Mobile Advertising Around the Globe: 2015 Annual Report

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1 BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report 9 INSIGHT SERIES The Definitive Facebook Advertising Playbook marinsoftware.com

2 Executive Summary In 2014, global smartphone adoption reached an all-time high with 25% of the world population owning and using one. This proliferation of smartphone and smartphone usage by consumers around the world has presented an opportunity for advertisers to reach consumers at a much greater level than before, with click-to-call or click-for-directions ads. As the leading provider of a cross-channel ad cloud, Marin works with the world s largest and most sophisticated advertisers, allowing us to gain insight into the most insights into the most prevalent trends regarding the usage of smartphone and tablet devices across search, social, and display which are critical for reaching consumers. Three of our specific findings, which we cover in more detail, are highlighted below: 1. Mobile device adoption amongst consumers continues to grow relative to desktop. Consumers spend more time and attention on mobile devices than desktop now, 1 and advertisers have been shifting spend away from desktop towards smartphones and tablets to reach consumer attention. Due to this digital advertising paradigm shift, mobile advertising budget is predicted to exceed desktop advertising budget by end of Consumers are more likely to use mobile devices for product research than desktop. Smartphones and tablets are used by consumers for research and represent the top of the funnel, while desktops are where they go to convert. With 40% of all online adults starting an activity on one device and ending on another, 2 it s important to retarget ads seen on mobile to desktop or tablet in order to ensure maximum view-time by engaged consumers. Use a thirdparty tracker to track users across device and channel to fully optimize advertising spend through retargeting ads. 3. However consumers are still much more likely to convert on desktop. are still the primary conversion-driving device; however research has shown that many consumers use mobile devices as upper-funnel research, and convert in-store or on desktop. 3 Mobile conversion attribution for these cross-device and offline conversions must be tracked and recorded to properly create the link between mobile clicks and conversions BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com

3 Introduction Mobile devices have quickly become a part of everyday life for consumers across the globe, with the world becoming more and more interconnected daily. Mobile device adoption has been a major talking point for digital advertisers for the past year. This comes as no surprise, with emarketer predicting the number of tablet and smartphone users to hit 1.06 billion 4 and 2.04 billion, 5 respectively, by years end. This means over 15% of the world population would own and use a tablet, and over 25% for smartphones. As the mobile marketplace and consumer adoption of smartphones increases, advertisers have taken notice. In 2014, mobile advertising spend versus desktop reached an all-time high of 41% of all US digital advertising spend. 6 Global Mobile Advertising Spend Growth % 46.8% 40% 34.4% 30% 22.6% 20% 8.3% 10% 0.1% 10% USA UK Eurozone Australia Japan BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com 3

4 As mobile devices become increasingly important for everyday life, advertisers need to adjust marketing strategies to accommodate the always-connected consumer, whose shopping and product research behavior is different from what has been seen before. This research brief analyzes mobile trends from 2014, forecasts the state of mobile advertising for 2015, and examines the overall performance of mobile ads across devices and channels. Our objective for this report is to help the digital marketer wrap their arms around the explosive growth in mobile advertising, while developing effective benchmarks and strategies for success. Methodology In this study, Marin looked across leading brands and advertisers that manage more than $6 billion in annualized search, social, and display spend. Our data set represented all major industry sectors alongside the following countries or regions: Australia India Singapore Brazil Japan United Kingdom Canada Mexico USA China New Zealand Eurozone Russia The size and diversity of our data set, coupled with the broad geographic coverage, enables us to provide the most comprehensive report on how smart mobile devices are changing consumer behavior on search, social, and display. That being said, our clients mainly consist of large advertisers spending upwards of $100,000 per month on paid-search, social and display. As such, the information presented in this report is biased towards larger advertisers, and may not reflect mobile search, social, and display trends for small or medium sized businesses. 4 BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com

