mobile report 2015

INSIGHT SERIES The Definitive Facebook Advertising Playbook marinsoftware.com9

BEST PRACTICESERIES

Mobile Advertising Around the Globe: 2015 Annual Report

2 BESTPRACTICESERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com

Executive SummaryIn 2014, global smartphone adoption reached an all-time high with 25% of theworld population owning and using one. This proliferation of smartphone andsmartphone usage by consumers around the world has presented an opportunityfor advertisers to reach consumers at a much greater level than before, withclick-to-call or click-for-directions ads. As the leading provider of a cross-channelad cloud, Marin works with the worlds largest and most sophisticated advertisers,allowing us to gain insight into the most insights into the most prevalent trendsregarding the usage of smartphone and tablet devices across search, social, anddisplay which are critical for reaching consumers. Three of our specific findings,which we cover in more detail, are highlighted below:

1. Mobile device adoption amongst consumers continues to grow relative todesktop. Consumers spend more time and attention on mobile devices thandesktop now,1 and advertisers have been shifting spend away from desktoptowards smartphones and tablets to reach consumer attention. Due to thisdigital advertising paradigm shift, mobile advertising budget is predicted toexceed desktop advertising budget by end of 2015.

2. Consumers are more likely to use mobile devices for product research thandesktop. Smartphones and tablets are used by consumers for research andrepresent the top of the funnel, while desktops are where they go to convert.With 40% of all online adults starting an activity on one device and ending onanother,2 its important to retarget ads seen on mobile to desktop or tablet inorder to ensure maximum view-time by engaged consumers. Use a third-party tracker to track users across device and channel to fully optimize adver-tising spend through retargeting ads.

3. However consumers are still much more likely to convert on desktop. Desktops are still the primary conversion-driving device; however researchhas shown that many consumers use mobile devices as upper-funnelresearch, and convert in-store or on desktop.3 Mobile conversion attributionfor these cross-device and offline conversions must be tracked and recordedto properly create the link between mobile clicks and conversions.

1. http://techcrunch.com/2014/08/21/majority-of-digital-media-consumption-now-takes-place-in-mobile-apps/2. https://www.facebook.com/business/news/Finding-simplicity-in-a-multi-device-world3. http://www.emarketer.com/Article/Mobile-Still-Upper-Funnel-Shopping-Activities/1012048

3BESTPRACTICESERIES Mobile Advertising Around the Globe: 2015 Annual Report marinsoftware.com

IntroductionMobile devices have quickly become a part of everyday life for consumers acrossthe globe, with the world becoming more and more interconnected daily. Mobiledevice adoption has been a major talking point for digital advertisers for the pastyear. This comes as no surprise, with eMarketer predicting the number of tabletand smartphone users to hit 1.06 billion4 and 2.04 billion,5 respectively, by yearsend. This means over 15% of the world population would own and use a tablet,and over 25% for smartphones. As the mobile marketplace and consumer adop-tion of smartphones increases, advertisers have taken notice. In 2014, mobileadvertising spend versus desktop reached an all-time high of 41% of all US digitaladvertising spend.6

4. http://www.emarketer.com/Article/Tablet-Users-Surpass-1-Billion-Worldwide-2015/10118065. http://www.emarketer.com/Article/Worldwide-Smartphone-Usage-Grow-25-2014/10109206. http://www.emarketer.com/Article/Direct-Response-Tactics-Take-Majority-of-US-Marketers-Budgets/1010852

40%

30%

20%

10%

10%

50%

USA EurozoneUK JapanAustralia

34.4%

22.6%

46.8%

8.3%

0.1%

Global Mobile Advertising Spend Growth 2014

Source: Marin Global Digital Advertising Index

As mobile devices become increasingly important for everyday life, advertisersneed to adjust marketing strategies to accommodate the always-connected con-sumer, whose shopping and product research behavior is different from what hasbeen seen before.

