The Global Online and Mobile Advertising Industry Outlook

The online and mobile advertising industries are set for dramatic changes. This report makes an in-depth study, looking at market size and forecasts, segments, growth forecasts, drivers and resistors, emerging models, and key player positioning. This report analyzes the current and future state of the global online and mobile advertising market. It analyzes market size, segments, growth forecasts, drivers and resistors. It also analyzes the emerging landscape of the markets, looking at competitive positioning of key players, business models, strategies, and SWOT. Furthermore, it examines the emerging models driving future growth.

Scope of this research

• Access market sizing and forecasting of the global and online mobile advertising industry.
• Analyze online and mobile advertising market segments, growth forecasts, drivers and resistors.
• Analyze the competitive landscape, including competitive positioning of key players, business models, strategies, and SWOT.
• Gain insight into emerging models which will drive the industry in the future: semantic, location based, social networking and video advertising.
• Gain insight into the various tools used for measuring the effectiveness of online advertising, such as business analytics.

Research and analysis highlights

The $55bn online advertising industry, largely dominated by Google, is poised for a historic battle. While Google will continue to monopolize the online ad space for some more time, Microsoft could emerge as a strong contender which may result in a market duopoly in the long-run.

The $2bn mobile advertising industry (which is currently just a fraction of the size of the online advertising market) will also witness equally dramatic changes. The two significant events which will transform the industry are: the rise of Google’s Android platform to a position of dominance; and the emergence of Asia as a key market.

While the online advertising industry is growing at a CAGR of 11.4% between 2007-12, and will continue to be popular in the developed world, mobile advertising will gain maximum traction in the emerging markets of Asia, especially India and China. The key driver of this growth will be the high rates of mobile penetration in the region.

Key reasons to purchase this research

• What was and will be the value of the global online and mobile advertising industry? What are the opportunities in the various market segments?
• What are the various drivers and resisitors to online and mobile advertising market growth?
• Who are the major players, who are current leaders and who are the emerging contenders? What are their busines models, strategies and SWOT?
• What are the various tools for measuring the performance and effectiveness of the advertising industry?
• What are the emerging models and evolving trends that will drive future growth in the industry?


