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Tuesday, 09 August 2016 12:25

Mobile momentum: Why advertising on handheld devices will allow Google and Facebook to sustain their remarkable growth

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If there was any lingering doubt about the potential of mobile advertising, it was put paid to last week. Advertising’s two behemoths,Google and Facebook, beat analysts’ expectations for growth in the second quarter, thanks largely to the rise of mobile advertising.

In its statement, Google’s parent company Alphabet said that not only were companies continuing to buy more ads on its search engine and other products, such as YouTube, but users were increasingly clicking on those ads. During the same quarter, Facebook’s revenue from mobile ads grew by a full 80 per cent.

But can either firm sustain this momentum in mobile?

“Certainly for the next two to three years, there will be quite significant growth in mobile usage, adoption and the performance of advertising,” says Tom Bailey, regional vice president at Marin Software.

Last year finally saw the tipping point at which the number of Google searches on mobiles exceeded that on desktop. GlobalWebIndex data shows that, in some Latin American and Middle Eastern countries, the time spent on mobile each day has already overtaken that spent on all other devices combined. By 2020, this will be the case in many other markets.

Google and Facebook’s success also owes to the design of their ad formats.

In February, Google removed ads which sat awkwardly on the right of its search engine results page, in favour of integrating them within the results themselves. And it has slowly rolled out its Accelerated Mobile Pages (AMP) – technology which optimises web pages to ensure faster loading on mobile devices.

Last week, Google launched AMP on iOS’s Chrome browser, so all iPhone owners will benefit – something that will please advertisers who have long been irked by glacial loading times on browsers. Google pays Apple to have Chrome pre-installed on all its iPhones.

“Both companies have incredibly rich datasets on their users, so they can target ads extremely efficiently,” says Jason Mander, director of research and insights at GlobalWebIndex. Indeed, Facebook’s Atlas product allows brands to target individual consumers, rather than just the devices they own, providing a more seamless experience. “This is ideal for brands, given the limitations of cookies, especially on mobile,” he says.

While Facebook has yet to make a profit from either WhatsApp or Messenger, where it has monetised its assets, it has done so in an unintrusive way. “Instagram has an extremely loyal community of 500m engaged users,” says Bailey, who thinks that Instagram’s monetisation has been key to Facebook’s continued success.

“Allowing tech providers to easily integrate with Instagram’s application programming interface proved a major hit with advertisers,” Bailey adds. While Snapchat remains a threat, Facebook continues to outstrip its rivals in both user and ad growth.

Could ad blockers threaten their success? They are prevalent on browsers, which makes them a problem for Google, but Facebook is better protected, notes Mander, because two in three adults log in through apps, which are better protected than browsers.

Facebook has warned that growth could slow later this year, but mobile is clearly becoming the dominant device. And that should enable Facebook and Google’s dominance to continue.

http://www.cityam.com/246575/mobile-momentum-why-advertising-handheld-devices-allow

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