Analysts are feeling ever-more confident in the growth of mobile advertising. The latest comes from BIA/Kelsey, which is predicting that the U.S. mobile ad revenues will grow from $491 million last year to $2.9 billion in 2014. That’s a compound annual growth rate of 43 percent and is based on expectations for rising mobile search ads, display on both apps and wap sites and text messaging. But the big spending will come in the form of local ads, which now makes up less than half of the mobile ad market. That will change significantly by 2014.
In part, the rise of mobile advertising this year had much to do with the introduction of Apple’s iAd system, which was designed to boost the value of apps for developers, marketers and publishers. While Apple’s app offerings, as well as ones for Google’s Android system, are raising the bar for mobile ads, apps will not be the main feature of the mobile ad ecosystem, according to BIA/Kelsey’s numbers.
As with the PC-based web, search ads will lead mobile as well. Over the next three years, BIA/Kelsey expects U.S. mobile search ad revenues to grow from $59 million to $1.6 billion (93 percent CAGR), while display ad revenues to rise from $206 million to $803 million (31 percent CAGR). Mindful of the negative backlash that would come to advertisers given messaging rates, SMS ads will remain very small. In ’09, $226 million was spent on text message ads and the researcher doesn’t anticipate it getting any higher than $562 million by 2014 for a 20 percent CAGR.
A majority of the growth mobile ads will experience over the next few years will come from an area all of the web is turning to: local. The rise of geo-targeting and other location based services will drive ad dollars significantly higher. BIA/Kelsey is calling for U.S. mobile local ad dollars to rise from $213 million in ’09 to $2.03 billion in 2014 (57 percent CAGR). For the past year, local was just getting started, as it represented only 44 percent of total U.S. mobile ad revenues last year. But by 2014, it will have a 69 percent share of the mobile ad market.