Mobile Advertising Europe s BIG FIVE

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1 TM mobile advertising Mobile Advertising Europe s BIG FIVE White Paper Prepared by Nick Lane Chief Analyst, mobilesquared New York London Hamburg Singapore + 1 (646) contact@adsmobi.com

2 Our clients are getting mobile, and of those clients that get mobile, they are really embracing the medium, and looking to exploit features such as location and the rise in app and browser usage. Smartphones now provide the level of functionality that we at agencies need to sell creative concepts to the client. With more people using the platform regularly, we have more opportunities to engage with the audience, which leads to greater levels of investment. It means more money for the mobile advertising ecosystem, and that can only be a good thing... if you re involved in mobile advertising. George Dixon Manager, mobile and digital media, MediaCom Our fi rst year was very successful and we are proud to see adsmobi as one of the biggest players with Pan-European inventory in the mobile advertising market as off today. We expanded our worldwide service with the opening of a new offi ce in London and our growing team is working hard with our agency partners to drive revenues in Europe s BIG FIVE markets. Ramy Yared Managing Director, adsmobi Copyright adsmobi Inc. All Rights Reserved. 2

3 Executive Summary All the ingredients are now in place to ensure the European mobile adver sing market will prosper. Europe will become a $1 billion industry 12 months faster than previously projected as smartphone penetra on drives mobile browsing and app consump on. By 2014, the collec ve mobile ad market across France, Germany, Italy, Spain and the UK, will be worth over $1.03 billion. During this meframe, mobile banner ads will con nue to represent a significant slice of the mobile adver sing revenues. Smartphone penetra on across Europe s Big 5 markets will top 24% at the end of 2011, and will increase to 55% of total devices by Correla ng with this growth is the increase in mobile internet and app usage. By the end of 2011, 23% of the Big 5 s combined mobile popula on will be browsing on their mobile devices, while the total number of app users will increase from 90 million in 2011 to almost 200 million in Perhaps the best indica on of the good health the European mobile adver sing market will be in during the forecast period of is the fact monthly adver sing ARPU will experience year-on-year growth. Copyright adsmobi Inc. All Rights Reserved. 3

4 The Markets The Big 5 mobile adver sing markets in Europe France, Germany, Italy, Spain and the UK will be worth over $1 billion in 2014, one year earlier than previously forecast, due to the con nued rapid adop on of smartphones having an accelerator effect on mobile ad campaign spend. By the end of 2011, the mobile adver sing market in Europe s Big 5 will be worth $ million, rising to $1.79 billion by Presently, the UK contributes 47% of total mobile adver sing revenues for the Big 5, followed by Italy and then France. However, during the forecast period, the UK s dominance will recede to 40%, with Germany showing strong growth. Between 2011 and 2016, the German mobile adver sing market will increase from $13.9 million to $97.71 million in $1 Billion Europe s BIG FIVE mobile advertising market in 2014 $ Million BIG FIVE mobile advertising market by the end of 2011 Across all of the markets researched for this report, with the excep on of Italy, mobile banner adver sing will represent a core feature of the revenue genera on. In the UK, mobile banner ads account for a li le over 60% of campaign spend, compared to 45% in France and Germany, and 45% in Italy. In the Big 5, mobile banner ads will generate revenues of $135.4 million in 2011, rising to $705.4 million in In 2010 mobilesquared projected that the combined mobile adver sing revenues of France, Germany, Italy, Spain and the UK, would top the $1 billion landmark in 2015, but ongoing research reveals that the sustained uptake of smartphones, and Android in par cular, across Europe is massively increasing the number of mobile internet and app users and associated levels of available inventory to be exploited by the mobile ad networks. Copyright adsmobi Inc. All Rights Reserved. 4

5 Consequently, mobile display-based ad campaigns are las ng for shorter periods of me as the frequency and length of mobile browsing sessions coupled with the usage of apps, is crea ng swathe a er swathe of page impressions, promp ng adver sers to increase the frequency of their mobile ad campaigns. Not surprisingly, given the UK s revenue-genera ng dominance among the Big 5, it will contribute 57% of total mobile banner ad spend, compared to 13% in both France and Italy. adsmobi Second largest mobile ad network across the Big 5 Across the Big 5, the mobile banner ad market shows strong growth in each market. Based on mobilesquared research, the mobile ad network delivering the largest number of ads on a monthly basis across the Big 5 is InMobi, followed by adsmobi and YOC., based on 2010 and 2011 data, where available Copyright adsmobi Inc. All Rights Reserved. 5

