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U.S. Mobile Advertising and Search Market

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U.S. Mobile Advertising and Search Market

NA11-65

Table of Contents

C h a p t e r 1

Introduction

Mobile Advertising and Search 1-1

Introduction and Overview 1-1

Market Segmentation 1-1

Key Findings and Conclusions 1-2

C h a p t e r 2

Market Trends and Strategic Evaluation and Analysis

Key Market Trends 2-1

Continued Adoption of Rich Media Ads 2-1

Ongoing Collaboration between Ad Networks; Mobile Demand Side Platforms and

Real-time Bidding Platforms 2-6

Ad Networks and Solution Provider Partnerships and Integrations - Proactive Collaboration 2-7

Private Mobile Ad Exchanges 2-8

Increasing Inventory in Mobile 2-9

Industry Standardization Efforts—ORMMA; VAST and VPAID; Others 2-12

Integrated Digital Advertising—Online; Mobile and Connected TV 2-14

Greater Integration with Mobile Commerce Functionality 2-15

Mobile Advertising and Social Communication 2-15

#NA11-65 © 2012 Frost & Sullivan www.frost.com iii

C h a p t e r 3

Total U.S. Mobile Advertising and Search Market

Key Market Definitions 3-1

Market Definitions and Overview 3-1

On-deck Mobile Advertising 3-1

Off-deck Mobile Advertising 3-1

Ad Network and Ad Network Providers 3-2

Fill Rate 3-2

Targeting 3-3

Demand Side Platforms 3-3

Ad Exchanges 3-3

Market Dynamics 3-4

Industry Challenges 3-4

Driving the growth of the Industry by educating the buy side and facilitating easier participation

in mobile advertising 3-4

Maintaining a price-premium in mobile advertising 3-5

Specialized vendors focused on a small set of mobile advertising opportunities will face increased

competitive pressures 3-5

Solving the industry fragmentation and measuring performance of mobile advertising could become

a challenge 3-5

It is important to achieve high degree of automation for rich media advertising in order to generate

enough scale 3-6

U.S. mobile operators need to play a greater role in mobile advertising 3-6

Ad aggregation and ad mediation systems in mobile need to deliver transparent pricing and reporting 3-6

Understanding the role of different types of mobile advertising solution providers can be challenging

for advertisers and publishers 3-7

Market Drivers 3-7

Next-generation connected wireless devices such as Smartphones and tablets are the major

growth drivers 3-8

Rich media ads in mobile continue to drive growth 3-8

The App Economy is a major growth driver 3-9

Increased uptake of mobile video ads expected to drive growth 3-9

Industry Standards—ORMMA, VAST, VPAID, and others—will help address inter-operability

issues in rich media and mobile video advertising and will likely be important growth drivers 3-10

#NA11-65 © 2012 Frost & Sullivan www.frost.com iv

Technological Advances such as HTML 5.0 could reduce the Industry fragmentation and help drive

adoption of new rich media mobile advertising experiences 3-10

Verifiable Results from mobile advertising help to support the business case for mobile advertising 3-11

Industry collaboration, real-time bidding exchanges and mobile demand side platforms will help in

