The $80 Billion Advertising Opportunity
“Generals always prepare for the last war, especially if they have won it”: an old adage that could well have been written for the advertising industry as it looks ahead to 2015. This year, in the midst of the greatest upheaval in the history of media, hundreds of billions of dollars will be spent on TV spots and radio jingles in emerging markets, while an $80 billion mobile advertising opportunity goes to waste.
Forget the traditional advertising model. The smartphone has replaced the television as the primary screen of emerging markets. Eighty billion dollars is the cost to an industry that has not yet acted on the scale of the mobile opportunity in the world’s fastest-growing markets.
Advertisers are fighting the “last war,” expecting that upwardly mobile consumers in emerging markets attach the same importance to television advertising as their predecessors in the global middle class.
This is not the case. The media consumption habits of a middle class consumer of Jakarta in 2015 will be very different from his counterpart in, say, 1985 Tokyo or 2005 Chicago.
This discrepancy between ad spend and screen time is common across the world’s most dynamic emerging markets.
The advertising industry is waking up gradually to the power of mobile. Globally, mobile advertising is expected to contribute over an $31.5 billion increase in ad spend up to 2016, but the dominance of traditional advertising is still great. While mobile Internet will contribute 7.6 percent of global ad spend, TV will contribute 39.2 percent.
By ignoring mobile, advertisers are failing to connect with the consumers that will drive consumption over the next decade. By 2025, emerging markets are expected to contribute approximately half of the world’s global spending — about $30 trillion.
In order to be prepared for this enormous commercial opportunity, marketers should structure their budgets to represent the media habits of the emerging global middle class. New opportunities in mobile enable them to do so in a much more effective and measurable way relative to traditional advertising.
Until that change is realized, advertisers will continue to fight a losing battle of reaching the world’s “next billion”.
Nathan Eagle is CEO and co-founder of Jana — a profitable,
Boston-based startup that has become one of 2014's fastest growing
technology companies. Jana enables free apps to be truly free in
The World Economic Forum’s Annual Meeting 2015 will take place from 21–24 January in Davos-Klosters, Switzerland, under the theme “The New Global Context.” You can find out more about the meeting here.