Mobile Braced For Video Advertising Explosion

Transcription

1 TM mobile advertising Mobile Braced For Video Advertising Explosion WHITE PAPER Prepared by Nick Lane Chief Analyst, mobilesquared New York London Hamburg Singapore +1 (646)

2 Euro7 Smartphone Video Audience Growth 274 Million smartphone users will watch video-based services by 2016 Source: mobilesquared Euro7 Mobile Advertising Forecast us$1.24 Billion Euro7 mobile ad revenue in 2012 Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 2

3 SUMMARY Mobile video stands to become one of the most powerful forms of advertising and can be considered as the richest of rich media. Across the Euro7 countries included in this report (France, Germany, Italy, the Netherlands, Russia, Spain and the UK), between 60-79% of smartphone users in these countries are watching video-based services. That means the total Euro7 video audience is million in 2012 and million in In other words, although mobile video is considered a very nascent advertising medium - only 12% of smartphone ads integrate video - brands investing in mobile video ad campaigns will still potentially reach a very sizeable share of the smartphone user base. While video penetration within rich media mobile ad campaigns remains low, the fact consumers are already engaging for 20 seconds with the ad makes it a very compelling medium. 153 Million Euro7 Video Audience (2012) $1.24 Billion Euro7 Mobile Ad Revenue (2012) $411 Million Euro7 Mobile Display Revenue (2012) Mobile video advertising remains an experimental component of rich media campaigns, which means the business model surrounding the service can only be described as liquid. While the mobile advertising industry will be looking to develop a premium CPM or CPC model around video, presently, advertisers are paying from $5 per CPM. Clearly, the target for the mobile advertising industry is to return to the heady CPMs of 2006 when mobile video advertising attracted CPMs upwards of $75. Presently, mobile video advertising is contributing very little in terms of the overall mobile ad spend, but rich media campaigns are now having an impact and will play a significant role in helping Europe to become a mobile advertising billion dollar playground in The Euro7 will generate mobile advertising revenues of US$1.24 billion in 2012 with Europe s Big 5 (France, Germany, Italy, Spain and the UK) contributing US$1.14 billion. By 2016, the Euro7 mobile advertising market will be worth US$3.76 billion. Mobile display looks set to truly benefit from the continued adoption of smartphones across Europe. Smartphones will account for million devices in 2012 and million in This is providing a mass market for rich media mobile ad campaigns, which will inevitably increase spend during the forecast period. In 2012 mobile display, incorporating rich media, will be worth US$ million and US$1.79 billion in Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 3

4 The data revolution is upon us In 2011 global mobile data traffic more than doubled for the fourth successive year, with traffic totalling 597 petabytes per month, which is over eight times greater than the total global Internet traffic in 2000 (75 petabytes per month). This data, provided by the Cisco Visual Networking Index Global Mobile Data Traffic Forecast Update, also reveals the impact that smartphones are having on behaviour. The average amount of traffic per smartphone was up from 55MB per month in 2010 to 150MB per month in 2011, with the typical smartphone now generating 35 times more mobile data traffic than featurephones (4.3 MB per month). 404 Million Euro7 Smartphone Users (2016) 64% Euro7 Smartphone Penetration (2016) By the end of 2012 Cisco claims over 100 million smartphone users will belong to the gigabyte club (over 1 GB per month), while the number of mobile-connected devices will exceed the world s population in Within two years the average mobile connection speed will surpass 1Mbps, and by 2016 monthly global mobile data traffic will surpass 10 exabytes in 2016, while tablets will exceed 10% of global mobile data traffic. This is the data forecast that the mobile advertising industry has been waiting for. Not only does this highlight the fact that consumers on smartphones are heavy data users, they are consuming richer content over faster data connections. With the average mobile connection speed set to pass 1MB by 2014, it means advertisers will be able to deliver the rich media ad campaigns to mobile devices regardless of location, and finally put to bed the 3G/4G versus Wifi debate. And there is a groundswell of activity surrounding the demands for rich media. Not surprisingly, at the centre of this upsurge of rich media ad activity sits the trusty smartphone. Across the Euro7 countries included in this report (France, Germany, Italy, Russia, Netherlands, Spain and the UK), mobilesquared forecasts there will be million smartphone users in 2012, rising to million. Across the Euro7, the average smartphone penetration will be 37% in 2012, increasing sharply to 64% by Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 4

