UK mobile media economy to increase by 21.9% to £2.5bn in 2012

2011 was the first year that global consumer spending on media content, apps and services for mobile phones broke through the $100 billion barrier. 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 % from $121.8 billion in 2011 to $138.2 billion in 2012.

In contrast, advertiser spend on mobile media is expected to almost double (85.4%) from $6.3 billion to $11.6 billion, resulting in the total mobile media economy reaching $149.8 billion in revenue in 2012 – a 17.0% increase on 2011 (see Chart 1).

While the lion’s share of consumer spend (60.2%) is on data plans and web browsing – making mobile operators the key beneficiaries to the tune of $82.8 billion in 2012, up 9.5% on 2011 – a key driver of growth is the apps market on smartphones, such as the iPhone and Android devices. Over 23 billion apps were downloaded globally in 2011, increasing by 38% to over 32 billion 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% of global consumer spend in 2012 – $26.1 billion, up 30.7% on 2011 – but the strength of the apps ecosystem 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 ($934.5 million) has been overtaken by in-app advertising ($1.7 billion).

David MacQueen, Strategy Analytics’ director of wireless media strategies, said: “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. 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 $16.0 billion or 11.6% of 2012 consumer spend. 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; 108 billion videos were watched on mobile phones in 2011, almost trebling to 280 billion in 2012. However, unlike apps, this is not translating into symbiotic revenue levels. Despite a 23.8% revenue growth, Video is likely to account for a mere 2.4% ($3.6 billion) of total mobile media revenues in 2012 (see Chart 2).

“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,” MacQueen explains. “Despite the huge audience of 271 million users, ad revenues from mobile video are tiny – a meager $223 million globally in 2011. While ad revenues will more than triple to $726 million in 2012, it is still clearly challenging for advertisers looking to reach consumers through video ads on smartphones.”

Revenue related to Social Networking content, apps and services is expected to increase by 16.1% to $17.6 billion – accounting for 11.8% of all mobile media revenues.

The UK mobile media economy

The UK mobile media economy is expected to outperform the global 17.0% growth figure, increasing by 21.9% to almost £2.5 billion in 2012. UK consumer spending is also expected to outperform the global rate (16.6% vs. 13.4%) to just under £2.2 billion although advertiser spend will increase slightly less (81.1% vs. 85.4% globally) to £305.4 million.

UK consumers are expected to spend £559.6million on apps in 2012 compared to £1.2 billion on data plans/browsing. Consequently, apps would account for a significantly higher share of UK consumer spend (25.8%) than they would globally (18.9%).

UK in-app ad spend on the mobile web is expected to more than double (108.2%) compared to 50.6% for display advertising, consequently, 2012 is expected to be the first year that display ad revenues (£61.1 million) in the UK are overtaken by in-app advertising (£82.9 million).

UK revenue related to Social Networking content, apps and services is expected to increase by 22.3% in 2012 to £247.0 million – a much higher rate than the 16.1% globally.