2011 was the first year that global consumer spending on media content, apps and services for mobile phones broke through the $100bn barrier. And according to the latest Global Mobile Media Forecast from Strategy Analytics, consumers are expected to increase this spend on mobile media by a further 13.4 per cent, from $121.8bn (£75.5m) in 2011 to $138.2bn in 2012.
Advertiser spend on mobile media is expected to rise more significantly, from $6.3bn to $11.6bn, an increase of 85.4 per cent. This will result in the total mobile media economy reaching $149.8bn in revenue in 2012 – a 17 per cent increase on 2011.
Whilst the lion’s share of consumer spend (60.2 per cent) is on data plans and web browsing – making mobile operators the key beneficiaries to the tune of $82.8bn in 2012, up 9.5 per cent on 2011 – a key driver of growth is the apps market on smartphones. Over 23bn apps were downloaded globally in 2011, and this is forecast to increase by 38 per cent to over 32bn in 2012. Apps are now the second largest category for revenues – for both consumer and advertiser spend – and are becoming the key distribution mechanism for media on mobile phones.
Apps are expected to account for 18.9 per cent of global consumer spend in 2012 – $26.1bn, up 30.7 per cent on 2011. But the strength of the apps ecosystem, Strategy Analytics says, is also demonstrated by advertiser spend. For example, across the USA and major Western European markets as a whole, revenue from display ads on the mobile web ($934.5m) has been overtaken by in-app advertising ($1.7bn).
Advertisers chase eyeballs so the fact that brands spend more on in-app advertising than the mobile web is a clear sign that apps are what consumers are glued to for an increasing range of activities, the analyst says. In the eyes of many advertisers, web browsing on the smartphone is playing second fiddle to the app economy.
Despite remaining relatively flat in terms of spend, Music remains one of the top mobile media categories, accounting for $16bn or 11.6 per cent of 2012 consumer spend,” says David MacQueen, Strategy Analytics’ director of wireless media strategies. However, the way consumers’ access and pay for music is changing. Ringtones are declining fast, but streaming music services such as Spotify, Pandora and Deezer – paid for by subscription or through advertising – are gaining good traction in Western Europe and the USA.”
As with apps, growth of mobile video usage is increasing dramatically; 108bn videos were watched on mobile phones in 2011, almost trebling to 280bn in 2012. However, unlike apps, this isn’t translating into symbiotic revenue levels. Despite a 23.8 per cent revenue growth, Video is likely to account for a mere 2.4 per cent ($3.6bn) of total mobile media revenues in 2012. 
“Low revenues are down to many major mobile video services being free to the end user, either funded by advertising (such as YouTube) or ‘bundled’ without additional cost by pay TV providers, such as Sky Go around Europe or AT&T U-verse in the USA,” says MacQueen. “Despite the huge audience of 271m users, ad revenues from mobile video are tiny – a meagre $223m globally in 2011. While ad revenues will more than triple to $726m in 2012, it is still clearly challenging for advertisers looking to reach consumers through video ads on smartphones.”
The UK mobile media economy is expected to outperform the global 17 per cent growth figure, increasing by 21.9 per cent to almost £2.5bn in 2012. UK consumer spending is also expected to outperform the global rate (16.6 per cent vs. 13.4 per cent) to just under £2.2bn, although advertiser spend will increase slightly less (81.1 per cent vs. 85.4 per cent globally) to £305.4m.
UK consumers are expected to spend £559.6m on apps in 2012, compared to £1.2bn on data plans and browsing. Consequently, apps would account for a significantly higher share of UK consumer spend (25.8 per cent) than they would globally (18.9 per cent).
UK in-app ad spend on the mobile web is expected to more than double (108.2 per cent) compared to 50.6 per cent for display advertising. Consequently, 2012 is expected to be the first year that display ad revenues (£61.1m) in the UK are overtaken by in-app advertising (£82.9m).
UK revenue related to social networking content, apps and services is expected to increase by 22.3 per cent in 2012 to £247m, a much higher rate than the 16.1 per cent globally.
