Mobile advertising market to grow 400%, but ‘correction’ needed in inventory

Posted by Friedrick on February 5, 2013 in Mobile Apps

Report suggests imbalance in supply and demand is driving down prices
February 1, 2013 | By Shane Schick

Stamford, Conn.-based Gartner said worldwide mobile advertising revenue is set to reach $11.4 billion this year, with overall growth between 2011 and 2016 reaching 400 percent. However, the current economics of mobile advertising is such that, if they’re not careful, developers could create a sort of “download bubble” that doesn’t reflect the reality of what consumers are actually willing to pay for apps and games, the report said.

“Some correction in the growth rate must occur before demand from brand and local advertisers catches up with supply, and more sustainable economics support a faster growth rate commensurate with consumer adoption,” said Stephanie Baghdassarian, a research director at Gartner.

Thus, developers need to make sure they avoid the mistakes of early online advertisers before they invest too much money in paid discovery, Gartner warns.

“For many developers the outlay for ads is close to their maximum ad income or even exceeds it,” said Gartner, explaining that developers could spend so much on ads that the revenue they generate from downloads obtained through those ads might not cover their marketing budget.

Although Gartner projects a lot of mobile advertising activity over the next three years in general, there will likely be some changes in which forms dominate the sector. For example, mobile search is expected to lead the way for now–possibly fuelled by recently launched offerings such as Facebook (NASDAQ:FB) Graph Search–but will diminish by 2016. Over the long term, Gartner said display advertising will overtake in-app display, but at the moment the two are evenly divided from a spending perspective.

On a global basis, North America and Europe are poised to catch up to their neighbors in the Asia-Pacific market, Gartner said. China and India are also expected to be big contributors to the market over the next three years.

Read more: Gartner: Mobile advertising market to grow 400%, but ‘correction’ needed in inventory – FierceDeveloper

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