6 The Growth It is smartphones that are contribu ng to this accelerated growth in mobile ad spend ac vity across the Big 5. Across the five markets, smartphones will account for 24% of total handset penetra on by the end of By the end of the year, the UK will have a smartphone penetra on of 39%, followed by Italy on 28% and France on 25%. Those figures will increase to 80% in the UK by 2016, and 65% in Italy, 46% in France. Germany, star ng from a low smartphone penetra on of 12% in 2011 will make a solid recovery during the forecast period, rising to 43% in % Smartphone share of total handset penetration by end of Million Smartphones by 2011 in the Big 5 markets Indeed, out of a combined mobile popula on of million, there are 99.6 million smartphones. mobilesquared projects unprecedented smartphone growth over the forecast period, with million smartphones in the five markets, accoun ng for 55% of total devices Million Mobile internet users by the end of UK with largest mobile internet population What is most telling, is that the rise of smartphones is also having a direct impact on the user figures for mobile internet and apps. At the end of 2011, there will be 93.3 million mobile internet users, and accoun ng for 23% of the total Big 5 mobile popula on. By 2016, mobile internet penetra on would have reached 46% across the 5 markets, with million people browsing on their mobile devices. Copyright adsmobi Inc. All Rights Reserved. 6

7 The UK will have the largest mobile internet popula on throughout the forecast period, with over 30.8 million users at the end of Italy possesses the second largest mobile browsing community with 26.2 million, and looks set to more than double by The markets that will show the most growth, primarily because they have a smaller base to start with will be Germany and Spain, that will see mobile internet penetra on almost treble by 2016 in both markets Million App users by 2016 It s a similar story with regard to the number of app users in the Big 5 markets. Star ng from a combined markets base of a li le over 90 million in 2011, the number of app users will increase to million in Again, the UK has the largest number of app users, however, the difference in app users across all of the Big 5 is smaller than compared to mobile internet penetra on. Italy, for example, has more app users than mobile internet users. This could be a ributed to the fact the market has a very high prepaid penetra on, and apps are more suited to this environment. The con nued increase in the number of mobile internet and app users across Europe s Big 5 is providing an ever-increasing pla orm for mobile adver sing to exploit. During the forecast period, both mobile internet and app penetra on will increase by more than 110%. While smartphone penetra on will expand by almost 150% in the same meframe. In addi on, research by mobilesquared reveals that less than 30% of companies across Europe s Big 5 are using mobile as a medium to either communicate or adver se with customers and poten al customers. That means, as more companies recognise or are educated about the benefits of the mobile channel, spend on mobile will con nue to increase. And that means the growth of mobile adver sing as means of delivering company communica ons is guaranteed. Copyright adsmobi Inc. All Rights Reserved. 7

8 To support this claim even further, mobilesquared s database Mobile Consumer Trends, reveals that in the UK at the start of 2011, the number of mobile users that would poten ally respond to a mobile ad if relevant was million, rising to 15.8 million at the end of 2011, and million by the end of That means the pool of users that would poten ally click on a mobile ad will have doubled in the space of two years. 26% of UK mobile population will potentially click on a mobile ad by the end of 2011 Source: Mobile Consumer Trends, mobilesquared Put another way, by the end of 2011, 19% of the UK mobile popula on will poten- ally click on a mobile ad, and 26% by the end of If we apply these figures across Europe s Big 5, it again serves to highlight the true poten al of mobile adver sing as an effec ve channel for reaching consumers. At the end of 2011, the total number of mobile users in the Big 5 markets that will poten ally click on an ad will be 78.2 million. At the end of the forecast period in 2016, that figure will have topped 191 million mobile users, equa ng to 44% of the mobile market. Copyright adsmobi Inc. All Rights Reserved. 8

9 ARPU (average revenue per user) has become one of the key performance indicators of the wireless industry. And it is now being applied to ver cal sectors, such as mobile adver sing, to reveal how the sector is performing on a monthly or annualised basis. The rise in mobile users acceptance of mobile adver sing will have a posi ve impact on AARPU (adver sing average revenue per user). Based just on the mobile community that will accept mobile adver sing, as outlined above, monthly AARPU will increase from $0.28 to $0.76 during the forecast period of When total mobile adver sing revenues are applied to the total mobile popula on across the Big 5, monthly AARPU increases from $0.05 to $0.34. ARPU (average revenue per user) increasement from $ 0.28 to $ 0.76 between 2011 and 2016 At a me when ARPU across the mobile industry is in a perennial state of decline, it is an incredibly posi ve sign that AARPU is set for solid growth during the forecast period. It highlights the healthy state of the mobile adver sing industry. What s more, it also reveals that brands and agencies will con nue to increase their investment in the mobile medium. Copyright adsmobi Inc. All Rights Reserved. 9

