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Games Take Center Stage in Mobile Ad Surge

The race for smartphone real estate among gaming apps is emerging as a major driver of mobile ad spending, helping Facebook in particular boost revenue but also raising questions as to whether the growth is sustainable.

Advertisers spent about $18 billion on mobile internet ads in 2013, according to a new report from eMarketer, and that figure is supposed to hit almost $32 billion this year, with about 70% of all the revenue going to Google and Facebook.

It’s not clear exactly what portion of the spending comes from games; Facebook would say only that they’re a “large part” of its mobile ad business. But a look at the financials of London-based King Digital Entertainment, the maker of Candy Crush whose initial public offering is expected this week, shows the growth and scale of the market.

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The once spectacularly popular games Temple Run and Temple Run 2 took off primarily from word of mouth. The company doesn’t spend any money on user acquisition or ads, according to Keith Shepherd, Imangi Studios’ founder.

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Joe Lonsdale
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Mobile spending feeds a virtuous cycle where startups, flush with venture money, buy their way into big growth, which in turn benefits social platforms as well as numerous ad networks.