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Tablet and smartphone growth is helping drive the mobile advertising market, which is expected to reach $11.4 billion in revenue in 2013, up from $9.6 billion in 2012, according to Gartner.  The group expects revenue to hit $26.6 billion in 2016, which will create even more opportunities for app developers and other service providers.

“The mobile advertising market took off even faster than we expected due to an increased uptake in smartphones and tablets, as well as the merger of consumer behaviors on computers and mobile devices,” said Stephanie Baghdassarian, research director at Gartner.

Because consumers are spending more time on their smartphones and tablets, ad inventory is growing at a faster pace than advertisers can shift spending to the medium, which is actually driving the cost down of ad prices, the group said.  As a result, a significant portion of mobile ad inventory is taken up by app developers paying for ads to promote their apps and get them more downloads, a category known as “paid discovery.”

And as app developers spend big bucks on ads to get them installs or “paid discovery,” companies like Facebook are trying to capture that market.  Facebook started allowing developers to buy its app install ads in October 2012 that appear in its mobile news feed.

Gartner also said that as more ad revenue is shifted to mobile advertising and away from print and radio, it expects North America and Western Europe to close the gap with the Asia/Pacific region, which is leading mobile ad growth due to atypically large adoption of handsets in Japan and South Korea.  Asia/Pacific is expected to reach $4.8 billion in mobile ad revenue by 2013, compared with $3.8 billion in North America and $1.9 billion in Western Europe.

Mobile advertising is expected to be led by Mobile search — including paid positioning on maps and various forms of augmented reality, all of which can be informed by location — will contribute to drive mobile ad spending across the forecast period, although it will diminish in strength as the period progresses, the group said.  Gartner expects that mobile display ad spending will eventually grow enough to take over from mobile search after 2015.


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