Search to Dominate Local Ad Spend
In 2011, search advertising accounted for an estimated $390 million in mobile local ad revenues, or about half of the $784 million total. Display was the next-largest format by revenue, at $299 million, followed by SMS ($81 million) and video ($14 million). Search is predicted to gradually grow its share of total mobile local ad spend over the next 5 years, to reach $3.2 billion by 2016, or roughly 64% of the $5 billion projected total. BIA/Kelsey insight suggest that this is due to the growth of the mobile web, where search is central, and because search ads perform better as a result of their intent-driven nature.
Indeed, a February 2012 report from xAd shows that based on average Q4 2011 activity across its mobile advertising network, although both search and display ads demonstrated strong performance, search outpaced display by a large margin. Average click-through rates (CTR) for search ads were 7%, compared to 0.6% for display ads. And among those who clicked, 37% of mobile-local searchers proceeded to access additional information, compared to 5% of mobile-display users.
Video to Grow Share of Revenues
Meanwhile, BIA/Kelsey forecasts video to grow from its 1.8% share of mobile local ad revenues in 2011 to about 5.8% share in 2016, or $292 million in spend. In fact, video ad revenues are predicted to double this year alone, from $14 million to $29 million, before doubling again in 2013, to $61 million.
At the same time, display is predicted to shrink from 38% share in 2011 to about 24% share of mobile local ad revenues in 2016, while SMS will also fall from about 10% share to less than 4% share in that period.
Mobile to Overtake Desktop in Local Search
Comparing mobile ad figures with their desktop equivalents, BIA/Kelsey discovered that mobile local searches are on pace to rival their desktop counterparts by 2015. In 2011, the company estimates that there were 19.7 billion mobile local searches, compared to 54.9 billion desktop searches. This year, though, mobile volume is expected to grow 56% to 30.7 billion, while desktop volume will grow a comparatively small 12%. With these growth trends taking a similar pattern for the next 5 years, the estimates show that by 2015 there will be 85.9 billion mobile local searches, compared to 84 billion for desktop. And in 2016, mobile volume (113.4 billion) will significantly outpace desktop volume, which will have plateaued at 85.6 billion.
The rise in mobile search volume was also documented in the xAd report (see link above), which found that mobile-local search requests on the network grew an impressive 60% quarter-over-quarter in Q4 2011.