In 2015 every website must be mobile ready because everything’s shifting mobile. What’s more, according to Ovum, one billion people will use mobile as their only form of internet access in 2015, writes Sean Sullivan.
Over 93% of users on Facebook are accessing the internet via mobile in SA – that’s more than 10 million people. The proof is in the profit. Facebook almost doubled its net income in 2014, lifted by growing mobile ad revenue. The platform reported earnings of $2.9 billion for 2014, compared with $1.5 billion for the same period in 2013. Revenue jumped 58% to $12.8 billion. In the fourth quarter alone, the US based social media company earned $701 million, up from $523 million in 2013.
The company said it counted 1.39 billion monthly users worldwide, an increase of 13% from 2013. More and more users were accessing the service via mobile devices, which had caused advertising sales for the fourth quarter to soar to $3.59 billion.
“Our community continues to grow and we’re making progress toward connecting the world,” Facebook co-founder Mark Zuckerberg said in a statement. In 2014, the number of Facebook employees surged 45%, causing costs and expenses at the social network to increase by 87%.
Zuckerberg told financial analysts the company was focused on serving the entire world and that it would require a lot of effort and investing for several years. He underscored that Facebook was a “mission-driven” company. “If we were only focused on making money, we might put all our energy into ads for people in the US and other developed countries, but that is not just what we care about here,” he said.
He reasoned that if Facebook becomes a main online platform in developing countries, the company would benefit over time as economies improve in those parts of the world. Facebook is testing a lightweight version of its mobile app for mobile phones with poor quality internet connections in emerging markets. A spokesman for the company recently told the news agency AFP that the Facebook Lite Android app is designed “for people on 2G [second generation] connections or in areas of limited internet accessibility”.
It is clear that Zuckerberg intends growing his community across every nation, and emerging markets invested in today, will reap massive benefits down the line. Mobile ad revenue was a huge driving force behind their success in 2014; 69% of total ad revenue came from mobile ad sales. This is a massive leap on the 53% mobile ad revenue share in 2013 and represents double the mobile ad revenue on 2013 – an additional $1.24 billion!
Interestingly, when Facebook was first floated onto the stock market back in 2012, the firm highlighted its desire to make money from mobile users. After all, mobile usage was sharply on the rise and finding ways to monetise that trend was always going to be high on the agenda. Well, fast forward to today and it’s safe to say that Facebook has absolutely nailed their monetisation plans and their mobile ad unit is now undoubtedly one of their biggest assets.
Gartner analysts projected that mobile advertising spending globally would reach $18 billion in 2014, and by 2017 the market will be worth around $41.9 billion. 2017 is just around the corner. If mobile advertising is expected to more than double, the opportunities in the industry are glaringly apparent. Growth on mobile platforms in general has been exponential, and this has naturally had a large impact on mobile advertising.
As more and more businesses realise the need for mobile advertising, the volume of growth will continue to increase as advertising budgets are moved from web to mobile in the next 12 months.
Five trend predictions for mobile advertising in 2015
• Increase in demand for richer measure of ROI. The industry will see more cost-per-acquisition (CPA) campaigns than cost-per-impression (CPI) campaigns because advertisers will be looking for more meaningful events – not just an impression, but also a deposit or a purchase. Essentially, advertisers will focus more on performance and they will be ready to spend more money when their ROI is clearer with more valuable and hyper-measurable results.
• Location, location, location. Popularity of location-based advertising is on the rise and will continue to climb, becoming a preference for advertisers. Smart phones have become such an integral part of our daily lives, and as we bring them with us everywhere we go, it offers new opportunities to reach target audiences, while also providing information-rich data for marketers. Location based technology gives advertisers the ability to use hyper targeting, enhancing the quality and effectiveness of ads. Traffic sources will also be more targeted and will deliver the quality users that advertisers want to pay for.
• Video will become ever more essential. A number of marketers have started promoting their apps using video in, or as, their advertisements. The results have been very effective because the users viewing them are imperative to their businesses. Everyone recognises the power video has as a medium in effectively communicating any message, even traditional media outlets have recognised that video is the future. It is clear that more advertisers will use video over one dimensional ads in 2015.
• Tailored and personalised ads. Everything has become about personalisation today, and customers expect their experiences to be tailored to them as such. In order to get the quality users that advertisers want, a focus on a target audience is required. The more and more targeted an audience is, the more successful marketers will be in reaching the right people. Context is also king in advertising, as it drives relevancy for consumers. If the right tools are used to capture a user’s context, the better results the campaign will receive.
• A focus on optimisation. For the best user acquisition strategy, budgets will be spread out and monitored closely to identify which channels are delivering users who actually engage or spend in the desired way. Having knowledge of a high volume of existing, quality traffic sources is the key in knowing which will deliver the best results and which ad campaign they should be matched with.
Programmatic takes off…
Innovators in the programmatic ad space have been working towards the Holy Grail: providing a valuable, scalable solution for advertisers to best reach their audience. Mobile programmatic ad spend in the US is set to hit $8.4 billion in 2015, surpassing online advertising spend for the first time. Improvements in the use of first- and third-party data will allow marketers to optimise and buy mobile ad inventory at an incredibly efficient rate, proving to advertisers that more budget should be spent programmatically.
This trend is expected to continue to grow, especially as we see rich ad formats, such as video and native, being bought through an automated process in 2015.
Sean Sullivan is business unit manager at The MediaShop
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