Over the past decade, digital advertising has changed dramatically with the rise of mobile. According to EMARKETER’s October 2023 forecast, U.S. adults will spend nearly one-third of their media time on mobile in 2023 (31.5%), nearly double the share in 2023 (16.2%). This shift has led to increased audience fragmentation across digital platforms and highlights the need for mobile-focused advertising strategies. Advertisers have responded, with mobile digital ad spend soaring to 49.3% of total media ad spend, up from 5.9% in 2013.
This guide explains these changes, the benefits of mobile advertising, and the market size.
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Mobile advertising refers to any form of advertising that takes place on smartphones and tablets. This mode of advertising is efficient and budget-friendly. As consumers constantly interact with them on their mobile devices, brands need to have an online presence to grab the attention of mobile users.
As innovation in ad design continues to grow over time, mobile ads will be invaluable to businesses who want to retain customers, attract new audiences, and sustain long-term growth. Advertisers using mobile ads must prioritize user experience due to the limited screen real estate on phones compared to desktops.
Chart showing mobile ad spending in the US from 2023 to 2025. (Subscribers only)
Accessible and targeted audience
Because people carry their mobile phones with them wherever they go, targeting techniques such as location-based mobile advertising (using a user’s location to serve up customized ads and offers) are effective. This tactic often increases click-through and conversion rates. Geotargeting is a popular location-centric strategy that allows for more precise targeting. For example, a retailer that sells baking supplies may send push notifications to individuals who have recently visited their bakery.
Easier to track campaign performance
Mobile marketing results are now extremely easy to track, especially with the help of tools that measure behaviors like website visits and click-through rates, allowing marketers to refine their messaging to increase reach and boost ROI.
At a lower cost
Mobile marketing is often cost-effective and tracking features can help reduce costs – for example, you can quickly pause a campaign if it’s not effective. Budget-friendly campaign tactics such as bulk text message campaigns can be beneficial for small businesses.
Banner ads
According to Amazon Ads, banner ads contain elements like a headline, copy and a call to action and typically appear at the top or bottom of a website page or mobile app. It’s a popular approach because it’s cost-effective, easy to implement and supported across a range of devices.
Video Ads
As video becomes more popular among mobile device users, more brands are leveraging video in their marketing strategies. According to Amazon Ads, the types of video ads include:
In-stream video ads: Ads that play before, during, or after watching a video. Interstitial video ads: This ad type pops up as a short video clip and can take up the entire screen. In-app video ads: These types of ads appear as users scroll through their feeds in social media apps, making them seem more natural than sponsored ads. Gamified video ads: These types of ads offer an interactive mobile experience, allowing users to interact with the ad by playing short games. If users find these ads engaging or informative, they can achieve high conversion rates.
Native Advertising
Native advertising is a non-traditional form of advertising where advertisers aim to provide a natural experience to their audience. This type of advertising provides an enhanced and authentic experience with minimal interruptions.
Mobile App Monetization
There are two ways to monetize a mobile app: in-app purchases (IAP) and in-app advertising (IAA).
IAP: This includes virtual goods, subscriptions, in-game currency, premium content, etc. “Sales of virtual goods in games have generated the majority of IAP historically and still dominate today, but this will end in 2025,” said Yoram Wurmser, analyst at EMARKETER, in the Mobile App Monetization 2023 report. “Overall, IAP for games will remain larger than non-games, including both virtual goods and subscriptions, through the end of our forecast period, but only slightly.”
IAA: This is advertising in mobile apps, including video, search, and shopping ads. “Mobile advertising is subject to privacy laws and regulations. [generative] “Yet, app publishers will continue to look for additional ways to monetize premium content. This may impact ad inventory types and prices in the future, but IAA volumes should remain strong,” the Mobile App Monetization 2023 report states.
According to the August 2023 EMARKETER forecast, 10 industries – entertainment, communications, computing and consumer electronics products, consumer packaged goods (CPG), financial services, retail, media, automotive, travel, and healthcare and pharmaceutical – used mobile ads more than non-mobile ads.
