Android Ad Revenue May Top $1.3B in 2012

Yesterday, Piper Jaffray analyst Gene Munster projected that advertising revenue from Android could top $1.3 billion in 2012.

That projection comes from expected growth in two areas: Android users and mobile advertising revenue per users.  In 2010, there were approximately 22 million Android users, and the average ad revenue per user was $5.90 per year. This translated into about $130 million in ad revenue for Android in 2010, which was about 16% of the total mobile advertising market. 

Munster expects the average ad revenue to nearly double to $9.85 per year by 2012. With the increase in mobile usage, this seems very likely. However, the other half of the equation is the number of Android users, and in order to hit Munster’s prediction of $1.3 billion, that number would have to grow by a factor of 6 to 122 million users. Given Android’s growth, this isn’t outside the realm of possibility, but I don’t know if I am as confident in it as Munster.

One of the big reasons for Android’s explosion in the US was the lack of a viable alternative. The iPhone was hampered by AT&T horrible service and lack of coverage, so when Verizon launched its Android campaign, the demand was enormous. With the iPhone finally making its way to Verizon, I expect Android’s growth to continue, but maybe not as fast as it did in the past year. By the end of 2012, I think we will see numbers closer to the 80-90 million user range, which puts Android in the $750 million range.