Mobile to set the pace in 2016

This part of the world is undergoing extraordinary growth in the use of mobile devices. Emerging markets are seeing rapid take-up, helped by lower cost handsets. India, for example, added 13 million users in the third quarter of 2015 alone [i].  In established markets mobile providers are busy building 4G LTE networks that offer faster, more reliable data speeds. It will account for 80 percent of total mobile subscriptions in Singapore by 2018, 40 percent in the Philippines and close to a third in Malaysia and Thailand.

All in all, it points to a growing base of smartphone users, predicted by Ericsson to exceed 800 million subscribers across South East Asia and Oceania by 2021.

We’re also seeing users consuming more data than ever before. Half of all mobile broadband users in APAC have plans that exceed 2GB per month.  As in other parts of the world these data allowances will continue to increase, freeing up users to spend more screen time on their mobile devices.

The only choice

There’s another significant trend. Mobile is outstripping fixed line subscriptions. In many cases subscribers are going straight to mobile broadband, having never had a fixed connection. Japan, for example, has four and a half times more mobile users than fixed line subscribers. In Australia, where fixed line penetration has been particularly high, the ACMA – the media and telecommunications regulator – found that last year 21 percent of adult Australians only accessed the internet on mobile devices[ii]. In many markets in APAC the ratio of mobile-only broadband users will be much higher.

So there’s an audience of millions that never switches on a PC or Mac. They can only be reached on their mobile devices. eMarketer [iii] is forecasting mobile ad spend in China will double to US$14 billion this year – 20 percent of the world total. That’s a huge slice of the market and watch as mobile progressively takes a bigger slice of the advertising pie in all countries in the region. For the ad industry it means you are dead in the water without a mobile strategy.

How do we react?

This rapid change creates a great opportunity for our industry, but there’s also every chance of getting it wrong. How we react this year is critical.

Key to this is tackling the scourge of ad blocking. PageFair’s 2015 Ad Blocking Report[iv] estimates that there are 198 million active ad blocker users in the world. It grew 41 percent last year and cost publishers nearly US$22 billion.

It sounds like a scary outcome. People are increasingly using mobiles, but they are also blocking ads. The worst outcome is that we have more mobile users but no way of reaching them.

Thankfully, there’s a solution. Tim Armstrong, AOL’s CEO, hit the nail on the head in a trade summit in the US last October[v]. He said, “Ad blocking is happening because people aren’t innovating on ad formats”. In other words, too many are taking creative devised for other formats and applying it to mobile.

That’s a bad approach because mobiles are personal devices – we see misplaced advertising as an intrusion in our lives. As an industry we have to be smarter about how we develop approaches suited to the medium, ensuring the creative is targeted at the right people and that delivery is optimised for screen format and consumer preferences.

Tim Armstrong made another key point last year. He said, “The consumer is 26 miles ahead”. It’s true. We’re an industry fighting to keep up. It’s why AOL acquired Millennial Media late last year – they are the world’s leading mobile marketplace, adding to the bag of tools that we make available to advertisers and publishers, including trading platforms, creative tools and data,

All these mechanisms need to be used together to keep up and be in sync with our audience. Otherwise people will continue to block and that could mean game over.

So, my prediction for 2016: it will be a lot like 2015, only much faster. The race is on to grasp the mobile opportunity but understand what will keep the audience tuned-in. And it’s going to happen quickly. Can you keep up?

The writer is AOL’s Asia managing director Alex Khan.