This research brief analyzes mobile trends from 2014, forecasts the state ofmobile advertising for 2015, and examines the overall performance of mobile adsacross devices and channels. Our objective for this report is to help the digitalmarketer wrap their arms around the explosive growth in mobile advertising,while developing effective benchmarks and strategies for success.

MethodologyIn this study, Marin looked across leading brands and advertisers that managemore than $6 billion in annualized search, social, and display spend. Our data setrepresented all major industry sectors alongside the following countries orregions:

Australia India Singapore

Brazil Japan United Kingdom

Canada Mexico USA

China New Zealand

Eurozone Russia

The size and diversity of our data set, coupled with the broad geographic coverage,enables us to provide the most comprehensive report on how smart mobiledevices are changing consumer behavior on search, social, and display. Thatbeing said, our clients mainly consist of large advertisers spending upwards of$100,000 per month on paid-search, social and display. As such, the informationpresented in this report is biased towards larger advertisers, and may not reflectmobile search, social, and display trends for small or medium sized businesses.



2013 2014 2015 2016 2017

1.40 0.70 1.76 0.91 2.04 1.06 2.29 1.20 2.52 1.32

TabletsSmartphones

2018

2.73 1.43

FindingsConsumers embraced smartphone and tablet usage across all three channels in2014, with mobile device usage growth increasing at steady rates globally, with 1 in 4 people owning and using a smartphone. With 27% year over year growth,and no signs of stopping, consumers have become ever more interconnected assmartphones and tablets fly off shelves and into consumers pockets. More thanever, people are using these devices to search online, browse the web, checksocial networks, and click on ads.

Global Mobile Device Users(in billions)

Source: eMarketer, Dec 2014

Between January and December 2014, search mobile click share rose 36%, from32% to 43.5%. Smartphones made up the majority of this mobile gain, with almost60% growth in 2014. What this signifies is that as consumer smartphone adoptionand usage grew, smartphone ad acceptance and engagement grew as well. With amajority of all online spent on mobile devices,9 its no surprise that smartphoneand tablet click growth have increased to match. Meanwhile, tablet growth wasflat across 2014. Based off these growth patterns, click share for search onmobile devices is predicted to break 50% by mid Q4 2015.


80%

60%

40%

20%

0%Jan Mar May July Sept Nov DecOctAugJuneAprFeb

TabletsSmartphonesDesktopsGlobal Search Click Share 2014


80%

60%

40%

20%


TabletsSmartphonesDesktops

Global Display Click Share 2014


9. http://techcrunch.com/2014/08/21/majority-of-digital-media-consumption-now-takes-place-in-mobile-apps/

Display saw the most drastic mobile growth of all three channels. Mobile clickshare for display grew almost 60% from January to December 2014, starting at32% and ending at over 50% of click share, making mobile devices the majority ofall display ad clicks by end of 2014. Again, smartphones took the majority of theseclicks away from desktops, almost doubling in click share between January andDecember 2014. This rapid shift away from desktops towards smartphones andtablets are a natural result of the widespread adoption and usage of smartphonesover the past few years. If these trends continue at the same rate, by early Q42015, smartphone click share alone will overtake display click share for displaynetworks.


80%

60%

40%

20%

0%

DesktopsMobile

Jul Aug Sept Oct Nov Dec

Global Social Click Share 2014


In contrast to display and search, social click share remained consistent over thepast six months, with the majority of all social media clicks originating from amobile device. This is vastly different from search and display behavior, whichshowed rapid mobile growth across the year. This is due to differences in thenature of consumer behavior between the three channels. Social networks tend tobe mobile-focused, made for sharing updates on the road from a smartphone.Some social networks cater almost exclusively to mobile devices, such as Insta-gram, Snapchat, and Vine. 65% of all time on social networks is spent on a mobiledevice.10 This creates a natural connection between users for mobile devices andsocial media, increasing their engagement for social ads on mobile devices.Search and display originated as desktop functions, and have had to pivot fromdesktop focused to add mobile functionality. On top of this, Search is a primarilyactive exercise; users must be looking (searching) for something to see search

10. http://www.statista.com/chart/1567/photos-maps-and-games-are-mobile-first-content/

ads. However, social on mobile devices is passive. Users may be browsing theirsocial media in a spare moment or two to see what their peers are doing, and seeand engage with ads as they are doing so. With social interaction so mobile-focused, social ads served on mobile devices received more views and moreengagement. Unsurprisingly, this resulted in an average of 62% of all social mediaclicks originating from a smartphone or tablet in 2014.

