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Internet Trends 2017: The Future of Mobile Advertising

· June 13, 2017

This is part of a series focusing on data from Mary Meeker’s 2017 Internet Trends report.

The mobile ad space is underutilized. According to Mary Meeker’s Internet Trends 2017 report, Americans spend 28% of their time on mobile devices yet only 21% of ad spending is targeting mobile. According to Meeker, this indicates a $16 billion opportunity for mobile ads in the United States.

While it is common to point to the success of Google and Facebook in prognosticating about advertising, data on where people are spending time on mobile apps suggest a diverse group of product and service providers have the opportunity to help close this gap.

Current stats and analyses of mobile trends show users are not spending their time exclusively on Facebook and Google apps. Rather, users are spending time on games (43%), social networking (26%), entertainment (10%), utilities (10%), news (2%), productivity (2%), health and fitness (1%), lifestyle (1%) and others (5%).

Growth in the time spent on mobile apps also shows promise for other companies, with music topping the list with 79%, travel 28%, entertainment 22%, sports 16%, games 15%, and news at 14%. Growth in time spent on mobile music apps is reflected in the advancement of music streaming services, which finally surpassed physical media sales — thanks in large part to Spotify’s 50 million subscribers.

The mobile gaming industry, too, has reached new heights; King (the mobile gaming group behind the highly addictive Candy Crush game) boasts an average of 35 daily minutes spent by active users. What’s more, with the number of apps embedding Virtual and Augmented Reality functions into their apps, the mobile gaming industry is poised to continue to grow at a fast rate — the fanaticism sparked by Pokémon Go, if anything, is an indication of this.

So, with services like Spotify, Pandora, and Apple Music leading the streaming service industry, apps within these high-growth spaces may find new success in ad targeting.

But, even within the social media space, more apps are beginning to leverage their data to deliver targeted ads to users. Snapchat has recently ramped up efforts to allow advertisers to target more relevant ads with greater precision through a process called “goal-based bidding.” This allows advertisers to bid on how much engagement they’d like users to have with an ad, then, depending on the bid, Snapchat places it in front of users who are more receptive. Snapchat also filed a patent for image recognition technology last year that would allow the app to target related filters, ads, and coupons based on user’s images. While there has yet to be an official announcement or release of this service, advertising through image recognition certainly has the potential for disruption.

Pinterest is also working towards such a feature, already having released an image-recognition service last year that suggests “related pins” when users click on images. Their “Lens feature,” however, would allow users to upload photos from their phone and then search for related pins.

Uber is also planning to launch itself into the “content marketplace” by offering a “rich feed of cards” displaying information about the area or place to which you’re traveling, entertainment, productivity applications, and communications with the place you’re going.

The opportunity for growth in the mobile advertising space Meeker identified should thus not be viewed as noncompetitive; people continue to use mobile apps for purposes other than social media — such as for music and gaming — which primarily lie outside of major advertising platforms. What’s more, companies with huge user bases, like Snap and Uber, continue to venture into the mobile advertising arena.

Yes, Facebook and Google are skilled at targeting ads, but the waves being made by other apps in the mobile advertising space should not be underestimated.

Isabelle Styslinger is a Research Analyst at CCIA.

Innovation

New technologies are constantly emerging that promise to change our lives for the better. These disruptive technologies give us an increase in choice, make technologies more accessible, make things more affordable, and give consumers a voice. And the pace of innovation has only quickened in recent years, as the Internet has enabled a wave of new, inter-connected devices that have benefited consumers around the world, seemingly in all aspects of their lives. Preserving an innovation-friendly market is, therefore, tantamount not only to businesses but society at large.