Location-Targeted Mobile Ad Spend In The U.S. Will Reach $29.5 Billion In 2020 Finds BIA/Kelsey

Updated Data

In the SPRING update to its U.S. Local Advertising Forecast 2016, BIA/KELSEY projects location-targeted mobile ad spending to grow from $9.8 billion in 2015 to $29.5 billion in 2020, a 24.6% compound annual growth rate.

The forecast offers breakouts of ad spend for search, traditional display, native social, traditional video, and messaging. Search will continue to eclipse all ad formats, holding the largest share of location-targeted ad spend through the forecast period. However, that share will decrease from 57% in 2016 to 42 percent in 2020.

“Several market factors are currently bearing down on the mobile ad marketplace—from GOOGLE’s moves to adapt to an app-based world, to the media consumption habits of millennials,” said Chief Analyst and VP/Content MICHAEL BOLAND. “These and other influences will require advertisers, publishers, agencies and ad tech players to rapidly innovate.”

BIA/KELSEY expects native social, one of the fastest growing formats in mobile advertising, to increase its share of location-targeted mobile ad spend from 19.8% in 2016 to 28.1% in 2020, mainly at the expense of search and display. The most common examples of the native social format are Facebook’s news feed ads and Snapchat Stories. Instagram and LinkedIn have similar offerings, which continue to grow in prevalence and ad coverage.

The forecast points to a number of factors feeding native social’s expected growth including:

• The rise of ad blocking technology which will benefit formats that are immune to ad blockers, like native social and sponsored content.
• High performance of native social compared with other mobile ad formats and benchmarks.
• Alignment with mobile device realities, like small screens, which favor vertically scrolling in-feed units over banners.
• Growing consumer influence and buying empowerment of millennials, who are more receptive to native social advertising than traditional formats like banners.
• Continued evolution of in-feed ad units, like action buttons and multimedia.

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