inventory monetization 3-11

Market Forecast 3-12

Market Forecast for the U.S. Mobile Advertising and Search Market 3-12

Competitive Analysis 3-20

Competitive Analysis of the U.S. Mobile Advertising and Search Market 3-20

Solution Providers 3-21

A Note on Google 3-22

Mobile Operators 3-23

Market Share Analysis 3-25

Market Share Analysis of the U.S. Mobile Advertising and Search Market 3-25

C h a p t e r 4

Messaging-based Mobile Advertising Segment

Introduction 4-1

Introduction to Messaging-based Mobile Advertising Segment 4-1

Key Mobile Messaging Technologies 4-1

Common Short Codes 4-1

Revenue Shares for Premium and Standard Rate Mobile Messaging Campaigns 4-3

Premium Rate Campaigns 4-3

Standard Rate Campaigns 4-4

Market Revenue Forecast 4-5

Revenue Forecast for Messaging-based Mobile Advertising 4-5

#NA11-65 © 2012 Frost & Sullivan www.frost.com v

C h a p t e r 5

Mobile Internet-based Display Advertising Segment

Introduction 5-1

Mobile Internet-based Display Advertising Segment 5-1


Revenue Forecast for Mobile Internet-based Display Advertising 5-2

C h a p t e r 6

Mobile Video Advertising Segment

Introduction 6-1

Introduction to Mobile Video Advertising segment 6-1


Revenue Forecast for Mobile Video Advertising 6-2

C h a p t e r 7

In-application Mobile Advertising Segment

Introduction 7-1

Introduction to In-application Mobile Advertising 7-1


Revenue Forecast for In-application Mobile Advertising 7-2

#NA11-65 © 2012 Frost & Sullivan www.frost.com vi

C h a p t e r 8

Mobile Search and Other Performance-based Mobile Advertising Segment

Introduction 8-1

Introduction to Mobile Search and Other Performance-based Mobile Advertising 8-1


Revenue Forecast for Mobile Search and Other Performance-based Mobile Advertising 8-2

C h a p t e r 9

Key Industry Participants

Mobile Advertising Solution Providers 9-1

4INFO Profile 9-1

Company 9-1

Key Mobile Advertising Offerings and Value Proposition 9-1

AdHaven Mobile Audience Platform 9-1

Key Customers and Partnerships 9-3

AdMarvel Profile 9-4

Company 9-4

Key Offerings and Value Proposition 9-4


[a.mo.bee] Profile 9-7

Company 9-7



BrightRoll Profile 9-9

Company 9-9



Crisp Media Profile 9-12

Company 9-12



#NA11-65 © 2012 Frost & Sullivan www.frost.com vii

Greystripe Profile 9-14

Company 9-14



InMobi Profile 9-18

Company 9-18



Jumptap Profile 9-21

Company 9-21



Medialets Profile 9-24

Company 9-24



Mojiva Profile 9-28

Company 9-28



Nexage Profile 9-31

Company 9-31



RadiumOne Profile 9-33

Company 9-33



Rhythm NewMedia 9-34

Company 9-34



Tremor Video Profile 9-38

Company 9-38



#NA11-65 © 2012 Frost & Sullivan www.frost.com viii

Velti Profile 9-39

Company 9-39



YuMe Profile 9-42

Company 9-42


YuMe Products: 9-43

#NA11-65 © 2012 Frost & Sullivan www.frost.com ix

List of Figures

C h a p t e r 2


2-1 Mobile Advertising and Search Market:

Contribution by Volume of Mobile Rich Media and Non Rich Media Branding Ads to Total Mobile

Branding Ads Served (U.S.), 2009-2017 2-4


Monthly Users and Service Penetration of Mobile Internet (U.S.), 2009-2017 2-9


Installed Base Forecast for Connected Tablets (U.S.), 2010-2017 2-10

C h a p t e r 3



Impact of Top Eight Industry Challenges (U.S.), 2011-2017 3-4


Market Drivers Ranked in Order of Impact (U.S.), 2011 -2017 3-7


Revenue Forecast for Mobile Advertising (U.S.), 2009 -2017 3-14


On-deck and Off-deck Mobile Advertising Revenue Forecast (U.S.), 2009-2017 3-15


Revenues from Different Channels of Mobile Advertising (U.S.), 2009-2017 3-16

#NA11-65 © 2012 Frost & Sullivan www.frost.com x


Percentage Revenue Contribution from Different Channels of Mobile Advertising

(U.S.), 2009-2017 3-17

3-7 Mobile Advertisement and Search Market:

Competitive Structure (U.S.), 2010 3-20

3-8 Mobile Advertisement and Search Market:

