Five Mobile Advertising Predictions for 2012

January 04, 2012

Tags: 2012, Industry Perspectives

Jim Payne
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It’s that time of year again. Time to look back at what happened over the past year, and start preparing for a new year. 2011 was a big year for mobile advertising as the mobile sphere has started to mature. Still, we’re going to see a lot of big change in 2012 – especially as publishers try to turn their apps into real sustainable businesses.

Here are my predictions for mobile advertising for the next year:

1. M&A Madness: Mobile advertising transactions to experience another record pace of deals – look for one a month

At this point, the mobile advertising market is so saturated, that advertisers are faced with too many options for where and from who and how to buy ad space. There are the ad networks from the major players, like Google’s AdMob and Apple’s iAds, and there are the independent players, like Millennial Media, JumpTap and InMobi. Add to that the mobile demand-side platforms, like MdotM and Fiksu and conventional demand-side platforms, like DataXu, Turn and Invite Media – it’s no wonder advertisers are overwhelmed! It’s clear that there will need to be some consolidation in order to give the market clarity and viability. In 2012, we’ll see big networks swallowing small networks and independent networks go IPO (that Millennial IPO rumor will come true very soon). We’ll also see different sides of the mobile ad spectrum merging: DSPs with servers and networks. All of this will result in more one-stop shops for advertisers and more clarity for publishers. Expect 12 major deals in 2012.

2. Put Your Money Where Your Mobile Is: Agency spend (finally) comes to mobile at scale with four companies poised for 100 million mobile ad paydays

Consumers are spending more and more of their time on their mobile devices, but advertisers (and their dollars) have yet to really catch up with this trend. Despite the richness and engagement a good mobile campaign can provide, advertisers are still throwing more money into Internet and television ads – in 2010, mobile only accounted for 2.1 percent of Internet advertising. Why? For one thing, mobile campaigns take a lot of effort to create and to create well. But perhaps more importantly, it’s very difficult to buy easily at scale. With so many different platforms – from iPhones to tablets to Android’s multitudes of models – it’s difficult to build an ad that you know will be effective. But new standardizations that will become popular in the next year, such as the IAB’s MRAID, and liquidity through real-time bidding and consolidation will help address these perceived problems, and bring agency spend into the market at scale for the first time.

Because of this, Google, InMobi, and possibly Amazon and Facebook can turn on 10-figure revenue potential in mobile advertising. The first two are already on pace, but the second two are dark horses to watch.

3. Real-time mobile ad bidding will be the hottest new innovation and totally disrupt mobile advertising

Real-time bidding is a relatively new ad technology that gives advertisers more control and ability to target their audience, while giving publishers more opportunities for monetization by selling ad space through a competitive auction. Over the past year, RTB has grown from zero to over half of the revenue flowing through Google’s Content Network. Why? Because advertisers prefer knowing what they are buying before they buy it, and they like to set their own price in a competitive auction, rather than buying through complicated offline forms. In mobile, RTB is just becoming possible. But now that it is, I predict quick and rapid movement of advertising spend to this method.

4. Mobile publishers “grow up” as at least 100 companies establish in-house mobile ad-operation positions that work across multiple ad networks and partners

As the mobile app space begins to mature, publishers are starting to look for new ways to monetize beyond the single ad network system. We are already seeing large mobile publishers, like gaming giant ngmoco, adopt ad serving, ad operations and sophisticated reporting platforms to power advertising on their mobile games and apps. Companies like Backflip Studios, Rovio (Angry Birds), BET and The Economist already have established in-house mobile ad operations teams – and this number will expand. This trend will increase in 2012 as publishers with growing mobile inventory look to diversify their revenue by adopting more capable platforms.

5. Put a Stake in the SDK: Death of the mobile ad network SDK

The demise of the ad network software developer kit has been long predicted, but has not been realized. Why has it taken so long? SDKs were the original monetization solution for apps, but they’re bloated, buggy and cause major headaches when they are integrated. As the balance of power shifts toward publishers, and the dollars flow toward RTB (where SDK integrations aren’t even necessary) we’ll finally see them disappear. SDKs will move from being a “necessary evil” to just “evil.”

See this post as a guest post on Forbes .

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