According to Sunil Gupta (Harvard Business Review, March 2013), mobile ad budgets in the United States are expected to grow from $2.3 Billion in 2012 to $11 Billion in 2016. Why? Mobile devices, such as smartphones and tablets, account for 10% of how media is consumed, yet only 1% of marketing dollars.
Furthermore, mobile apps stand to take a large portion of these growing advertising dollars. First, consumers just plain do not like banner ads on their smartphones. Traditional advertisements disrupt the user’s experience and connections with social media (like Facebook). In addition, less than 20% of time spent on a smartphone is with a browser. Traditional ads tend to load slowly and are typically much more expensive to create than developing a mobile app.
Apps engage consumers by offering entertainment (games) and social value. Apps also connect with consumers by offering convenience. For example, checking into your airline for a flight is easy with a smartphone app and some states now allow proof of insurance via smartphone for routine traffic stops.
Branded apps offering convenience give businesses and advertisers multiple chances to connect with customers. Nike connects with runners through a free app for the Nike+ device to track speed and distance by using a special device inserted into the shoe. Red Bull connects with customers by offering entertaining apps like Red Bull Kart Fighter and Red Bull Air Force.
The average smartphone user has about 40 apps on his or her device. Tablet users have many more.