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Table of Contents

Disclaimer 2
Executive summary 11
The online advertising industry outlook 11
The segments of the online advertising industry 11
The emerging landscape of the online advertising industry 12
Measuring the effectiveness of online advertising 13
The mobile advertising industry outlook 14
Emerging models 15
Chapter 1 Introduction 16
What is this report about? 16
Who is this report for? 17
Methodology 17
Definitions of online and mobile advertising 17
Definition of online advertising 17
Definition of mobile advertising 18
The mobile advertising system 18
Chapter 2 The online advertising industry outlook 20
Summary 20
Global online advertising market size by value 21
Geographic segmentation of the industry 22
Elements of online advertising 23
Global media consumption time breakdown 23
Share of total advertising spend by medium 24
Global internet subscribers and internet penetration (percent of population) 26
Chapter 3 The segments of the online advertising industry 28
Summary 28
Segments of online advertising 29
Search advertising 29
Search engine optimization (SEO) 29
Classified advertising 30
Display advertising (banner ads) 30
Search advertising 32
Global search market share 32
Regional search market share 34
Online advertising segmental revenues 35
Drivers and resistors of online advertising 37
Drivers 37
Resistors 37
Pricing models in online advertising 38
Cost per mille (CPM) 38
Performance 38
Cost per click (CPC) 38
Cost per action (CPA) 39
Hybrid 40
Trends in pricing models 40
Chapter 4 The emerging landscape of the online advertising industry 41
Summary 41
Google 42
Google’s business model 42
AdWords 42
AdSense 43
Google’s advertising revenues 43
Google’s strategies 44
M&A deals strengthen core advertising business 44
Partnering with social networking sites to attract advertising dollars 44
Strategic initiatives to boost display advertising 45
New features are targeted at increasing users and ads 46
Yahoo 49
Yahoo’s business model 49
Yahoo’s advertising revenues 49
Yahoo’s strategies 50
Outsourcing search to offset declining market share 50
Countering Google’s challenge in core display business 51
M&A deals strengthen advertising business 52
Strategic initiatives are aimed at transforming the firm into a content company 52
Microsoft 54
Microsoft’s business model 54
Microsoft’s advertising revenues 55
Countering Google through a strategic partnership with Yahoo 55
Discontinuing cash back program in favor of social semantic search 56
AOL 58
AOL’s business model 58
AOL’s advertising revenues 59
AOL's strategies 59
Transforming from an internet service provider into a content provider 59
M&A deals power the transformation into online advertiser 60
Painful restructuring efforts are aimed at attracting ad dollars 61
Competitive positioning of key players 63
Key players' ad revenues 63
Average revenue per user (ARPU) 64
Performance of key players 65
Chapter 5 Measuring the effectiveness of online advertising 67
Summary 67
Web analytics 68
Google Analytics 68
Yahoo Web Analytics 70
Bing analytics 72
AOL analytics 73
E-commerce as a key performance indicator 75
Chapter 6 The mobile advertising industry outlook 78
Summary 78
Mobile advertising market size 79
Geographic segmentation of the industry 80
Segments of the mobile advertising industry 83
SMS advertising 83
Display advertising 83
Search advertising 83
Mobile advertising segmental revenues 83
Mobile apps 85
Drivers of mobile advertising 87
Rapidly increasing mobile penetration rates allow ads to reach a broader market 87
Increasing global mobile phone shipments result in wider reach 88
Rising global smartphone sales are resulting in a richer user experience 89
Rapid growth rate of mobile broadband subscriptions to boost ad revenues 91
Increasing 2G and 3G proliferation boosting the industry 93
Resistors 95
Small screen limits placement of number of ads 95
Lack of a standard mobile platform 95
Multiple player value chain 95
Connectivity is still a challenge 96
Resistance from ad companies 96
Key players 97
Apple’s strategies 97
Launching iAd platform to boost mobile ad business 97
Acquisition of Quattro Wireless enables Apple to battle Google 98
iPhone Apps and iPad fuel growth 98
Google’s strategies 99
Acquisition of AdMob and other strategic deals to strengthen market presence 99
Android drives mobile advertising business 99
Stepping into location-based advertising for better targeting 101
Apps lead the way 101
Differences between Apple and Google 103
Nokia’s strategies 104
Teaming up with Yahoo to offset declining market share 104
Strategic deals spur growth 104
Research In Motion’s strategies 104
Launching service platforms to boost apps business 105
Shifting focus to consumer segment to boost mobile ad sales 105
Competitive positioning of major OS platforms 106
Number of apps by OS platform 106
Global mobile OS platform market share 107
Global mobile advertising market shares 108
Global click-through rates 109
Performance of major OS platforms 110
Chapter 7 Emerging models 113
Summary 113
Emerging models in online and mobile advertising 114
Semantic advertising 114
Applying semantics to search 115
Semantic advertising on mobiles 115
Social networking advertising 119
Growing popularity of social networking sites 120
Social networking ad revenues 121
Facebook and social semantic search 122
Social networking on mobile 124
Location-based advertising 125
LBA on the mobile 126
Video advertising 128
Online video views 129
Online video ads 130
Video advertising on mobile 133