The U.S. industry will spend 66% of its digital ad spend on mobile in 2024. Mobile ad spend has plateaued since 2022 as connected TV (CTV) has gained market share. U.S. CTV ad spend is expected to grow 22.4% year-over-year to $30.1 billion in 2024 and maintain double-digit growth annually through 2027.
According to EMARKETER’s 2023 U.S. Digital Ad Spending by Industry Report, while no industry will experience explosive ad spend growth in 2023, there are notable mobile favorable trends. Sectors such as travel, retail, healthcare, pharmaceuticals, and automotive will grow faster than the national average, while entertainment will grow at a slightly above average growth rate.
Additionally, several sectors that saw spending declines in 2022 are expected to see notable recoveries. Both automotive and CPG are expected to see larger increases in ad spending in 2023 and 2024 compared to 2022, while financial services is expected to see an even larger increase in 2024.
According to a July 2023 forecast, IAPs, which include both subscription fees and virtual goods, for mobile games and media will grow 3.5% in 2024. Nearly three-quarters (74.4%) of non-gaming in-app revenue comes from subscriptions, and this percentage will continue to grow through 2027.
“Privacy restrictions on iOS and Android continue to tighten,” states our Mobile App Monetization 2023 report. Advertisers have found clever ways to get around this, but privacy and antitrust regulations will pose a significant threat over time, potentially making third-party app stores more attractive and reducing app store commissions. Another mobile advertising trend to watch is the impact of generative AI on search, which could reduce site traffic.
Despite challenges posed by privacy regulations and generative AI, mobile advertising is set to continue growing rapidly. App publishers may seek new ways to monetize, such as providing access to features like AI chatbots, which could impact the nature and cost of advertising space in the future. However, demand for IAA is expected to continue for the next few years.
According to our 2022 U.S. Time Used on Connected Devices Report, U.S. adults’ smartphone usage time increased 17.7% to three hours and two minutes (3:02) in 2020 from two hours and 34 minutes in 2019, driven by subscription video-on-demand, TikTok, podcasts and pandemic trends.
Growth in smartphone usage will continue, albeit at a slower pace, over the next few years. Growth in smartphone usage is expected to stabilize and increase slightly, from 3:26 in 2023 to 3:31 in 2024, a 2.1% increase.
Chart showing US mobile usage time from 2023 to 2025. (Subscribers only)
According to EMARKETER’s State of 5G report, 5G broadband adoption in the U.S. is projected to reach 290.5 million device subscriptions by 2026, despite a slower-than-expected initial rollout. The expansion of 5G will optimize inventory management for retailers, enhance in-store and online shopping, and power mobile AR experiences for consumers. Marketers can leverage these advancements to enable more dynamic digital advertising and deeper insights into consumer behavior.
The app landscape is changing as users consolidate their preferences and choose fewer, more versatile apps. According to our Mobile App Users 2023 report, this shift signals the potential rise of super apps in the West, mirroring the model used in Asia Pacific.
Moreover, grocery apps stand out as the fastest-growing vertical, with a projected compound annual growth rate of 5.23% between 2023 and 2026. The rise of grocery apps, along with other niches such as banking and dating, is creating new advertising landscapes beyond major platforms like Meta, Google, and Amazon. Marketers also have the opportunity to leverage valuable first-party data to fine-tune their advertising approaches.
As smartphone usage increases, so will m-commerce sales. According to a February 2024 EMARKETER forecast, U.S. retail m-commerce sales will reach $542.66 billion in 2024, accounting for 7.3% of total retail sales. Additionally, m-commerce is projected to account for 44.6% of total U.S. retail e-commerce sales in 2024.
EMARKETER’s “Future of Digital 2024” report expands on the changes outlined in this guide and highlights mobile’s critical role in the evolution of digital advertising. Download the report to understand a decade of change and learn how to adapt your advertising strategy for the mobile-centric era.