5 Global Mobile Device Users (in billions) Smartphones Tablets Source: emarketer, Dec 2014 Findings Consumers embraced smartphone and tablet usage across all three channels in 2014, with mobile device usage growth increasing at steady rates globally, with 1 in 4 people owning and using a smartphone. With 27% year over year growth, and no signs of stopping, consumers have become ever more interconnected as smartphones and tablets fly off shelves and into consumer s pockets. More than ever, people are using these devices to search online, browse the web, check social networks, and click on ads. BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com 5

6 Global Search Click Share % 60% Smartphones Tablets 40% 20% 0% Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Between January and December 2014, search mobile click share rose 36%, from 32% to 43.5%. Smartphones made up the majority of this mobile gain, with almost 60% growth in What this signifies is that as consumer smartphone adoption and usage grew, smartphone ad acceptance and engagement grew as well. With a majority of all online spent on mobile devices, 9 it s no surprise that smartphone and tablet click growth have increased to match. Meanwhile, tablet growth was flat across Based off these growth patterns, click share for search on mobile devices is predicted to break 50% by mid Q Global Display Click Share % 60% Smartphones Tablets 40% 20% 0% Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com

7 Display saw the most drastic mobile growth of all three channels. Mobile click share for display grew almost 60% from January to December 2014, starting at 32% and ending at over 50% of click share, making mobile devices the majority of all display ad clicks by end of Again, smartphones took the majority of these clicks away from desktops, almost doubling in click share between January and December This rapid shift away from desktops towards smartphones and tablets are a natural result of the widespread adoption and usage of smartphones over the past few years. If these trends continue at the same rate, by early Q4 2015, smartphone click share alone will overtake display click share for display networks. Global Social Click Share % Mobile 60% 40% 20% 0% Jul Aug Sept Oct Nov Dec In contrast to display and search, social click share remained consistent over the past six months, with the majority of all social media clicks originating from a mobile device. This is vastly different from search and display behavior, which showed rapid mobile growth across the year. This is due to differences in the nature of consumer behavior between the three channels. Social networks tend to be mobile-focused, made for sharing updates on the road from a smartphone. Some social networks cater almost exclusively to mobile devices, such as Instagram, Snapchat, and Vine. 65% of all time on social networks is spent on a mobile device. 10 This creates a natural connection between users for mobile devices and social media, increasing their engagement for social ads on mobile devices. Search and display originated as desktop functions, and have had to pivot from desktop focused to add mobile functionality. On top of this, Search is a primarily active exercise; users must be looking ( searching ) for something to see search BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com 7

8 ads. However, social on mobile devices is passive. Users may be browsing their social media in a spare moment or two to see what their peers are doing, and see and engage with ads as they are doing so. With social interaction so mobilefocused, social ads served on mobile devices received more views and more engagement. Unsurprisingly, this resulted in an average of 62% of all social media clicks originating from a smartphone or tablet in By late 2016, it can be expected that mobile devices will truly outpace desktops for consumer ad clicks across all three channels in the US. Consumers already spent 23% more time on mobile devices than they did on desktops, reports emarketer, 11 accounting for 52% of all time spent on digital media. 12 With consumers in major markets spending most of their digital viewing time on mobile devices, 13,14 advertisers wanted to be sure to reach them by diverting advertising budget towards smartphone and tablets. Spend share, or percentage of budget, has shown similar trends across all three channels, with mobile share climbing and poised to take over the majority position. Globally, mobile ad spend has been growing at a striking pace, at $31 billion spent in 2014, and $46 billion predicted for Global Mobile Ad Spend (in billions) $8.76 $17.96 $31.45 $45.85 $61.40 $77.67 $94.91 Source: emarketer, March BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com

9 Global Search Spend Share % 60% Smartphones Tablets 40% 20% 0% Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Globally, search spend share showed a slow shift from desktop towards mobile. Mobile search spend share grew 8% over the year, peaking in November at just under 48% of all search advertising budget. While mobile search spend share has not grown as dramatically as click share, it is still on an upwards trend, and is predicted to break 50% by Q It is clear that this slow growth in search mobile spend is an advertiser reaction to shifting the shifting consumer behavior towards smartphone and tablet and the fact that the majority of consumer time is now spent on mobile. 15 Global Display Spend Share % 60% Smartphones Tablets 40% 20% 0% Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com 9