By late 2016, it can be expected that mobile devices will truly outpace desktops forconsumer ad clicks across all three channels in the US. Consumers already spent23% more time on mobile devices than they did on desktops, reports eMarketer,11

accounting for 52% of all time spent on digital media.12

With consumers in major markets spending most of their digital viewing time onmobile devices,13,14 advertisers wanted to be sure to reach them by divertingadvertising budget towards smartphone and tablets. Spend share, or percentageof budget, has shown similar trends across all three channels, with mobile shareclimbing and poised to take over the majority position. Globally, mobile ad spendhas been growing at a striking pace, at $31 billion spent in 2014, and $46 billionpredicted for 2015.


11. http://www.emarketer.com/Article/Mobile-Continues-Steal-Share-of-US-Adults-Daily-Time-Spent-with-Media/101078212. http://techcrunch.com/2014/08/21/majority-of-digital-media-consumption-now-takes-place-in-mobile-apps/13. http://www.comscore.com/Insights/Blog/Major-Mobile-Milestones-in-May-Apps-Now-Drive-Half-of-All-Time-Spent-on-Digital14. http://www.millennialmedia.com/pressroom/press-releases/cross-screen-study-reveals-70-percent-of-digital-users-access-internet-

across-multiple-devices/

2012 2014 20162013 2015 2017

$8.76 $17.96 $31.45 $45.85 $61.40 $77.67

2018

$94.91

Global Mobile Ad Spend(in billions)

Source: eMarketer, March 2014

Globally, search spend share showed a slow shift from desktop towards mobile.Mobile search spend share grew 8% over the year, peaking in November at justunder 48% of all search advertising budget. While mobile search spend share hasnot grown as dramatically as click share, it is still on an upwards trend, and ispredicted to break 50% by Q3 2015. It is clear that this slow growth in searchmobile spend is an advertiser reaction to shifting the shifting consumer behaviortowards smartphone and tablet and the fact that the majority of consumer time isnow spent on mobile.15


15. http://www.comscore.com/Insights/Blog/Major-Mobile-Milestones-in-May-Apps-Now-Drive-Half-of-All-Time-Spent-on-Digital

80%

60%

40%

20%



Global Search Spend Share 2014


80%

60%

40%

20%



Global Display Spend Share 2014


Display spend behavior fluctuates dramatically during 2014. Desktop and smart-phone spend share fluctuate drastically throughout the year; with smartphonedisplay spend becoming the majority of display advertising budgets at severalpoints throughout the year. Although it may be difficult to discern from the graphabove, display advertising budget has been moving towards mobiles devices,smartphones in particular. By mid-2015, display advertising spend is predicted tobe majority mobile-based, with smartphones dominating display spend share.


80%

60%

40%

20%

0%

DesktopsMobile

Jul Aug Sept Oct Nov Dec

Global Social Spend Share 2014


With social networks being so mobile-focused, it makes sense that advertisersthat advertisers would have social spend on mobile devices, where consumer eyesare. Therefore, it comes as no surprise that mobile devices already make up themajority of social ad spend, with over 55% of it being used on smartphone andtablet advertising. This mirrors the 62% of social clicks being on smartphones andtablets. Over the past year, mobile devices have been capturing consumer atten-tion and clicks more than ever, so marketers need to be increasingly aware ofwhere they allocate their budgets.

