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How Location Helped Mobile Ad Spending Break Another Milestone

There is a blurring of distinctions between mobile and desktop, says PwC's David Silverman, but it's clear that location is the tie binding mobile, search, and social.

The latest figures from the Interactive Advertising Bureau showed yet another milestone in terms of spending: for the first time, mobile now accounts for half of all online advertising.

Mobile ads represented 51 percent of the “record-breaking” $72.5 billion spent by advertisers in 2016, according to the IAB Internet Advertising Revenue Report, which was prepared by PwC US.

The total represents a 22 percent increase, up from $59.6 billion in 2015. Mobile generated a 77 percent gain from $20.7 billion the previous year, hitting $36.6 billion in 2016.

In recognition of the centrality of online-to-offline marketing that is a prime focus of mobile ads generally — and for stores in particular — earlier this month, the IAB released its Location-based Marketing Playbook for Retailers to establish best practices for using geo-data by brands, agencies, and vendors.

While geo-data wasn’t specifically looked at in the ad spending report, David Silverman, partner, PwC US, told GeoMarketing that “the greater ability to accurately geotarget, whether on mobile or desktop, is obviously having a significant effect on ad spending.”

The IAB numbers do seem to complement a separate report from local marketplace analyst group BIA/Kelsey, which last year forecast that Location-targeted mobile ad sales are expected to rise from $9.8 billion in 2015 to $29.5 billion by the end of 2019, for a 24.6 percent compound annual growth rate.

Sound And Vision

Video, search, and social have long been key drivers of mobile marketing, Silverman noted. And in general, all ad formats on mobile have been rising fairly robustly, he said.

But one additional area that is emerging is another format that is also entwined with the role of location and online-to-offline marketing: audio.

“Mobile, social, video, and programmatic trends combine to redefine the digital landscape, providing unprecedented access for advertisers to reach consumers,” Silverman said. “Digital audio, generating $1.1 billion in 2016 speaks to the continued evolution of new formats that enable marketers to find audiences at home, behind their desks, or wherever they are.”

We’re All Mobile Now

Some of the highlights of the IAB/PwC report included:

  • Retail, which is one of the largest verticals relying on location-based ads, represented 21.3 percent of internet ad spend in 2016.
  • Financial Services, which has been expanding its use of geo-data, accounted for 13.3 percent of expenditures,
  • Search revenues reached nearly $35 billion in 2016, up 19 percent from $29.5 billion in 2015
  • On mobile devices, video revenue more than doubled, rising 145 percent year-over-year to nearly $4.2 billion
  • Social media advertising generated $16.3 billion last year, climbing 50 percent over 2015’s $10.9 billion

“Mobile fueled the internet economy in 2016, with advertisers showing their confidence in digital to achieve their marketing goals,” said Randall Rothenberg, President and CEO, IAB. “This increasing commitment is a reflection of brands’ ongoing marketing shift from ‘mobile-first’ to ‘mobile-only’ in order to keep pace with today’s on-the-go consumers.”

In terms of further perspective about what these numbers say about the state of interactive advertising, Silverman said it’s not a matter of whether “mobile has arrived.” It’s that there is less of a distinction between what device people use to access the internet, he said.

“More often than not, the mobile device is simply more available to people throughout their day,” Silverman said. “And that greater mobile search and browser usage has simply translated to advertising spend.”

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of GeoMarketing.com. A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.