Estimated Company Market Share by On-deck Advertising Revenues (U.S.), 2010 3-25

C h a p t e r 4



Revenue Forecast for Messaging-based Advertising and Marketing Campaigns

(U.S.), 2009-2017 4-6


Application Provider Opportunity from Monthly Access Fee Collected to Maintain

Connections (U.S.), 2009-2017 4-7

C h a p t e r 5



Revenue Forecast for Mobile Internet-based Display Advertising (U.S.), 2009-2017 5-2


Revenue Forecast for Off-deck and On-deck Mobile Internet-based Display Advertising

(U.S.), 2009-2017 5-3

#NA11-65 © 2012 Frost & Sullivan www.frost.com xi

C h a p t e r 6



Revenue Forecast for Mobile Video Advertising (U.S.), 2009-2017 6-3


Revenue Forecast for Off-deck and On-deck Mobile Video Advertising (U.S.), 2009-2017 6-4

C h a p t e r 7



Revenue Forecast for In-application Mobile Advertising (U.S.), 2009-2017 7-2


Revenue Forecast for Off-deck and On-deck In-application Mobile Advertising

(U.S.), 2009-2017 7-3

C h a p t e r 8



Revenue Forecast for Performance-based Mobile Advertising (U.S.), 2009-2017 8-3


Revenue Forecast for Off-deck and On-deck Performance-based Mobile Advertising

(U.S.), 2009-2017 8-4

#NA11-65 © 2012 Frost & Sullivan www.frost.com xii

List of Charts

C h a p t e r 1

Introduction

1.1 Mobile Advertising and Search Market:

Market Segmentation (U.S.), 2010 1-2


Revenue Forecast for Mobile Advertising (U.S.), 2009-2017 1-4


Contribution from Different Channels of Mobile Advertising (U.S.), 2009-2017 1-4

C h a p t e r 2



Evolution and Roadmap for Mobile Advertising (U.S.), 2005-2017 2-3


Contribution by Volume of Mobile Rich Media and Non Rich Media Branding Ads to

Total Mobile Branding Ads Served (U.S.), 2009-2017 2-4


High-level Contribution of Popular Rich Media Technologies to Total Rich Media Ads

Served (U.S.), 2009-2017 2-5


Revenue Contribution of Mobile-enabled and Mobile-specific DSPs and RTBs to Mobile

Internet and Mobile Applications Advertising Revenues (U.S.), 2009-2017 2-8

#NA11-65 © 2012 Frost & Sullivan www.frost.com xiii


Monthly Users and Service Penetration of Mobile Internet (U.S.), 2009-2017 2-10


Installed Base Forecast for Connected Tablets (U.S.), 2009-2017 2-11

C h a p t e r 3



Market Engineering Measurements (U.S.), 2010 3-13


Revenue Forecast for Mobile Advertising (U.S.), 2009-2017 3-14


On-deck and Off-deck Mobile Advertising Revenue Forecast (U.S.), 2009-2017 3-15


Variation in Contribution of On-deck and Off-deck Mobile Advertising (U.S.), 2009-2017 3-16


Revenues from Different Channels of Mobile Advertising (U.S.), 2009-2017 3-17


Percentage Revenue Contribution from Different Channels of Mobile Advertising

(U.S.), 2009-2017 3-18


Low Growth and High Growth Revenue Estimation (U.S.), 2009-2017 3-18


Estimated Company Market Share by On-deck Advertising Revenues (U.S.), 2010 3-25

#NA11-65 © 2012 Frost & Sullivan www.frost.com xiv

C h a p t e r 4



Short Code SMS Value Chain (U.S.), 2011 4-2


Possible Revenue Share for a Premium Rate Mobile Marketing Campaign (U.S.), 2011 4-4


Revenue Flow for a Standard Rate Mobile Marketing Campaign (U.S.), 2011 4-5


Revenue Forecast for Messaging-based Mobile Marketing and Advertising (U.S.), 2009-2017 4-6