10 Conclusion All of the core ingredients to drive mobile adver sing across Europe will experience triple-figure percentage growth during the forecast period of 2011 to The European mobile adver sing industry is set to enjoy significant growth over the coming 5 years, with the increase in spend across the Big 5 markets set to increase by almost 600%. The increase in mobile banner ad spend between 2011 and 2016 will be more than 400%. Smartphone penetra on will increase by almost 150% across the 5 markets, leading to more than 110% growth in the penetra on of mobile internet and app users. Consequently, more people will be spending more me on their mobile phones, crea ng significantly more inventory on a daily basis. The challenge for the mobile adver sing industry, and the mobile ad networks in par cular, will be filling the available inventory. But then that s not a bad challenge to face. Great thing with the growth of smartphones and their capabilities, is that they can really capitalise on the introduction of HTML5. As an ad unit, HTML5 enables campaigns to focus on brand awareness and brand building. It is no longer about driving an end action or downloading content, this is all about customer engagement. HTML5 is effectively creating an ad that is like a mini app, containing different menus to access a range of content. It is a good fi rst step for brands that do not have a mobile destination. These campaigns are delivering response rates of 1-1.5% or even higher. So we re getting good click through rates, but it s also about the amount of time people are engaging in that ad, which can be up to seconds. We could effectively be creating a new currency for advertising: time. Jide Sobo Mobile Strategist, EMEA, Mediabrands Copyright adsmobi Inc. All Rights Reserved. 10

11 About The European mobile advertising space is now demonstrating the strong growth that has been projected for a number of years. The meteoric rise of mobile internet users is ensuring that the mobile banner ad space will remain an incredibly healthy marketplace. Companies like adsmobi, that are helping to drive the sector are primed for the good times. Nick Lane Chief Analyst, mobilesquared Nick has been described as the leading commentator on UK mobile media (Adam Smith, Futures Director at GroupM). But Nick s experience extends well beyond the UK. He specializes in mobile market intelligence and heads up the research and analysis at mobilesquared ( Prior to launching mobilesquared, Nick was Head of Research Services and Principal Analyst at Informa, where he oversaw the group s leading industry newsle ers, reports and forecasts that have helped shape the mobile industry. In this role, Nick established himself as one of the leading authori es on the mobile content, services and adver sing space, regularly speaking and chairing at conferences and events around the world. While in this role at Informa, Nick wrote a number of reports, from consumer behavioral analaysis to mobile adver sing. About mobilesquared provides specialist research which enables brands, agencies and the mobile industry to increase engagement with the mobile consumer. We conduct primary research on the mobile industry and mobile consumers, with a focus on delivering exclusive forward-looking data on mobile device usage, mobile web, app and commerce trends and usage, and mobile adver sing responsiveness to help clients iden fy and respond to fast-changing mobile trends. And for a wider view of the industry, we provide detailed mobile industry user and revenue forecasts. Our clients look to mobilesquared s exper se to provide candid insight into the mobile market. We do this using our extensive global network of senior contacts to research, collect and collate the latest data, developments, trends and insight on an ongoing basis. For more informa on, please visit, D2 Mobile Ltd. mobilesquared is a trading name of D2 Mobile Ltd. Copyright adsmobi Inc. All Rights Reserved. 11

12 TM mobile advertising About adsmobi adsmobi is a mobile media buying pla orm that focuses on placing successful mobile campaigns for mobile adver sers. adsmobi delivers premium adver sing traffic for adver sers through partnerships with leading mobile media on and op- miza on pla orms. adsmobi matches agencies and brands, with the best mobile publisher inventory to achieve their mobile ROI goals. adsmobi focuses on the adver ser buy side of the mobile adver sing ecosystem. The adsmobi ad server will help effec vely manage media spending with the flexibility to target a desired audience at the right me, in the right place, on the right device. A er a great launch in February 2010, adsmobi has come quickly off the ground and generates increasing revenues with a Headquarter in New York and offices in Hamburg, London and Singapore. Through their partnership with the leading mobile media on and op miza on pla orm Smaato, adsmobi has access to a worldwide inventory of more than 30,000 publishers with up to 30 billion ad requests monthly. adsmobi Inc. 260 Madison Avenue 8th Floor, NYC New York 10016, USA 22 Long Acre Covent Garden London, WC2E 9LY, UK Gerhofstrasse Hamburg Germany 66B, Tras Street Singapore Singapore T: + 1 (646) T: T: T: newyork@adsmobi.com london@adsmobi.com hamburg@adsmobi.com singapore@adsmobi.com New York London Hamburg Singapore + 1 (646) contact@adsmobi.com