Mobile ad spending is growing at such a rate that it will soon overtake display advertising to become the second-largest digital advertising channel in the US, according to PricewaterhouseCooper’s annual Entertainment and Media Outlook study. The study forecasts a 22.1% compound annual growth rate (CAGR) for mobile advertising from 2013 through 2018, versus a 9% CAGR for internet advertising as a whole. As such, mobile should account for 29.2% of online ad revenues by 2018, almost double its share (16.6%) from last year. That translates to a projected spending of $19.2 billion on mobile advertising in 2018, from $7.1 billion last year.
Another rapidly growing channel is online video advertising, predicted to grow at a compound annual rate of 19.5% from 2013 through 2018. But video ad revenues are growing from a smaller base, and will constitute a relatively smaller 10% share of the digital advertising pie in 2018. The analysts note that video ad revenue is growing in response to increasing audiences. Online video ads did indeed reach a larger share of the online population last year, although the huge growth in online video ads viewed during the year was more the result of viewers being exposed to ads much more frequently.
Meanwhile, paid search will continue to dominate the online advertising market through the forecast period, although its share will decline. Last year, search captured 43% of all digital advertising dollars, with that figure projected to drop to 37% by the end of the forecast period. That’s partly the result of search dollars moving to mobile, per a recent report from the IAB and PwC.