Application Provider Opportunity from Monthly Access Fee Collected to Maintain

Connections (U.S.), 2009-2017 4-8

C h a p t e r 5



Revenue Forecast for Mobile Internet-based Display Advertising (U.S.), 2009-2017 5-3


Revenue Forecast for Off-deck and On-deck Mobile Internet-based Display Advertising

(U.S.), 2009-2017 5-4


Percent Contribution of Off-deck and On-deck Mobile Internet-based Display Advertising

Revenues (U.S.), 2009-2017 5-4

#NA11-65 © 2012 Frost & Sullivan www.frost.com xv

C h a p t e r 6



Mobile Video Advertising Segmentation (U.S.), 2011 6-2


Revenue Forecast for Mobile Video Advertising (U.S.), 2009-2017 6-3


Revenue Forecast for Off-deck and On-deck Mobile Video Advertising (U.S.), 2009-2017 6-4


Percent Contribution of Off-deck and On-deck Mobile Video Advertising Revenues

(U.S.), 2009-2017 6-5

C h a p t e r 7



Revenue Forecast for In-application Mobile Advertising (U.S.), 2009-2017 7-3


Revenue Forecast for Off-deck and On-deck In-application Mobile Advertising

(U.S.), 2009-2017 7-4


Percent Contribution of Off-deck and On-deck In-application Mobile Advertising

Revenues (U.S.), 2009-2017 7-4

#NA11-65 © 2012 Frost & Sullivan www.frost.com xvi

C h a p t e r 8



Revenue Forecast for Performance-based Mobile Advertising (U.S.), 2009-2017 8-3


Revenue Forecast for Off-deck and On-deck Performance-based Mobile Advertising

(U.S.), 2009-2017 8-4


Percent Contribution of Off-deck and On-deck Performance-based Mobile Advertising

(U.S.), 2009-2017 8-5

#NA11-65 © 2012 Frost & Sullivan www.frost.com xvii

1Introduction

M o b i l e A d v e r t i s i n g a n d S e a r c h

Introduction and Overview

This research service builds on the information presented in the study conducted in 2010

entitled "U.S. Mobile Advertising and Search Market." Although it amends and updates the

information and data points, the study itself presents a complete picture of the market and

highlights the market changes. New emerging solutions as well as business models within the

mobile advertising ecosystem are also discussed. Throughout this study, the words "adver-

tising" and "ad"; "applications" and "app"; and "mobile Internet," "mobile web," and

"WAP" are used interchangeably.

Mobile advertising is the actual process of describing or presenting a product, a service, an

idea, or an organization through mobile communication channels to induce mobile

subscribers to buy, interact, or support the item being advertised.

Market Segmentation

Frost & Sullivan presents an analysis of the following mobile advertising channels across the

on-deck and off-deck mobile ecosystems in this research service:

■ Mobile messaging-based advertising

■ Mobile Internet-based advertising

■ Mobile video advertising

■ In-application mobile advertising

■ Mobile search and performance based advertising

#NA11-65 © 2012 Frost & Sullivan www.frost.com 1-1

Chart 1.1 shows the market segmentation for the U.S. mobile advertising and search market

in 2010.

C h a r t 1 . 1

Mobile Advertising and Search Market: Market Segmentation (U.S.), 2010

Source: Frost & Sullivan analysis

Advertising in these mobile channels could be served by ad networks, ad exchanges, and ad

mediators, or by publishers themselves (with help of white-label mobile advertising plat-

forms). All these possibilities have been considered in the market forecasts.

Key Findings and Conclusions

Next-generation wireless devices such as Smartphones and tablets continue to drive the U.S.

mobile advertising and search markets. Improved targeting capabilities, advanced ad

rendering capabilities, large amounts of inventory, and strong developer interest in leveraging

mobile advertising for monetization of their applications are some of the key reasons for the

continued adoption of mobile advertising on these new device platforms.