As consumers continue to increase the amount of time spent on mobile devices, itwill inevitably create opportunities for advertisers. However, advertisers looking toinvest in mobile should first consider the nuances of how consumers use mobiledevices compared to desktop. For example, one example is the second screeneffect, of the phenomenon of consumers to browse online media while consumingother media, most typically television. Mobile users are much more affected bythe second-screen effect, using smartphones or tablets to reference advertising

or content seen on television, or browsing social media simultaneously. Anotherkey difference is the usage of mobile devices outside of a home. Smartphones arecommonly used on the go for a variety of reasons, such as looking up nearbystores or directions, or browsing social media on public transportation. The differ-ences between the three channels only complicate matters. These forces adver-tisers to find ways to adapt advertising to the mobile user, and successful mobileadvertising can yield huge dividends. So just how well did advertisers react to thisshifting attention towards smartphones and tablets?

If click-through rates are examined, it is clear that smartphones have higherclick-through rates than desktops and tablets, which show similar click-throughbehavior. This is especially pronounced in search, where smartphone CTR isalmost 50% higher than tablet and desktop. However, if CTR by ad-position isexamined, it becomes clear that ad position plays a large part in why smartphoneCTR is so much higher than desktop and tablet. Search remains the primarychannel for users to find goods and services, making search ads very relevant tothe user intent, while social and display ads while users may not necessarily belooking for them, making these ads secondary to the users browsing intention.This is very apparent in the click-through rates, where search boasts much higherclick-through rates than the other two channels, due to user intent while theyreusing each channel. For social and display ads, the difference between averagedesktop and mobile ad CTR is much closer. However, when we examine searchclick-through rate by ad position, search click-through behavior is revealed to bemuch more similar to social and display.


If search click-through rate is shown by ad position, it is apparent that click-through rate is much closer between devices. Tablet actually has the highest CTRfor the first search position, and search CTR is very similar close between devicesby ad position, until smartphone CTR falls off starting at position four. This is dueto how smartphones deliver search ads, in that they show less per page thandesktop and tablet. If click-through rates for the first three search ad positions iscompared with CTRs for social and display, it is apparent that the differencesbetween smartphone and tablet and desktop is much closer. Therefore, ad posi-tion is much more important than device when it comes to click-through rate.Thus, it is most important for a marketer advertising on any device to find a way toreach top positions or visibility for their ads, especially for search. It can be arguedthat ad position matters more than device type in this case.


Search Social Display

2.09% 2.81% 0.42% 0.60% 0.24% 0.32%

TabletsSmartphones

2.34% 0.36%

Desktops

Average Global Click-Through Rate by Channel and Device 2014


While smartphone is king for click-through rate, conversion rates tell a very dif-ferent story. Across all channels, desktops still are the highest-converting device.Smartphones are still lagging behind for conversions, which is reflected in thecost-per-click of search, social, and display, whose behavior closely mirrors thatof conversion rate. What this fails to take into account, though, is the prevalence ofmobile usage in in-store purchases, or mobile click-to-call or click-for-directions,which are not always correctly tracked as conversions. Deloitte found that mobiledevice usage helped account for roughly $593 billion of US in-store retail sales in 2013, or almost 20% of all brick-and-mortar sales.16 The difficulty in trackingthese types of conversions hurts the recorded conversion rate, but the conversionrate with all these disparate factors may be much higher. In addition, many shop-pers use mobile for top-of-funnel browsing, and move to desktops for actual conversion, further harming mobile conversion numbers.17


1 2 3 4 5 6 7 8

SmartphonesDesktops Tablets

4.10%4.36%4.64% 2.12%2.37%2.25% 1.80%1.81%2.12% 1.58%1.17%1.78% 1.26%1.08%1.35% 1.19%0.56%1.09% 0.95%0.29%0.72% 0.74%0.39%0.61%

Global Search CTR by Ad Position and Device 2014


16. http://www.emarketer.com/Article/Mobile-Devices-Boosting-Not-Hurting-In-Store-Shopping/101083817. http://www.emarketer.com/Article/Mobile-Still-Upper-Funnel-Shopping-Activities/1012048

Optimizing Mobile Advertising across ChannelsMobile advertising is quickly overtaking desktop for the top spot in digital advertis-ing. As such, it is critical for marketers to pay attention to mobile, and to adapttheir mobile advertising strategy to account for both cross-device and cross-channel advertising. This section covers a few best practices to take into accountfor marketers to get the most out of their marketing dollar.

