When the shift in advertising started to drift from offline to online, there was no shortage of online inventory. As online advertising developed, the focus came down to ROI for advertising dollars spent. Suddenly, marketers were able to measure performance in a way never seen before in the world of offline advertising.
Over time, the price of online advertising steadily rose as the demand increased. Advertising networks, affiliate programs, pay per click traffic and SEO (search engine optimization). The budgets to be seen online seemed to be endless.
Now we are entering into another shift. This time advertisers are looking to reach mobile smartphone users. Google, Facebook and a whole array of mobile advertising companies have already entered this market to provide advertising solutions to the companies with mobile advertising budgets.
According to Gartner, mobile advertising will increase 18.8% to $11.4 billion in 2013. The total spend on mobile advertising in 2012 was $9.6 billion. The prediction is expected to reach a peak in 2016 of $24.5 billion.
The effect that we will see from this is the share price of companies whose core business is application development, advertising networks and platform providers.
However, the adverse effect will be decreased spending in advertising in other more traditional media such as newspapers and printed publications.
Gartner is also predicting that although mobile search will continue to be the driving force during the period of this forecast “mobile display ad spending will grow and take over from mobile search”.
Consumers are spending more time on mobile devices and thus creating the demand for mobile advertising inventory quicker than they can physically re-allocate their advertising budgets. Due to an excess of unallocated advertising space on mobile, application developers have been spending on mobile ads to increase exposure to their applications, a process known as ‘paid discovery’, while the unit prices for mobile advertising have remained relatively low.
Once the larger companies have the time to re-align their budgets, the cost of mobile advertising will soar.
This will result in the share price increase of Google, Facebook and a decline in shares such as Lamar Advertising who provide offline advertising.