Mobile web and mobile applications are the prime inventories for mobile advertising, with a

large majority of ad spend generated by these two advertising channels. Both branding and

performance-based advertising continue to perform well within the mobile web and mobile

applications channels. However, branding campaigns executed within the application channel

continue to outnumber the branding campaigns served within the mobile Internet in the U.S.

mobile advertising and search market.

On-deck Mobile Advertising

— Mobile Internet- based Mobile Advertising— On-deck Mobile Video Advertising— On-deck Performance-based Advertising— In-application Mobile Advertising

Off-deck Mobile Advertising

— M essaging-based Advertising— M obile Internet- based M obile Advertising— Off-deck M obile Video Advertising— Off-deck Performance-based Advertising— In-application Mobile Advertising

Mobile Advertising Market Opportunity


Mobile video ads have emerged as one of the fastest growing industry segments. Mobile

video ads can be served within both video and non-video data environments in mobile. As

such, a large majority of video ads in mobile are served within non-video data channels (for

example, a news application). Pricing-per-impression remains the main pricing mechanism

for mobile video ads.

Leading industry participants are collaborating to develop and promote a standardized

framework for rich media mobile advertising. Open Rich Media Mobile Advertising

(ORMMA), Mobile Rich Media Ad Interface Definitions (MRAID), Digital Video Ad Serving

Template (VAST), and Digital Video Player-Ad Interface Definition (VPAID) are the leading

ad standard specification and implementations for rich media and mobile video advertising.

Frost & Sullivan believes that a well-designed and popular rich media ad specification could

be one of the most important drivers of mobile advertising in the United States in the coming

years.

All leading mobile operators have established broad mobile advertising programs for on-deck

properties. Mobile operators aspire to leverage the subscriber information and insights into

data usage patterns to enable targeted mobile advertising - both within their own content

offerings, as well as within the data channels and inventory of their strategic partners.

In 2017, mobile advertising revenues in the United States are expected to reach

$x,xxx.x million. This is more than xxx percent growth over 2010 figures of around

$xxxx.xmillion. It can be argued that rapid penetration of connected tablets and other

connected display devices could actually increase the market size much beyond the Frost &

Sullivan forecasts. However, falling mobile advertising rates, excess inventory, and elimina-

tion of the distinction between online and mobile advertising spending and ad serving

mechanisms could mean that the market revenues may not grow in line with the adoption of

Smartphones and tablets. In other words, a trend of revenue divergence between inventory

and mobile advertising spending will be increasingly seen in the U.S. mobile advertising and

search markets.

From a channel perspective, performance-based advertising, mobile Internet branding, and

in-application mobile advertising are expected to be the three largest contributors to mobile

advertising. In-application advertising revenues include both display and performance mobile

advertising, which increases the bucket of performance mobile advertising in the

United States.

Chart 1.2 shows revenue forecast for mobile advertising in the U.S. mobile advertising and

search market from 2009 to 2017.


C h a r t 1 . 2

Mobile Advertising and Search Market: Revenue Forecast for Mobile Advertising (U.S.),

2009-2017

Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan analysis

Chart 1.3 shows the contribution from different channels of mobile advertising in the U.S.

mobile advertising and search market from 2009 to 2017.

C h a r t 1 . 3

Mobile Advertising and Search Market: Contribution from Different Channels of Mobile

Advertising (U.S.), 2009-2017

Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan analysis

0.0

xxx.x

x,xxx.x

x,xxx.x

x,xxx.x

x,xxx.x

x,xxx.x

2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

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x.x

xx.x

xx.x

xx.x

xx.x

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Rev

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Revenue ($ Million) Revenue Growth Rate (%)

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Con

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2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Messaging (%) Mobile Internet (%)

Mobile Video (%) Mobile Search and Performance (%)

In-application (%)


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