5 Smartphone Growth, Euro 7 (in Millions) France Germany Italy Netherlands Russia Spain UK Chart 1: Smartphone growth, Euro 7 (Source: mobilesquared) To put this into perspective, across the Euro7, the UK has the highest smartphone penetration of 51% in 2012, increasing to 80% by 2016 France, Germany and Netherlands all have smartphone penetration in the low-40% and will leap to 61%, 78% and 68% respectively. Of these markets, Germany will have the largest smartphone user base on 91.3 million, followed by Russia on 84 million, representing 36% of its total mobile user base. 80% UK Smartphone Penetration Rate (2016) From a mobile advertiser s perspective, it means that any rich media campaign will now be served to a mass market audience of smartphone uses per country. What s more, a walled garden campaign, such as an OS platform-based campaign, would no longer be considered inconsequential because of the sheer volume of users on ios and Android in particular. By the end of 2012, there will be almost 44 million iphone users across the Euro7. That number will rise to 63.4 million by 2016 which will be the equivalent to the size of the UK population. As expected, the two largest markets of Germany and Russia will have the largest iphone population, followed by the UK. In the more developed iphone markets, mobilesquared projects stable steady growth, but in markets where smartphone penetration remains low, such as Russia, more aggressive iphone growth is projected. 44 Million Euro7 iphone Users (2012) Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 5

6 Total iphone Population, Euro7 (in Millions) Million Euro7 Android Users (2012) France Germany Italy Netherlands Russia Spain UK Chart 2: Total iphone population, Euro7 (Source: mobilesquared) If the Euro7 iphone population can be linked to the UK, then the number of Android users in 2016 will be similar to the size of Brazil. Android continues its smartphone domination. A direct comparison between the mobile advertiser s opportunity on Android versus iphone across the Euro7 shows that the number of Android devices in 2012 will be equal to the number of iphones in million. However, the Android number is projected to almost triple during the forecast period, with total Android users in the Euro7 reaching million. Again, Germany maintains its position as the largest developed market in 2016 with the largest Android community of over 48 million users. This is followed by the UK with 41.1 million Android users. Russia can be considered something of a sleeping giant when it comes to Android, with only 26.9 million users in 2016, and significantly more Android users would be expected beyond the forecast period. Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 6

7 Total Android Population, Euro7 (in Millions) Million Euro7 Mobile Internet Users (2012) 204 Million Euro7 App Users (2012) France Germany Italy Netherlands Russia Spain UK Chart 3: Total Android population, Euro7 (Source: mobilesquared) Mobile internet and app usage is also being driven by smartphones. mobilesquared data shows that there is a considerable crossover between the mobile internet and app user base. Across the Euro7, there will be million mobile internet users in 2012, rising to million in Similarly, over the forecast period, there will be million app users rising to million, with app users overtaking mobile internet users in Total Mobile Internet Users, Euro7 (in Millions) France Germany Italy Netherlands Russia Spain UK Chart 4: Total mobile internet users, Euro7 (Source: mobilesquared) Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 7

8 Russia has the most mobile internet users, with almost 59 million users in 2012, while Germany has million and the UK has 33.2 million. In terms of app users, Russia is also the largest market with almost 56 million users, Germany has slightly less app users (35.5 million) than mobile internet users, while the converse is true in the UK where there are 31.6 million app users. By 2016, Russia will have 90.3 million app users and 82.1 million mobile internet users. Germany will have 72.1 million mobile internet users and 73.3 million app users. 59 Million Mobile Internet Users in Russia (2012) Total App Users, Euro7 (in Millions) France Germany Italy Netherlands Russia Spain UK Chart 5: Total app users, Euro7 (Source: mobilesquared) Smartphones then, are at the the center of the mobile data revolution, and there is no service that has capitalised on this opportunity more so than video. In 2011, mobile video traffic accounted for 52% of total global mobile traffic. A recent survey into smartphone usage highlighted that 64% of smartphone users in the UK watch video, while 25% watch movies, which is a similar usage level to France (64% watch video). The figure was higher in Spain and Germany where with 79% and 71% watch videos, respectively. With video usage so prominent among smartphone users, it is perhaps inevitable that for mobile advertising, video is the next progressive step for rich media campaigns. Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 8