10 Display spend behavior fluctuates dramatically during Desktop and smartphone spend share fluctuate drastically throughout the year; with smartphone display spend becoming the majority of display advertising budgets at several points throughout the year. Although it may be difficult to discern from the graph above, display advertising budget has been moving towards mobiles devices, smartphones in particular. By mid-2015, display advertising spend is predicted to be majority mobile-based, with smartphones dominating display spend share. Global Social Spend Share % Mobile 60% 40% 20% 0% Jul Aug Sept Oct Nov Dec With social networks being so mobile-focused, it makes sense that advertisers that advertisers would have social spend on mobile devices, where consumer eyes are. Therefore, it comes as no surprise that mobile devices already make up the majority of social ad spend, with over 55% of it being used on smartphone and tablet advertising. This mirrors the 62% of social clicks being on smartphones and tablets. Over the past year, mobile devices have been capturing consumer attention and clicks more than ever, so marketers need to be increasingly aware of where they allocate their budgets. As consumers continue to increase the amount of time spent on mobile devices, it will inevitably create opportunities for advertisers. However, advertisers looking to invest in mobile should first consider the nuances of how consumers use mobile devices compared to desktop. For example, one example is the second screen effect, of the phenomenon of consumers to browse online media while consuming other media, most typically television. Mobile users are much more affected by the second-screen effect, using smartphones or tablets to reference advertising 10 BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com

11 or content seen on television, or browsing social media simultaneously. Another key difference is the usage of mobile devices outside of a home. Smartphones are commonly used on the go for a variety of reasons, such as looking up nearby stores or directions, or browsing social media on public transportation. The differences between the three channels only complicate matters. These forces advertisers to find ways to adapt advertising to the mobile user, and successful mobile advertising can yield huge dividends. So just how well did advertisers react to this shifting attention towards smartphones and tablets? If click-through rates are examined, it is clear that smartphones have higher click-through rates than desktops and tablets, which show similar click-through behavior. This is especially pronounced in search, where smartphone CTR is almost 50% higher than tablet and desktop. However, if CTR by ad-position is examined, it becomes clear that ad position plays a large part in why smartphone CTR is so much higher than desktop and tablet. Search remains the primary channel for users to find goods and services, making search ads very relevant to the user intent, while social and display ads while users may not necessarily be looking for them, making these ads secondary to the user s browsing intention. This is very apparent in the click-through rates, where search boasts much higher click-through rates than the other two channels, due to user intent while they re using each channel. For social and display ads, the difference between average desktop and mobile ad CTR is much closer. However, when we examine search click-through rate by ad position, search click-through behavior is revealed to be much more similar to social and display. BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com 11

12 Average Global Click-Through Rate by Channel and Device 2014 Smartphones Tablets Search Social Display 2.09% 2.81% 2.34% 0.42% 0.60% 0.24% 0.36% 0.32% If search click-through rate is shown by ad position, it is apparent that clickthrough rate is much closer between devices. Tablet actually has the highest CTR for the first search position, and search CTR is very similar close between devices by ad position, until smartphone CTR falls off starting at position four. This is due to how smartphones deliver search ads, in that they show less per page than desktop and tablet. If click-through rates for the first three search ad positions is compared with CTRs for social and display, it is apparent that the differences between smartphone and tablet and desktop is much closer. Therefore, ad position is much more important than device when it comes to click-through rate. Thus, it is most important for a marketer advertising on any device to find a way to reach top positions or visibility for their ads, especially for search. It can be argued that ad position matters more than device type in this case. 12 BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com

