For the first time this year, mobile advertising is expected to pass both magazines and newspapers in terms of ad dollars, becoming the third-largest ad platform after TV and online (desktops and laptops). In 2014, about 10% of all ad spending will be aimed at phones and tablets, a number that represents a revolution in the realm of marketing. Just a few years ago, mobile advertising was essentially zero. Now it’s a major reason why advertising is growing at all.
The surge for mobile (up 83% over last year) is so large that one might expect the growth to be across the board, benefitting companies big and small. Instead, two companies—Google and Facebook—have come to dominate mobile advertising, combining for more than two thirds of the market. Google had been the singular force since the category’s inception, garnering more than half the market as recently as two years ago. But the latest chapter in the story is all about Facebook.
As late as 2011, Facebook had zero mobile ad revenue. Now, Wired says, it’s “the future of mobile advertising,” as its share of revenue rises above 20 percent.
Has Facebook cracked the mobile ad? Evidence can be found in its most recent annual numbers. The number of mobile ads that the company ran grew 40 percent, while ad clicks climbed 70 percent—a sign that the company has figured out how to display ads in ways its users actually found useful. And with the recent announcement of a mobile ad network that will allow third-party aps to use Facebook data to target users and brands alike, it’s not hard to see why its stock had surged nearly 30 percent at one point this year.
None of this comes as a surprise to Carolyn Everson, vice president of global marketing solutions at Facebook. In an interview with Yale Insights, she said that not long after the company went public in 2012, people at the company noticed that more people were signing up to Facebook on mobile devices than through desktops or laptops. At that point, she said, Facebook CEO Mark Zuckerberg declared it a “mobile-first” company. “Arguably, if Mark had started Facebook a few years ago, he would’ve started it as a mobile-only company,” Everson said.
In less than three years, mobile grew to 59 percent of Facebook’s revenue, Everson said. The company now boasts nearly one million advertisers spread around the globe. Facebook’s format on mobile devices played a key role in driving this growth, she added. On desktop computers, many of Facebook’s ads are displayed in a narrow sidebar to the right of the news feed; historically, users have showed little interest in them. “When you go to the mobile phone, there is no right-hand side,” Everson said. “So the notion of something that looked like a digital banner is out the window and it’s really only the news feed. And news feed was the predominant way consumers were experiencing Facebook, so marketers seamlessly moved with us.” She added: “Mobile is the best thing that ever happened to our core advertising business.”