AOL faces an “uphill battle” in its bid to capture more mobile advertising dollars through its acquisition of mobile ad firm Millennial Media, says a new report from U.S. research firm eMarketer.
The company says catching rivals like Google and Facebook could prove challenging for AOL. The two companies control more than half (52.3%) of the US$15.92 billion mobile ad market, while Millennial Media captures just 0.3% ($101.2 million).
However, the company says this month’s acquisition will help AOL/Millennial Media compete “more effectively” for mobile display dollars.
Analyst Cathy Boyle said the Millennial Media acquisition expands the breadth and depth of AOL’s in-app display inventory, giving advertisers access to greater scale. At the same time, it will gain access to the valuable mobile user profile data that Millennial Media has been amassing for several years, improving its ability to find and target specific mobile audiences.
Google is the “undisputed leader” in total U.S. digital ad revenues, snatching up two of every digital ad dollars (40%), more than three times as many as its closest rival Facebook (13.2%). However, eMarketer predicts Facebook, Twitter and other smaller players will continue to gain share, chipping away nearly 5% from Google’s slice of digital ad revenues between now and 2017.
Facebook in particular will narrow the gap “more dramatically,” growing its share to 16.1% in 2017. The social media giant has made significant inroads in mobile and continues to attract advertisers with its high user engagement on mobile.
Mobile will account for 77% of Facebook’s digital ad revenue this year, growing to 85% by 2017, with Instagram and other mobile video formats driving the growth. The report pegs Instagram’s revenues at $570 million, growing to $2.39 billion – or 28% of total mobile ad revenues – by 2017.
Facebook is also the undisputed leader in digital display, and is expected to generate $7.66 billion this year, a 44.9% increase over 2014. Google – whose display business includes YouTube, Google Display Network and AdSense – ranks third in the display category behind Facebook and Yahoo, with projected revenues of $4.11 billion this year.