9 Mobile advertising comes of age in Europe But looking beyond just video, smartphones are fundamentally changing how people use mobile devices to entertain, inform, educate, shop, and of course communicate. It is not just person-toperson communication that is changing. Data coupled with smartphones is evolving how brands communicate with consumers, and this manifestation is clearly translating into mobile ad spend. That said, mobile advertising continues to be viewed as the next big thing, and rightly so given mobile adds context, relevance and location to the world of advertising. But spend is now filtering into mobile. In 2011 spend across key markets within the Euro7 started to gather significant momentum, with the more developed mobile advertising markets showing very impressive growth. In 2012 mobilesquared forecasts the mobile advertising market across the Euro7 to be worth US$1.24 billion jumping to US$3.76 billion in In 2011, mobilesquared projected that Europe s Big 5 (France, Germany, Italy, Spain and UK) would be worth over US$1 billion in While this year s report has been expanded to include the Netherlands and Russia, the Big 5 alone will generate US$1.17 billion in 2012, and pass the US$1 billion landmark 12 months earlier than projected. In 2012, the UK maintains its position as Europe s biggest mobile advertising market, accounting for almost one-third (32%) of total spend of the markets covered in this report, followed by Germany (22%) and France (16%). By 2016, the UK s regional lead has been cut to 26%, with Germany staying on 22% and France increasing its share to 19%. Mobile Advertising Forecasts (US$), Euro7 (in Millions) France Germany Italy Netherlands Russia Spain UK Chart 6: Mobile advertising forecasts (US$), Euro7 (Source: mobilesquared) Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 9

10 This is the second successive year that mobilesquared has upwardly revised its mobile advertising forecasts as smartphones continue to attract swathe after swathe of campaigns by brands and businesses using the mobile channel to target their end customers. Driving this activity is the evolution of mobile display. $1.79 Billion Euro7 Mobile Display Revenue (2016) Mobile display continues to deliver strong growth as the mainstay of mobile advertising spend (along with search). In 2012, mobile display will generate revenues of US$ million, increasing to US$1.79 billion in Not surprisingly, given the UK s share of overall mobile advertising spend, it generates the most revenue from mobile display out of the Euro7, projected to make US$ million in 2012, significantly ahead of the German and French markets, which are expected to generate revenues of US$78.78 million and US$70.83 million, respectively. By 2016 spend on mobile display would have ramped up dramatically, with the UK market worth US$429.1 million, and Germany US$ million. Mobile Display Forecasts (US$), Euro7 (in Millions) France Germany Italy Netherlands Russia Spain UK Chart 7: Mobile display forecasts (US$), Euro7 (Source: mobilesquared) Much of the growth in display will be attributed to the rise of rich media campaigns. Across the Euro5 for instance, rich media is now present in between 18-32% of all mobile advertising campaigns. And that is only going to increase. Based on the existing growth trajectory, mobilesquared predicts rich media will feature in 100% of all mobile advertising campaigns in developed mobile advertising markets within three years. While this could be conceived as jumping on the rich media bandwagon, the data from rich media campaigns is not only incredibly compelling, it is breeding new levels of creativity that is increasing the engagement between a brand and consumer, and ultimately driving spend. Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 10

11 For instance, the click-through rate on standard static mobile banner ads continues its downward spiral, now less than 1%, while rich media engagement rates is more than bucking that trend. For example, Medialets says expand rates on rich media ads average is between 1-2%, while the click-through rate on rich media campaigns can reach up to 30%. Perhaps a more telling statistic is that rich media ads that include video have a 35% higher engagement rate on average, with consumers spending an average of 20 seconds with rich media mobile ads. Ultimately, consumers are increasing their engagement with brands. This alone justifies the higher costs associated with rich media campaigns, which is typically at least six times the cost of a standard static banner campaign. up to 30% Rich Media Campaign CTR 35% higher engagement rates with mobile video According to video advertising provider Yume, the company claims that mobile video ad impressions increased by 35% in 2011.Placing that figure into context, mobile video ads only account for 2.7% of the total online video market. Research by Break Media reveals that 55% of marketers plan to use mobile video ads, compared to 39% in Moreover, mobile video campaigns can increase unaided brand awareness by as much as four times when compared to traditional online video campaigns, claims InsightExpress. When combined, these reference points confirm that mobile video advertising will experience significant growth in A recent mobile video campaign by MediaCom for Skoda revealed that a consumer s purchase intent increased the longer they watched a video. Not only did the pre-roll video campaign achieve an 18% response rate, the campaign s performance was 230% higher than the average response rate on digital. While these alone are compelling stats for the industry, it is the consumer s purchase intent that is most persuasive. After 30 seconds of interaction, the consumer s purchase intent increased by 6%, but that increased to 14% after 60 seconds and 20% after 90 seconds of engagement. Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 11

