How Does 5G Impact Mobile Advertising?

In 2020, the long-awaited 5G began to spread across the US. T-Mobile was the first to release 5G, while AT&T and Verizon released their networks in smaller, more targeted areas. The long-term positive impact was never in doubt, with the next wave of cellular connection poised to transform service delivery, decision-making, and much more. According to PwC, 5G will drive $13.2 trillion in global economic value by 2035, while generating more than 22 million jobs.

But, like most new technology, there have been some growing pains. Recently, the U.S. FAA proposed requiring 5G safeguards on planes.

5G holds advertising implications, too, namely in the form of faster loading times, more innovative ad formats, and more robust targeting.

What’s 5G?

5G (fifth-generation cellular wireless network) connects people on mobile devices to faster internet. Unlike 4G (fourth-generation cellular wireless network), which requires cables and infrastructure, 5G uses cloud-based signals to give people instant access to the information and resources they need. The technology is transformative for end-users as well as for mobile advertising.

The Current State of Mobile Advertising

Mobile advertising is a multi-billion dollar industry—and it’s no wonder considering 85% of Americans own a smartphone and around 15% are “smart-phone” only, meaning they don’t have any other device connected to broadband internet in their home. These people rely only on their smartphones to access the internet.

Advertisers know this, which is why mobile ad revenue continues to climb and is expected to reach nearly $400 billion by 2024.

MediaRadar data found that:

• ​Over 20,000 companies bought mobile ads in 2019.
• ​Over 125 companies dedicated at least $1 million in ad dollars to mobile ads.
• ​Top mobile advertisers include TikTok, NBC, and Coca-Cola.

Ad technology and platforms have responded with advancements to make mobile advertising as effective and efficient as possible. In 2021, The Trade Desk (TTD) partnered with Xiaomi to expand advertising opportunities on the open internet with the world’s second-largest smartphone maker.

There’s even an entire category of mobile advertising software.

With the release and adoption of 5G, mobile advertising will continue to pave the way for better ad experiences. But why, exactly, is that the case?

Lower Latency Means Less Lag and More Opportunities

One of the biggest benefits of 5G is lower latency, i.e., how long two devices take to communicate with one another.

Historically, lag has been tied to gaming and website speed, but as consumer expectations around ads have increased, the advertising connection has strengthened.

Consumers won’t wait for anything to load. New 5G networks will reduce latency by 80%, providing consumers with near-instantaneous ad content delivery.

The implications of 5G extend to the ad formats available as well. Advertisers will realize benefits in formats they already know: video, programmatic, and native ads.

“Video ads will even be able to change their storylines in mid-flow in response to a viewer’s responses, making it more customized to consumers’ individual preferences and needs, which in turn will push up engagement rates,” says Martin Salo, chief product officer and co-founder at Realeyes.

They will also be able to create high-quality, innovative video ads in conjunction with other technology, like AI-powered IoT devices—physical objects that are embedded with sensors, software, and other technologies to connect and exchange data with other devices and systems over the internet.

Augmented reality ads will also benefit from 5G. Emodo premiered the company’s first 5G-powered AR campaign. The ad transported mobile users to New York City’s Times Square through AR and allowed them to engage with content from Broadway musicals and plays.

According to Emodo’s study, 70% of respondents shared their desire for more augmented reality ads. Much of that has to do with the immersive experience, but the near-instantaneous load times certainly help.

Emodo also partnered with an audiobook service to create the first 5G programmatically-served mobile audio ad. The ad delivered a real-time experience that was simply impossible via 4G.

5G is ‘Post-smartphone Era’

All the hype around 5G is not necessarily centered on iPhones; the excitement is about the possibility of better-connected devices.

Some have dubbed 5G the ‘post-smartphone’ era, meaning that IoT devices and machines are taking center stage.

By 2030, the number of Internet of Things (IoT) devices worldwide is forecast to almost triple from 9.7 billion in 2020 to more than 29 billion.

These devices will not always be connected to broadband internet. They will connect to each other with machine-to-machine communication.

Julie Coppernoll, VP of global marketing at Intel, said: “I think that is going to change. I think nothing will be ‘mobile’ anymore because everything will be mobile.”

4G could handle what we imagine as “smart” devices now, but the reality is that IoT has just begun. We will see developments in AR/VR, autonomous cars, and smart cities, all of which will have serious advertising implications.

Connected Everything Means Better Targeting

Advertisers already have seemingly limitless consumer data at their fingertips, but the rise of connected devices means higher volume and higher quality data.

They’re not without challenges, though. Advertisers are experiencing a changing data ecosystem with new privacy regulations and Google dropping cookies.

In 2021, Apple announced a new privacy feature requiring all apps to ask permission to track users. The feature, called App Tracking Transparency (ATT), received pushback from Facebook and other ecosystems worried iPhone users would opt out of tracking—and they were right.

A survey conducted from April 2021 to April 2022 found that among those who had already installed the iOS 14.5 update, the opt-in rate for app tracking is around 25%.

This poses a challenge for all advertisers, especially those relying heavily on mobile, including DTC brands.

Not only will this have a massive impact on consumers, but brands will also need to adjust to a whole new way of interacting with consumers or risk getting left behind.

That said, it is too soon to tell exactly what data they will have access to and what technology will best equip them to deliver highly personalized ads.

“To really harness all that new data flying around, it’s crucial to make sure all these various points are connected and used in the optimal way,” says Gavin Stirrat, VP of Partner Services OpenX. “That means the right infrastructure, the right technology partners, and the right kind of privacy measures.”