Brief:

• Mobile surpassed desktop platforms in paid search for the first time with a 48% share of spending in Q2 2018, compared to 44% for desktop and 8% for tablets, according to a study by digital ad platform Kenshoo provided to Mobile Marketer. The adoption of inexpensive mobile shopping ads pushed down cost-per-click (CPC) rates for paid search advertisers by 12% from a year earlier.
• Social media impressions grew in Q2 for the first time in a year, rising 14% from Q2 2017. Instagram spending doubled from a year earlier as the image-sharing app's Stories feature made up 10% of total Q2 Instagram spending, Kenshoo's study shows.
• Kenshoo collected 15 months of performance data from more than 3,000 advertiser and agency accounts among Google, Bing, Baidu, Yahoo, Pinterest, Snapchat, Facebook, Instagram and the Facebook Audience Network. The sample includes more than 500 billion impressions, 14 billion clicks and $6.5 billion in advertiser spending.

Insight:

Kenshoo's ad spending study shows universally favorable trends for mobile platforms, with strong growth in paid search and social media. That growth reflects the migration of audiences to mobile platforms for entertainment, news and information. Zenith last month predicted that mobile advertising will account for 30.5% of global ad expenditure in 2020, up from 19.2% in 2017. Expenditure on mobile advertising will reach $187 billion in 2020, more than twice the $88 billion spent on desktop ads and just $5 billion less than the $192 billion spent on TV advertising. According to these estimates, mobile advertising is set to overtake TV in 2021, continuing the trend of consumers cutting the cord and opting for streaming alternatives like YouTube.

The growth in paid search on mobile platforms would seem to be particularly beneficial for Google, which has a near-monopoly on the mobile search engine market. However, that dominance may open the search giant to greater antitrust scrutiny, particularly in the European Union. Google is currently appealing a 2017 decision by the EU to a fine of about $2.9 billion for allegedly misusing its search engine dominance to favor its services over those of competitors. Last week, the EU again took aim at Google, fining the company about $5 billion for alleged anti-competitive practices in the licensing of its Android operating system. Google is cash-rich, though, and the fines so far haven't worried its shareholders.

The shift in ad budgets comes even as mobile phone shipments are stalling. After slipping 0.3% in 2017, the worldwide smartphone market is expected to shrink this year before returning to growth in 2019, according to the International Data Corporation. The researcher forecast that smartphone sales will slide 0.2% in 2018 to 1.462 billion units from 1.465 billion in 2017 and 1.469 billion in 2016. IDC expects the market to grow about 3% a year from 2019 onward as worldwide shipment volume reaches 1.654 billion in 2022 and a five-year compound annual growth rate (CAGR) of 2.5%. A big driver of future growth will be the adoption of next-generation 5G technology that will drastically speed up download times for mobile devices, making them a bigger threat to cable and landline telecom service.