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U.S. mobile ad revenues will grow from $23 billion this year to $62 billion by 2020. That’s according to BIA/Kelsey’s latest local advertising forecast, released today. The forecast is broken down into media such as online, television, and print. Today I’m highlighting the mobile piece.

The mobile projections above include search, display, SMS, video and native social (i.e. Facebook news feed ads). The latter are the fastest growing mobile ad format. It’s also important to note that these figures do not include tablets (for reasons mentioned here).

In addition to ad formats, the mobile ad pie can be segmented by targeting scope: Location targeted mobile ad spend will grow from $8.5 billion last year to $26.7 billion in 2020. That equals about a 37 percent of overall mobile ad revenues, growing to 43 percent by 2019.

Drivers for this growth include mobile usage (which skews towards local intent) and advertiser evolution to follow that usage. Another important factor is the premiums associated with location targeted ads, which result from performance and growing demand.

We’ll release more data soon that drills down further into the mobile numbers and many inputs. Also expect more from the forecast’s other media types as we unpack them here and at BIA/Kelsey NEXT. Meanwhile the mobile highlights are below.

— U.S. location-targeted mobile ad revenues are projected to grow from $8.5 billion last year to $26.7 billion in 2020
— Location-targeted mobile advertising is a subset of overall U.S. mobile advertising revenues.
— The share of the mobile ad revenues attributed to location-based campaigns will grow from 37% in 2015 to 43% in 2020.
— The dynamics and drivers of location-targeted mobile advertising were covered in the previous slides.
— The overall U.S. mobile advertising market is driven by separate but related factors.
— Most of its growth is via Google (roughly 50% mobile market share) and Facebook (76% of its ad revenues attributed to mobile).
— Both companies are transitioning their mobile ad models and innovating with new formats.
— The evolution of these formats will have an impact on Google and Facebook market shares in the coming years and influence the direction of the rest of the mobile ad ecosystem.
— The mobile ad marketplace is currently in a precarious position due to several unfolding market events.
— A few key factors will decide Google’s market share and continued dominance:
— Most mobile usage happens in-app. However, Google’s search volume is built from web (browser) traffic, where it is the front door. This poses a challenge for Google.
— Google’s answer is to innovate new formats to live in this app-based world, including Google Now. Its success will determine Google’s positioning in the mobile competitive field.
— Ad blocking technology in iOS9 threatens to undermine mobile advertising, but BIA/Kelsey believes this topic is mostly overblown and will have only a minor impact due to its applicability to a narrow portion of mobile advertising (in-browser banner ads for iOS users who download and activate ad blockers).
— Native social advertising (see slide 61) will pull market share from both search and display, due to the above trends and also its increasing desirability.
— Native social’s advantages also stem from high performance compared with other mobile ad formats and benchmarks, and alignment with mobile device realities, including:
— Sub-six inch screens, which favor in-feed units over banners
— The growing consumer influence and buying empowerment of millennials, who are more receptive to native social advertising than other formats



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