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eMarketer: Twitter Tops Facebook in US Mobile Advertising Revenue

Google dominates $2.61 billion US mobile ad market with 54% share

NEW YORK, NY (September 5, 2012)—Twitter will take home more US mobile advertising revenues this year than its larger cousin, Facebook, according to a new forecast by eMarketer.

Twitter will earn $116.8 million in mobile advertising revenues this year in the US, eMarketer projects. Facebook, which rolled out mobile ads for the first time this year, will come in at just over half that amount, at $72.7 million in the US.

Both companies earn far less mobile revenue than companies with more established mobile ad platforms like Google and Pandora, though growth in mobile revenues at both social networks is expected to remain high throughout the forecast period.

The increasing focus on mobile by both Twitter and Facebook, as well as other major digital advertising publishers, will contribute to growth in the overall US mobile advertising market, which eMarketer estimates will reach $2.61 billion this year. By 2016, the US mobile advertising market is expected to near $12 billion, according to eMarketer.

eMarketer bases its estimates for mobile advertising revenues on an analysis of reported revenues from company releases; estimates from other research firms on advertising revenues, pricing, impressions and other factors; usage trends at major mobile advertising publishers; and eMarketer interviews with executives at ad agencies, brands, online ad publishers and other industry leaders. eMarketer’s estimate for overall US mobile advertising spending in 2012 is unchanged from the previous forecast. This is eMarketer’s first forecast for mobile advertising revenue at Twitter, Facebook and Pandora.

Driving Factors for Mobile Ad Growth at Facebook and Twitter

There are several factors underpinning the growth of Facebook and Twitter’s mobile businesses.

As users increasingly access Twitter via mobile devices, eMarketer believes that the tight integration between the company’s ad products—particularly Promoted Tweets—and core user experience has made the subsequent shift toward displaying mobile advertisements relatively simple. Twitter CEO Dick Costolo has reported that, on most days, the service generates more ad revenues from users on mobile devices than it does from viewers of

Facebook, by comparison, only rolled out Premium advertisements in the Newsfeed—part of its core user experience for both mobile and desktop—earlier this year. eMarketer estimates that Facebook earns more than 60% of its revenue from its Marketplace advertising platform, most of which is generated by ads that display on the right-hand side of Facebook’s desktop experience. Such ads do not appear on Facebook’s mobile platform.

Still, mobile is a long-term play for Facebook, and by next year, eMarketer expects the social networking giant to beat out Twitter by a significant margin, taking in $387 million on mobile in the US. By 2014, Facebook’s US mobile revenues will reach $629.4 million, compared to $350.9 million at Twitter—making Facebook the second-highest mobile ad earner of all companies after Google, which has a significant lead.

Net US Mobile Search, Display and Overall Ad Market Share

Google currently dominates the overall US mobile ad market, with a 54.5% share of net revenues projected for this year, dropping slightly to 54.1% by 2014 as more competitors enter the market. Online radio service Pandora, which is expected to earn 8.7% of US mobile ad revenues this year, will maintain the No. 2 position until next year.

Much of Google’s dominance of the overall mobile market is a result of the company’s strong position in the mobile search ad market, in which eMarketer estimates Google maintains a 95.4% share of revenues—leaving just 4.6% of the $1.28 billion advertisers will spend on US mobile search ads this year for competitors like Microsoft.

Competition among major players will be healthier in the US mobile display ad market, which eMarketer estimates will grow 102% to $1.1 billion this year.

On a net basis, Pandora Media has emerged as one of the strongest US mobile display ad sellers, and its share of the total US mobile display market is expected to reach 20.5% in 2012. Google, which sells mobile display ads through its network and on its own sites, is expected to earn an 18.4% share of US mobile display ad revenues this year. eMarketer estimates Millennial Media will earn $84.1 million in net US mobile display revenue this year, compared to Apple, which will earn $75.1 million.

One key change from the previous forecast is that these figures represent net revenues after companies pay traffic acquisition costs to partner sites. eMarketer previously forecast gross US mobile revenues for major ad networks.

This change in definition has led to a reduction in share for mobile display ad networks owned by Millennial Media, Apple and Google, each of which pay back a significant portion of their gross revenues to ad publishers and partner sites. eMarketer believes mobile display growth at these companies is still very strong—and each will maintain an outsize footprint in the marketplace despite taking home a smaller piece of the net revenue pie.

Despite the growing focus from major ad publishers, mobile remains a relatively small portion of the overall US ad market—with mobile representing roughly 1% of total US ad spending in 2012, according to eMarketer—and mobile media buys will remain smaller than those on other digital platforms, particularly as small screen sizes force many display ad publishers to serve fewer impressions per mobile page view.

Still, growth rates for mobile display, as well as search, are expected to remain very strong over the next few years as more advertisers develop infrastructure to support larger mobile ad buys and publishers develop more sophisticated offerings.

Spending on rich media ads drives a commanding portion of mobile display growth, though mobile banner advertising remains a relatively strong contributor too. Mobile video advertising—accounting for just 5.8% of all mobile ad dollars spent in 2012, according to eMarketer—will remain a small piece of the mobile ad market throughout the forecast period.

About eMarketer
eMarketer is the authority on digital marketing, media and commerce, offering insights essential to navigating the changing, competitive and complex digital environment. By weighing and analyzing information from different sources, eMarketer provides businesspeople, marketers and advertisers with the most complete view of digital marketing available.

Media Contact:
Clark Fredricksen
Vice President, Communications, eMarketer
Tel. 212-763-6056

Posted on September 5, 2012.