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Mobile Internet Time Spent Vs Ad Spending Gap to Narrow

September 12th, 2013

Time Spent on Apps Vs AdvertisingApps will help to close the gap between internet time spent and advertising allocated. In particular there could be a $50bn shift over the long term in advertising spending for mobile alone. We believe in Asia and increasingly in western markets OTT services like Chat Apps will continue to expand but are evolving into platforms themselves and looking to monetise their engaged user base and could emerge as a US$10bn revenue industry. These changes have far-reaching implications for Media, Advertising, Social Networks and Telcos globally.

Time spent on internet for users across major developed markets is over 25-30% but advertising spending remains lower at close to 15-20% with the gap likely to compress over time. That gap has already been falling and is likely to continue. Time spent on mobile is now over 10% of total time (1/3 of internet) and rising rapidly as smartphone penetration rises globally. Ad spending globally averages 1.9% and is only 3% in developed markets like USA/Japan/Korea. We estimate a shift of 10% of global ad spending to match the current time spent on mobile would result in a shift of US$50bn in global advertising to the current $9bn mobile advertising industry.

Apps could help accelerate the shift to mobile advertising as they shift to monetisation. We think they are increasingly evolving into advertising networks (advertising and paid app installation), games platforms and other services. Telcos will also benefit from OTT services Chat Apps data traffic as they drive higher data usage, shift users to higher capacity networks and hence better pricing and profitability.

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