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A Foolish Take: Mobile Ads Will Overtake TV Ads This Year

By Leo Sun – May 14, 2018 at 12:00PM

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Marketing dollars are flowing from TVs onto smaller screens.

Last year, a Nielsen study found that 18- to 24-year-olds across America spent more time on their smartphones than watching TV. Users across older age groups still watched more TV, but the message was clear: Smartphone usage could eventually overtake TV viewership.

That's why it wasn't surprising when eMarketer recently reported that advertisers would spend more money on mobile ads than TV ads in 2018, and that the gap would widen over the next four years. eMarketer expects this transition to bolster ad prices as demand outstrips supply.

Chart showing percentage of mobile and TV ad spending in the in 2018 and 2022 U.S.

Data source: eMarketer. Chart by author.

That's great news for Alphabet (GOOG -1.16%) (GOOGL -0.92%) subsidiary Google and Facebook (META -1.11%), which hold a near-duopoly in internet ads. Last December, research firm Pivotal estimated that the two companies accounted for 73% of all digital advertising in the U.S., up from 63% in the second quarter of 2015. That growth could hurt smaller digital ad players like Twitter and Snap.

Google's YouTube and Facebook's Watch, a new video platform the social network launched last August, will also likely pull more advertisers away from TV networks. The networks are fighting back with their own mobile apps, but they'll face a tough uphill battle over the next few years.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Leo Sun has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, and TWTR. The Motley Fool has a disclosure policy.

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