One of the biggest trends of 2013 will be the growing mobile ad market.
According to the Wall Street Journal, Steve Jobs said back in 2010 that “Mobile advertising really sucks.” While he may have been right back then, the mobile ad market is growing rapidly and companies are refining their strategies. Back then Facebook Inc (NASDAQ:FB) had a non-existent mobile ad presence. Today they account for over 18% of all mobile display ads.
As the chart below shows, mobile ad spending was over $4 billion in 2012 and is expected to grow by 77% in 2013.
Facebook is rapidly developing its infant mobile ad platform into a more and more robust system. As the chart below illustrates, Facebook Inc (NASDAQ:FB) jumped from 0 to 8.8% of total mobile ad revenue.
Facebook Inc (NASDAQ:FB) already generates over $300 million from mobile advertisements. In the third quarter of 2012 mobile accounted for 14% of company revenue, but by the fourth quarter it was up to 23% of company revenue. The rapid growth in revenue from its mobile ad market is essential to the bottom line as the fourth quarter of 2012 marked the first time people spent more time viewing Facebook from their phones then online.
Amazon.com, Inc. (NASDAQ:AMZN) is opening up a new level of competition in the mobile ad sphere as it prepares to roll out its new advertising platform. With the amount of data Amazon collects on users this ad platform could potentially be superior to Google Inc (NASDAQ:GOOG)‘s because it is based on user interest and purchases. This makes it more accurate and more able to drive higher quality traffic that actually results in purchases.
Though the exact details haven’t been released yet, this should create a whole new revenue generating opportunity for its Kindle devices. Amazon sells these devices at a near loss and seeks to make it up through in tablet purchases and add-ons. This kind of strategy has driven Amazons profitability down to less than 2%. If the ad platform comes out in 2013, expect Amazon to be able to increase its profitability, especially on the Kindles.