Table of figures
Figure 1: The mobile advertising system 19
Figure 2: Global online advertising market size ($bn), 2007–12 21
Figure 3: Online advertising market share by region (%), 2009–12 23
Figure 4: Media consumption time breakdown (%), 2009 24
Figure 5: Advertising medium market share (% of revenues), 2009–12 25
Figure 6: Global internet and mobile broadband* users (m), 2007–12 26
Figure 7: Global internet penetration rates (%), 2006–10 27
Figure 8: An example of display advertising 31
Figure 9: Market share of top five search companies (%), July 2009 33
Figure 10: Search market share by region (%), 2009 34
Figure 11: Global online advertising segment share (%), 2007–12 36
Figure 12: Internet ad share by pricing model (%), 2005–09 40
Figure 13: Google SWOT analysis 48
Figure 14: Yahoo SWOT analysis 53
Figure 15: Microsoft SWOT analysis 57
Figure 16: AOL SWOT analysis 62
Figure 17: Key online players' advertising revenues ($m), 2007–09 64
Figure 18: Competitive positioning of key players, 2009 65
Figure 19: An example of Google Analytics 69
Figure 20: An example of cross-channel and multimedia tracking 69
Figure 21: An example of score card analytics 70
Figure 22: An example of ad hoc scenario 71
Figure 23: Global e-commerce revenues ($bn), 2004-12 76
Figure 24: US e-commerce penetration vs. online ad penetration (%), 2002-08 77
Figure 25: Global mobile advertising market size ($m), 2008–12 79
Figure 26: Regional mobile advertising market share (%), 2009–12 80
Figure 27: Mobile vs. internet subscriptions of major Asian countries (m), 2008 82
Figure 28: Global mobile advertising segment revenue share (%), 2008–12 84
Figure 29: Global mobile apps downloads (m), 2009–15 85
Figure 30: Global mobile apps revenues ($m), 2009–15 86
Figure 31: Global service population penetration (%), 2004–14 88
Figure 32: Global mobile phone shipments (m), 2009–14 89
Figure 33: Global smartphone shipments (m), 2006–12 90
Figure 34: Global fixed and mobile broadband subscribers (m), 2009–14 92
Figure 35: Global consumer fixed and mobile broadband revenue ($m), 2009–14 93
Figure 36: 2G and 3G mobile subscriptions (m), 2005–10 94
Figure 37: Global mobile search engine market share (%), 2009 100
Figure 38: Google’s across-the-board value chain presence 102
Figure 39: Number of apps by major OS platform, 2010 106
Figure 40: Global mobile OS market share (%), 2009-14 108
Figure 41: Global mobile advertising market share (%), July 2010 109
Figure 42: Global CTR index scores by OS, February, 2010 110
Figure 43: Competitive positioning of major OS platforms, 2010 111
Figure 44: Strengths and weaknesses of major OS platforms 112
Figure 45: An illustration of semantics on a mobile device: 1 116
Figure 46: An illustration of semantics on a mobile device: 2 116
Figure 47: An illustration of semantics on a mobile device: 3 117
Figure 48: An illustration of semantics on a mobile device: 4 118
Figure 49: Leading global social networks by unique user numbers (m), end 2009 121
Figure 50: Social networking ad revenues ($m), 2006–10 122
Figure 51: The “like” button feature on Facebook 124
Figure 52: Facebook on a mobile 125
Figure 53: Online LBA revenues ($bn), 2009–14 126
Figure 54: LBA (CPC) model 127
Figure 55: LBA (commission) model 128
Figure 56: Online video ad spend market size ($m), 2008–14 129
Figure 57: Top US online video properties by views (m), August 2010 130
Figure 58: Top US online video properties by video ads* viewed (m), August 2010 132
Figure 59: An example of a mobile video ad 134


Table of tables
Table 1: Global online advertising market size ($bn), 2007–12 21
Table 2: Online advertising market share by region (%), 2009–12 22
Table 3: Global advertising medium revenues ($m), 2009–12 25
Table 4: Global internet and mobile broadband users (m), 2007–12 26
Table 5: Global internet penetration rates (%), 2006–10 27
Table 6: Global search market share (m), 2008–09 32
Table 7: Global online advertising segment revenues (%), 2007–12 35
Table 8: Google advertising revenues ($m), 2007–09 44
Table 9: Yahoo advertising revenues ($m), 2007–09 50
Table 10: Microsoft advertising revenues ($m), 2007–09 55
Table 11: AOL advertising revenues ($m), 2007–09 59
Table 12: Key online players' advertising revenues ($m), 2007–09 63
Table 13: ARPU of key players ($), 2009 65
Table 14: Global e-commerce revenues ($bn), 2004-12 75
Table 15: Global mobile advertising market size ($m), 2008–12 79
Table 16: Mobile vs. internet subscriptions of major Asian countries (m), 2008 81
Table 17: Global mobile advertising segment revenues ($m), 2008-12 84
Table 18: Global mobile apps downloads (m), 2009–15 85
Table 19: Global mobile apps revenues ($m), 2009–15 86
Table 20: Global mobile phone shipments (m), 2009–14 89
Table 21: Global smartphone shipments (m), 2006–12 90
Table 22: Global fixed and mobile broadband subscribers (m), 2009–14 91
Table 23: Global consumer fixed and mobile broadband revenue ($m), 2009–14 92
Table 24: 2G and 3G mobile subscriptions (m), 2005–10 94
Table 25: Global mobile OS market share (%), 2009-14 107
Table 26: Leading global social networks by unique user numbers (m), end 2009 120
Table 27: Social networking ad revenues ($m), 2006–10 122
Table 28: Online LBA revenues ($bn), 2009–14 126
Table 29: Online video ad spend market size ($m), 2008–14 128
Table 30: Top US online video properties by video ads* viewed (m), August 2010 131


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