 billion or 11.6 percent of 2012 consumer spend. However, the way consumers' access and pay for music is changing. Ringtones are declining fast, but streaming music services such as Spotify, Pandora and Deezer - paid for by subscription or through advertising - are gaining good traction in Western Europe and the USA.
As with apps, growth of mobile video usage is increasing dramatically; 108 billion videos were watched on mobile phones in 2011, almost trebling to 280 billion in 2012. However, unlike apps, this isn’t translating into symbiotic revenue levels. Despite a 23.8 percent revenue growth, Video is likely to account for a mere 2.4 percent ($3.6 billion) of total mobile media revenues in 2012 (see Chart 2).
MacQueen explains, "Low revenues are down to many major mobile video services being free to the end user, either funded by advertising (such as YouTube) or "bundled" without additional cost by pay TV providers, such as Sky Go around Europe or AT&T U-verse in the USA. Despite the huge audience of 271 million users, ad revenues from mobile video are tiny - a meager $223m globally in 2011. While ad revenues will more than triple to $726 million in 2012, it is still clearly challenging for advertisers looking to reach consumers through video ads on smartphones."
Revenue related to Social Networking content, apps and services is expected to increase by 16.1 percent to $17.6 billion – accounting for 11.8 percent of all mobile media revenues.
The US Mobile Media Economy
The US mobile media economy is expected to outperform the global growth figure, increasing by 22.1 percent to nearly $38 billion in 2012. US consumer spending is also expected to outperform the global rate (15.5 percent vs. 13.4 percent) rising to approximately $33.7 billion. Advertiser spend on mobile media is projected to more than double in 2012, increasing 128.9 percent to just under $4.2 billion.
US consumers are expected to spend $6.7 billion on mobile apps in 2012, a 24.6 percent increase over 2011, and accounting for 20 percent of all US consumers mobile spend. In direct correlation to this, US advertising revenue on mobile apps is projected to reach $1.2 billion in 2012, a 118 percent increase over 2011. Again, the strength of the apps ecosystem in the US is evidenced by the fact that in-app advertising revenue is more than double the revenue from mobile Web display advertising in 2012, which is only projected to reach $556 million.
124.9 million Americans are expected to access social networks via their handset in 2012, yet the amount of revenue this will generate for social networks is only expected to reach $412.7 million or $3.48 per mobile user during the year.