12 The richest of rich media All-in-all, mobile video stands to become one of the most powerful forms of advertising and could be considered as the richest of rich media. As already demonstrated earlier in this white paper, video will become one of the core areas of content for consumers, which will be used as an obvious ally for advertising. According to Medialets, only 12% of smartphone ads integrate video, and all of that content will be repurposed from other media channels. For the time being at least, the mobile industry has given up its obsession with made-for-mobile content in favour of providing consumers with the content they want to access. Mobile video advertising will be no different, at least in the mid-term. The strategy of repurposing video content on mobile means the costs involved in generating the content are somewhat skewed. Furthermore, mobile video advertising remains an experimental component of rich media campaigns, which means the business model surrounding the service can only be described as liquid. While the mobile advertising industry will be looking to develop a premium CPM or CPC model around video, presently, advertisers are paying from $5 per CPM. Clearly, the target for the mobile advertising industry is to return to the heady CPMs of 2006 when mobile video advertising attracted CPMs upwards of $75 to deliver a campaign over a network incapable of supporting video, to a device largely incapable of screening video to a mobile video audience that didn t really exist. It s all change now though. But the repurposing of content and undefined business model is by no means a bad thing. As Shazam has saliently pointed out in recent months, in the UK they are now targeting a slice of the 4 billion TV advertising marketplace, instead of a share of the 202 million mobile advertising opportunity, of which less than 1 million can be directly attributed to mobile video advertising. It is a similar story across Europe, with mobile video ad campaigns consumed within spend for mobile display. Generally, this is also reflective of a service that is not large enough to be broken out. But the Shazam example further strengthens the argument in favour of using video to provide a deeper and more immersive engagement between the consumer and the brand. In Shazam s case, it is extending a 30-second TV ad into a 3-minute video ad on the mobile device with the option of interaction and consumer engagement. Of course, mobile video advertising can also be used to supplement above-the-line campaigns on TV or print, by providing that rich immersive experience to the consumer that a print ad cannot provide, for example. Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 12

13 Importantly from a mobile ad network provider s perspective, video can be described as the next iteration of rich media campaigns, which means the role of creative is continually expanding. And that is making mobile a more appealing medium to the ad agencies because it will inevitable attract higher campaign spend, and up their margins. It s a win-win for the mobile advertising ecosystem. 274 Million Euro7 Video Audience (2016) What s more, with between 60-79% of smartphone users watching video-based services across the Euro7, the total video audience is million in 2012 and million in In other words, brands investing in mobile video ad campaigns will still potentially reach a very sizeable share of the smartphone user base. Smartphone Video Audience, Euro7 (in Millions) France Germany Italy Netherlands Russia Spain UK Chart 8: Smartphone video audience (Source: mobilesquared) Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 13

14 Conclusion Rich media mobile advertising is now prevalent across the Euro7 countries, and that is paving the way for brands to create deeper and more immersive consumer experiences. In short, the most powerful medium that maximises engagement between a brand and consumer is video. The data shows that 90% of most users across Europe use their phones at work, while between 61-71% use their phones at work, and up to 78% of users use their devices on-the-go. Furthermore, one of the growing areas of content consumption is video-based services. This means video is going mobile, and advertising is one the verge of going mobile. Our work with mobile rich media has allowed us to demonstrate the effectiveness of these new formats when assessed in terms of time spent and levels of consumer engagement. We feel the newly-emerging mobile video opportunities provide the additional opportunities to deepen the layers of consumer engagement for the benefit of our clients brands. Alex Newman, Head of Mobile, OMD UK We are offering innovative mobile video-based services such as pre-, mid- or post-roll advertising formats that are driving mobile advertising revenue growth. They have the potential to reach a very sizeable share of the smartphone user base and will drive the Euro7 mobile advertising markets to almost hit the US$4 Billion landmark in Ramy Yared, Co-Founder & Managing Director, Adsmobi Inc. Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 14

15 About mobilesquared 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 advertising responsiveness to help clients identify 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 expertise 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 information, visit, About Nick Lane 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 newsletters, reports and forecasts that have helped shape the mobile industry. In this role, Nick established himself as one of the leading authorities on the mobile content, services and advertising 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 advertising. Copyright 2012 adsmobi Inc. White Paper: Mobile braced for video advertising explosion. 15

16 About adsmobi TM mobile advertising adsmobi is a mobile media buying platform that focuses on placing successful mobile campaigns for mobile advertisers. adsmobi delivers premium advertising traffic for advertisers through partnerships with leading mobile mediation and optimization platforms. adsmobi matches agencies and brands, with the best mobile publisher inventory to achieve their mobile ROI goals. adsmobi focuses on the advertiser buy side of the mobile advertising ecosystem. The adsmobi ad server will help effectivelly manage media spending with the flexibility to target a desired audience at the right time, in the right place, on the right device. After 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 mediation and optimization platform Smaato, adsmobi has access to a worldwide inventory of more than 50,000 publishers with up to 40 billion ad requests monthly. More free White Papers at adsmobi.com/whitepaper adsmobi Inc. 260 Madison Avenue 8th Floor, NYC New York 10016, USA 25 Floral Street Covent Garden London, WC2E 9DS, UK Gerhofstrasse Hamburg Germany 333 North Bridge Rd. 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