1. Play to each channels and devices strengths. Marketers need to identifywhat theyre looking to accomplish. For the brand advertiser, it makes senseto allocate more spend toward mobile ads on social and display networks,which are strong on branded advertising and consumer usage. Customizing a strategy based off each channels and devices strengths can help meetmarketing goals and maximize sales.

2. Correctly attribute mobile conversions. While there have been improve-ments made to correctly attribute in-store conversions to mobile devices,there is still a lot of room for improvement. Marketers should look into track-ing mobile ad formats like click-to-call and store-locator. If successful, theycan better estimate revenue from mobile transactions and adjust budget


Search Social Display

10.3% 6.1% 1.1% 0.4% 3.11% 2.68%7.7% 2.29%


Global Average Conversion Rate by Device and Channel 2014


accordingly. Mobile app usage accounts for a majority of smartphone usage,so having a reliable way to link mobile app activity to mobile app purchasesand browsing is important for every marketer.

3. Optimize ads for mobile experience. Research shows that different ad for-mats vary in effectiveness between channels. For example, 970250 displayads work best for desktop, while 32050 display ads work best on smart-phones.18 Make sure to properly set ads for these differences in screen sizeand devices. Click-to-call and store-locater ads should be added for mobile-search ads. This will help ensure effective consumer reach and click-through.Mobile app advertising is also a crucial part of the mobile experience.

4. Target consumers across devices and channels. Cross-device retargeting ismore crucial than ever with consumers using desktops and tablets andsmartphones in conjunction. Make sure to find a way to retarget these con-sumers across all channels and devices effectively, to bring down costs andincrease consumer awareness. This can be done through third-party solu-tions which have trackers which can follow user activity across devices to thepoint of conversion and retarget ads cross-channel and cross-device.

5. Invest in mobile app advertising. Mobile apps now account for almost 90% ofall time spent on mobile devices and almost 60% of mobile users say they useapps daily.19 This makes mobile app advertising an important tool in any mar-keters toolbox, with in-app ads an important way to reach consumers andengage them. This is especially true for social media, as Facebook is themost-used app on smartphones and tablets.

6. Plan ahead for mobile video advertising. While desktop is still the mostimportant avenue for consumer video consumption and advertiser videoadvertising, mobile devices are quickly catching up. Smartphones and tabletshave already accounted for 30% of all digital video views in Q3 2014, and showno sign of stopping.20 Smartphones are used by consumers for shorter videos,while tablets are preferred for longer ones. Mobile video is quickly becominganother important channel for marketers to reach advertisers, and must bepaid attention to in the future.


18. http://www.emarketer.com/Article/What-Display-Ad-Sizes-Drive-Best-Viewability-Rates/101167019. http://techcrunch.com/2014/08/21/majority-of-digital-media-consumption-now-takes-place-in-mobile-apps/20. http://www.emarketer.com/Article/Lets-Not-Forget-About-Mobile-Video/1011740

About Marin SoftwareMarin Software Incorporated (NYSE: MRIN) provides a leading Revenue Acquisi-tion Management platform used by advertisers and agencies to measure, manageand optimize more than $7 billion in annualized ad spend. Offering an integratedplatform for search, social and display advertising, Marin helps advertisers andagencies improve financial performance, save time, and make better decisions.Marins technology powers marketing campaigns in more than 160 countries. For more information about Marins products, please visit: http://www.marinsoftware.com/solutions/overview.


mobile report 2015

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mobile device adoption

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