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Smartphones are no longer new, but as use increases, advertisers must find new ways to reach and monetize users
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In the last decade, digital advertising has transformed dramatically. In 2024, US adults spent nearly a third of their media time on mobile (31.7%). This shift has led to audience fragmentation across digital platforms, emphasizing the need for mobile-focused ad strategies. Advertisers are responding, with mobile digital ad spend jumping to 51.2% of total media ad spend, a substantial rise from 5.9% in 2013.
In this guide, we discuss these changes, the benefits of mobile advertising, and the size of the market.
Mobile advertising refers to any form of advertising that takes place on a smartphone or tablet. This mode of advertising is efficient and budget-friendly. Given that consumers consistently interact with their mobile devices, brands require an online presence to garner attention from mobile users.
Given how embedded smartphones have become, mobile advertising is essential for businesses looking to retain customers, attract new audiences, and sustain long-term growth. Advertisers using mobile ads must prioritize the user experience, due to the limited screen space on mobile phones compared with desktops.
People carry their phones everywhere, making targeting approaches like location-based mobile advertising (leveraging a user’s location to offer tailored ads or offers) effective. This tactic often boosts clickthrough and conversion rates. Geo-targeting is a popular location-centric strategy, offering even more precision in targeting. For example, a retailer that sells baking equipment might send push notifications to an individual who recently visited a bakery.
Mobile marketing results are fairly simple to track, particularly with the help of tools that measure behaviors like website visits and clickthrough rates, allowing marketers to refine messaging to increase reach and boost ROI.
Mobile marketing is often cost-effective to produce, and its tracking capabilities can help reduce costs—for example, if a campaign isn’t effective, it can be quickly paused. Budget-friendly campaign tactics, such as bulk text messaging campaigns, can be valuable for small and medium-sized businesses.
Banner ads feature elements like a headline, copy, and call to action and typically appear at the top or bottom of website pages or mobile apps, according to Amazon Ads. This is a popular approach as it is cost-effective, easy to implement, and supported across various devices.
In 2024, in-app video ads are set to capture over 30% of total US mobile advertising spend for the first time. Driven by placements in social media, YouTube, and OTT apps, in-app video ad spending will rise by 20.4% year-over-year, reaching $61.11 billion. This will represent over half (58%) of the $105.93 billion in US video ad revenues and nearly 90% of mobile video ad revenues. As video gets increasingly popular among mobile device users, more brands are leveraging video in their marketing strategies. Per Amazon Ads, video ad types include:
Native ads are a less traditional form of advertising, where an advertiser aims to create an organic experience for their audience. This type of ad offers an enhanced, authentic experience with limited disruption.
There are two ways to monetize a mobile app: in-app purchases (IAPs) and in-app advertising (IAA).
IAPs: These are for things like virtual goods, subscriptions, in-game currency, and premium content. “Virtual goods sales in gaming have historically generated most IAPs and still represent a majority. That will end in 2025,” EMARKETER analyst Yoram Wurmser wrote in our Mobile App Monetization 2023 report. “Overall, gaming IAPs will still be larger than nongaming, including both virtual goods and subscriptions, through the end of our forecast—but barely.”
IAA: This is advertising in a mobile app, including video, search, and shopping ads. “Mobile advertising will keep growing at a rapid clip despite headwinds from privacy laws and [generative] AI. Even so, app publishers will explore additional ways of making money for premium content. This may have an impact on the type and price of ad inventory in the future, although the volume of IAA should remain strong,” according to the Mobile App Monetization 2023 report.
Across 10 industries—entertainment, telecom, computing products and consumer electronics, consumer packaged goods (CPG), financial services, retail, media, automotive, travel, and healthcare and pharma—mobile advertising was used over nonmobile advertising, per an August 2023 EMARKETER forecast.
US industries will spend 65.9% of digital ad spend on mobile in 2024. Mobile ad spend has leveled off since 2022 as connected TV (CTV) has gained market share. US CTV ad spend is expected to increase 18.8% YoY in 2024, reaching $28.75 billion, and is expected to maintain double-digit increases annually until 2027.
While no industry experienced explosive ad spend growth in 2023, there are positive mobile trends to highlight, according to EMARKETER’s US Digital Ad Spending by Industry 2023 report. Sectors like travel, retail, healthcare and pharma, and auto are set to grow faster than the national average, with entertainment rising just ahead of the average growth rate.
Moreover, a few sectors that saw spending drops in 2022 are expected to recover. Both auto and CPG are expected to see ad spending rise in 2023 and 2024 relative to 2022. Meanwhile, financial services are expected to receive a more significant bump in 2024.
IAPs—which include both subscription fees and virtual goods in mobile games and media—will grow 3.5% in 2024, per our July 2023 forecast. Revenues from non-gaming apps are expected to surpass in 2024 compared to gaming apps, at a CAGR of 11% versus 4%, respectively.
“Privacy restrictions on iOS and Android continue to tighten,” per our Mobile App Monetization 2023 report. And while advertisers have been able to find clever ways around this, privacy and antitrust regulations may pose a greater threat in time, which could make third-party app stores more appealing and take away from app store commissions. Another mobile ad trend to watch will be generative AI’s impact on search, which could decrease site traffic.
Despite challenges from privacy regulations and generative AI, mobile advertising is poised to continue growing. App publishers will likely explore new methods for monetization, including offering access to features like AI chatbots, which could influence the nature and cost of future ad spaces. However, the demand for IAA is expected to continue over the next few years.
This rise in smartphone usage will extend into the coming years, albeit more slowly. Smartphone usage growth is expected to stabilize, growing 2.1% to 4:00 in 2024, up slightly from 3:55 in 2023.
Adoption of 5G broadband in the US is projected to reach 290.5 million device subscriptions by 2026, despite a slower-than-anticipated initial rollout, according to EMARKETER’s State of 5G report. The expansion of 5G is poised to optimize inventory management for retailers, enhance in-store and online shopping, and boost mobile AR experiences for consumers.
The app landscape is shifting as users consolidate their preferences, opting for fewer but more versatile apps. This could give rise to super apps in the West, mirroring the model used in Asia-Pacific, according to our Mobile App Users 2023 report.
In addition, grocery apps stand out as the fastest-growing segment, with an expected compound annual growth rate of 5.23% between 2023 and 2026. The rise in grocery apps, along with other niche sectors like banking and dating, creates fresh advertising prospects beyond leading platforms like Meta, Google, and Amazon. Service apps like Instacart, Uber, and Lyft have paired their ad offerings and capabilities with first-party data for advertisers to harness its wealth of information.
In our Mobile Trends to Watch in 2024 report, we projected mobile game advertising will represent just 3.9% of mobile ad spending in 2024, significantly lower than the 10.9% of mobile time dedicated to gaming.
Growing smartphone use leads to increases in mcommerce sales. In 2024, US retail mcommerce sales will reach $534.88 billion, accounting for 7.2% of total retail sales, according to a July 2024 EMARKETER forecast. Further, mcommerce is estimated to make up 44.6% of total US retail ecommerce sales in 2024.
EMARKETER’s Future of Digital 2024 report delves into changes discussed in this guide, highlighting the critical role of mobile in digital advertising’s evolution. Download the report to understand these decade-long shifts and how to adapt your advertising strategies for this mobile-centric era.
This article has been updated. Original was posted on March, 14 2024.
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