WPP’s Sorrell: It’s Still Not the Year of Mobile Advertising

March 12, 2017

This guest post was contributed by Andy Plesser, Owner of Beet.TV. 

Despite years of promise, mobile advertising has still not developed into a full-fledged advertiser medium, because inadequate technology is causing advertisers to hold back on spending.

That’s according to the leader of the world’s largest advertising agency holding group, WPP CEO Sir Martin Sorrell.

"It's Still Not The Year Of Mobile Advertising: WPP's Sorrell"

Speaking with Beet.TV in this video interview at Mobile World Congress in Barcelona, which was held February 27-March 2, Sorrell says the famous mobile ad spending gap is still far from being closed. (In Mary Meeker’s “2016 Internet Trends Report,” the Kleiner Perkins Caulfield Byers executive found that the gap between mobile ad spending and mobile usage represents a $22 billion opportunity in the U.S. alone).

“People are spending about a quarter of their time on mobile, and yet it only accounts for around 12 percent of spending,” he says. “That’s out of kilter and it has to change.”

So, why is spending still lagging behind usage? Sorrell blames the technology. “Technology, bandwidth, the devices, the screens are not big enough, not good enough yet,” he says. “There’s a lot of technological development to come.”

Magna Global estimates global mobile ad spend grew by 48 percent in 2016 to hit $80 billion in 2016, representing 45 percent of total digital ad spend and 16 percent of total ad spend. But the group expects this strong growth to continue — rising to 72 percent of digital and 36 percent of the total by 2021.

That is the fastest growth of any ad medium, which is sure to delight Mobile World Congress veterans who long remember predictions of the arrival of “the year of advertising.”

Yet Magna Global also says key growth driver has simply been dollars moving from desktop, a channel now impacted by ad blocking. Sorrell is looking to technological evolution to make mobile advertising a more attractive proposition in its own right, and he implies that India and other nations may be in a position to embrace mobile advertising at a faster rate than in the U.S.

“5G will obviously be important,” he adds. “In India, we’ve seen the explosion of 5G, with (Reliance Jio’s) Mukesh Ambani launching 5G having invested $16 billion without receiving a dollar of revenue. Facebook and Google tell me (about) the utilization rates, the graph looks (vertical) – they’ve never seen any country in the world with such penetration so quickly.”

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Photo by Moyan Brenn