13 Global Search CTR by Ad Position and Device 2014 Smartphones Tablets % 4.36% 4.64% 2.12% 2.37% 2.25% 1.80% 1.81% 2.12% 1.58% 1.17% 1.78% 1.26% 1.08% 1.35% 1.19% 0.56% 1.09% 0.95% 0.29% 0.72% 0.74% 0.39% 0.61% While smartphone is king for click-through rate, conversion rates tell a very different story. Across all channels, desktops still are the highest-converting device. Smartphones are still lagging behind for conversions, which is reflected in the cost-per-click of search, social, and display, whose behavior closely mirrors that of conversion rate. What this fails to take into account, though, is the prevalence of mobile usage in in-store purchases, or mobile click-to-call or click-for-directions, which are not always correctly tracked as conversions. Deloitte found that mobile device usage helped account for roughly $593 billion of US in-store retail sales in 2013, or almost 20% of all brick-and-mortar sales. 16 The difficulty in tracking these types of conversions hurts the recorded conversion rate, but the conversion rate with all these disparate factors may be much higher. In addition, many shoppers use mobile for top-of-funnel browsing, and move to desktops for actual conversion, further harming mobile conversion numbers BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com 13

14 Global Average Conversion Rate by Device and Channel 2014 Smartphones Tablets Search Social Display 10.3% 6.1% 7.7% 1.1% 0.4% 3.11% 2.29% 2.68% Optimizing Mobile Advertising across Channels Mobile advertising is quickly overtaking desktop for the top spot in digital advertising. As such, it is critical for marketers to pay attention to mobile, and to adapt their mobile advertising strategy to account for both cross-device and crosschannel advertising. This section covers a few best practices to take into account for marketers to get the most out of their marketing dollar. 1. Play to each channel s and device s strengths. Marketers need to identify what they re looking to accomplish. For the brand advertiser, it makes sense to allocate more spend toward mobile ads on social and display networks, which are strong on branded advertising and consumer usage. Customizing a strategy based off each channel s and device s strengths can help meet marketing goals and maximize sales. 2. Correctly attribute mobile conversions. While there have been improvements made to correctly attribute in-store conversions to mobile devices, there is still a lot of room for improvement. Marketers should look into tracking mobile ad formats like click-to-call and store-locator. If successful, they can better estimate revenue from mobile transactions and adjust budget 14 BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com

15 accordingly. Mobile app usage accounts for a majority of smartphone usage, so having a reliable way to link mobile app activity to mobile app purchases and browsing is important for every marketer. 3. Optimize ads for mobile experience. Research shows that different ad formats vary in effectiveness between channels. For example, display ads work best for desktop, while display ads work best on smartphones. 18 Make sure to properly set ads for these differences in screen size and devices. Click-to-call and store-locater ads should be added for mobilesearch ads. This will help ensure effective consumer reach and click-through. Mobile app advertising is also a crucial part of the mobile experience. 4. Target consumers across devices and channels. Cross-device retargeting is more crucial than ever with consumers using desktops and tablets and smartphones in conjunction. Make sure to find a way to retarget these consumers across all channels and devices effectively, to bring down costs and increase consumer awareness. This can be done through third-party solutions which have trackers which can follow user activity across devices to the point of conversion and retarget ads cross-channel and cross-device. 5. Invest in mobile app advertising. Mobile apps now account for almost 90% of all time spent on mobile devices and almost 60% of mobile users say they use apps daily. 19 This makes mobile app advertising an important tool in any marketer s toolbox, with in-app ads an important way to reach consumers and engage them. This is especially true for social media, as Facebook is the most-used app on smartphones and tablets. 6. Plan ahead for mobile video advertising. While desktop is still the most important avenue for consumer video consumption and advertiser video advertising, mobile devices are quickly catching up. Smartphones and tablets have already accounted for 30% of all digital video views in Q3 2014, and show no sign of stopping. 20 Smartphones are used by consumers for shorter videos, while tablets are preferred for longer ones. Mobile video is quickly becoming another important channel for marketers to reach advertisers, and must be paid attention to in the future BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com 15

16 About Marin Software Marin Software Incorporated (NYSE: MRIN) provides a leading Revenue Acquisition Management platform used by advertisers and agencies to measure, manage and optimize more than $7 billion in annualized ad spend. Offering an integrated platform for search, social and display advertising, Marin helps advertisers and agencies improve financial performance, save time, and make better decisions. Marin s technology powers marketing campaigns in more than 160 countries. For more information about Marin s products, please visit: 16 BEST PRACTICE SERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com

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