Update: Mobile ads double in first half of 2013, reaching $3B

Advertisers see the power in small screens

Revenue from mobile ads and searches more than doubled in the first half of 2013, reaching $3 billion, as advertisers began seeing value in offering ads over tablets and smartphones.

The increase was 145% over the $1.2 billion recorded for the first half of 2012, according a report released yesterday by the Interactive Advertising Bureau.

Analysts and the IAB attributed the surge in mobile to several factors, including an ability to better measure the success of mobile ads.

"Mobile advertising's breakneck growth is evidence that marketers are recognizing the tremendous power of smaller screens," said Randall Rothenberg, CEO of IAB in a statement.

David Silverman, a partner at PricewaterhouseCoopers, which authored the study sponsored by IAB, said a "profound shift" is underway in how consumers view media on mobile devices "wherever they go." Silverman predicted the trend will continue as smartphones and tablets grow and the user experience improves.

Companies are generally reluctant to talk about how much they spend on mobile advertisements,or how much revenue the ads generate in improved sales. But in one example, Nilla Wafers cookies were advertised on a Facebook mobile campaign over the summer, helping improve retail sales by 13% in July, according to the cookie maker's parent company, Mondelez International.

The IAB report also tracked overall Internet ad and search-related revenues, which reached $20.1 billion for the first half of 2013, an increase of 18% over the $17 billion for the first half of 2012.

While mobile revenues soared over the prior year, they still accounted for just 15% of all Internet ad-related revenues, at $3 billion. IAB separates mobile from search-related revenue on desktops, which totaled $8.7 billion in the first half of 2013, the largest category in the overall Internet ad market. IAB also includes mobile search revenues in its overall mobile ad revenue category, but doesn't provide a separate dollar figure for mobile search.

IAB defines mobile advertising as display ads, text messaging ads, search ads and audio-video spots on smartphones, feature phones and tablets. The ads generally appear within mobile websites (sites that are optimized for viewing on mobile devices), mobile apps, text messaging services or within mobile search results, including 411 listings, directories and mobile-optimized search engines, such as Google.

Google alone will capture nearly half of the U.S. mobile ad market in 2013, according to several analyst firms, while Facebook is expected to capture about 15%. Facebook reported in the second quarter that mobile ads accounted for 41% of its ad revenues, another sign of the surge in interest in mobile advertising.

Sephi Shapira, CEO of MassiveImpact, which provides a mobile advertising and analysis platform for global companies like Citibank, attributed much of the growth in mobile ads to the surge in the number of smartphones and tablets in use in the last year, with Android smartphones accounting for more than 80% of the total.

With so many Android smartphones in the hands of consumers, Google is at a significant advantage because its search engine is natively loaded on those phones, Shapira noted. Shapira estimated that ads offered during a search on a mobile device account for roughly half of all mobile ad revenues, while display ads account for roughly the other half.

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