There are a lot of questions left to be answered about Facebook’s IPO fiasco, but one thing we know is this: As consumers shift their use of Facebook from PCs to smartphones, investors worry about lower mobile advertising revenues. Is this a temporary situation that will be remedied when usage patterns settle, or do investors have a right to be concerned? Must the advertising industry learn to adapt to a permanently leaner income stream from smartphones?
Let’s start by taking another look at Mary Meeker’s latest Internet Trends presentation from last week’s All Things Digital conference. On slide 17, she projects a $20B opportunity for Mobile Advertising in the US:
When Meeker uses the word “opportunity”, she means “unfulfilled potential”: Mobile Ad Spend in the US alone should be $20B larger than it is. For reference, Google’s latest quarterly revenue was about $10B worldwide.
$20B is a big number, and it got me thinking. How is it possible that the industry’s richest and most sophisticated players are unable to grab such a big pile of money? They have the brains and the computers, they’re aware of the situation…Is there a deeper problem?
A too-easy answer is the market’s age: Mobile advertising is still in its infancy. But that’s an indefensible excuse: The first iPhones shipped in late June 2007, the Smartphone 2.0 era is now five years old. Both Android and iOS are prosperous platforms with bulging App Stores, they sell tens of millions of devices every month, close to half a billion this calendar year. Brand managers, advertising agencies, search engines, social networks, a myriad of vibrant startups keep trying, but mobile advertising barely moves the needle.
We get closer to the heart of the matter when we look at a common thought pattern, an age-old and dangerously misleading algorithm:
The [new thing] is like the [old thing] only [smaller | bigger]
We’ve seen this formula, and its abuse, before. Decades ago, incumbents had to finally admit that minicomputers weren’t simply small mainframes. Manufacturers, vendors, software makers had to adapt to the constraints and benefits of a new, different environment. A semi-generation later, we saw it again: Microcomputers weren’t diminutive minicomputers but truly personal machines that consumers could lift with their arms, minds, and credit cards.
The “Tech-savvy We” should know better by now; We should have learned, but the temptation — and the lazy easiness — of the “X=Y but for the form factor” algorithm continues to derail even Our most “different thinkers”. When the iPad was introduced, a former Apple Director described the offering thus: “It’s just a big iPod Touch” (which proves nothing more than that Steve Jobs didn’t burden his Board of Directors with loads of information).
At the D8 conference in 2010, in front of an iPad-toting audience, a bellowing CEO dismissed Apple’s tablet as just a PC, minus the keyboard and mouse. (And I’ll share the shame: On April 3rd 2010, I looked at my new iPad through PC goggles and lamented the Mac features that were “missing” from my new tablet.)
Now we have advertising on smartphones, and we’ve fallen into a comfortable, predictable rut: “It’s just like Web advertising on the PC, shrunk to fit.” We see the same methods, the same designs, the same business models, wedged onto a smaller screen.
PC advertising has successfully navigated different screen sizes. On a large screen you might see something like this:
Plenty of space for both advertising and content. Even on a smaller screen, the ads are unobtrusive:
But on a smartphone, this is the advertising that’s supposed to entice us:
…and this is the NY Times, one of the better mobile apps.
Mobile ads aren’t merely smaller, they have less expressive power, they don’t seduce…and they’re annoying.
Of course, there’s more to the smartphone misunderstanding than the fairly obvious screen size problem. There’s also a matter of how we use our computing devices.
When we sit down in front of a laptop or desktop screen, our attention is (somewhat) focused and our time is (reasonably) committed. We know where we are and what we’re doing.
With smartphones, we’re on the move, we’re surrounded by people, activities, real-world attractions and diversions. As yet another Mary Meeker presentation suggests, time spent on mobile devices is fragmented:
We’re not paying (a loaded word) the same type of attention as we do on a PC.
Business Insider features an InMobi report on mobile ads, with the following comment [emphasis mine]:
Those ads were served across 6 billion mobile devices. That’s less than $1 per device, per year—a tiny sum. That tells you how far mobile advertising has to go, and how massive it will become in the next five years.
The dollar-per-device statement is a fact, the assumption of “massive” growth is wishful thinking.
When I hear that there’s a mother lode of advertising revenue in location-based ads that are pushed to my mobile phone as I stroll down Main Street (with my permission…I hope), ads that offer succulent deals in the stores and restaurants I’m about to pass, I wonder: Do we want barkers on our devices? Is this the game changer for mobile advertising, yet another kind of spam? LBA may be a hot topic among marketers but the public is dubious, as this MobileMarketer article soberly explains:
The reality is that this scares consumers, rather than excites them. Mobile marketers need to realize that what gets them and their peers fired up does not necessarily move consumers in the same way.
And this…
According to [Rip Gerber, CEO of Locaid Technologies, San Francisco], marketers create their own privacy obstacles when they forget relationship, relevance and preferences in favor of short-sighted metrics.
If the industry hasn’t cracked the mobile advertising code after five years of energetic and skillful work it’s because there is no code to crack. Together, the small screen, the different attention modes, the growing concerns about privacy create an insurmountable obstacle.
The “$20B Opportunity” is a mirage.
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41 Comments
Great article, JLG!
On could also mention the impact of Apps on mobile. Custom interfaces designed to complete the job at hand – find a plane ticket, book the train, buy an iPod, etc. – these are all leading to less blind ‘surfing’ on the net to find ‘something’. I now have a large selection of apps that I use to find the things i need – I am not using google or surfing blind!
Ads and most infos must be behind a filter:
* entertaining.
* as a shadow. They are here but you need to do something for them to appear.
* flagable as viewed, thus not presented another time.
Or the other way around: you get a discount but be bombarded.
Sometimes I think you’re in the “how many ways can one say that Apple wins and everyone else loses club” sadly. You’re way too erudite for that. Contextual advertising is very valuable and will be so in mobile. Ad placement is not limited solely to filling out empty spaces on desktop web pages. Mobile web ads will be embedded in content, presented interstitially, audibly and probably many other very effective ways. It’s not fair to say, “hey clever people, you’ve had 5 years, now where’s the mobile ad industry?”.
There were at least three significant impediments: 1) Steve Jobs pushing apps and not advertising – the evolution of the mobile web and Apple’s greedy app store antics have effectively pushed the mobile web ahead. 2) Bigger, faster phones and faster networks help a lot, even the iPhone will have 4G some day 3) Smartphones are only now becoming ubiquitous.
Betting against a viable mobile ad business at this stage seems at least pre-mature if not dead wrong.
@ Edwin: You’re right, my opinion of mobile advertising might very well turn to be dead wrong. Many Monday Notes are nothing but essays, as in the word’s etymology, trying out an idea.
As for the Apple reference, I don’t see how what I say today about the mobile advertising business model applies to Apple. As for club any club membership, take a look at Monday Notes over the years and see how critical I am from time to time: MobileMe, several times, UI brain flatulence, App Store shortcomings.
I’d prefer you criticize the points I make or seem to make, rather than use ad hominem arguments that should have no place here.
I agree with Gassée. Pixel for pixel, the mobile screen real-estate is more valuable then the desktop, and from what I observe and hear, users do not want their precious limited mobile screen space to be polluted by Ads. Some of us actually prefer to pay for Apps just to make sure they remain ad free.
Precisely why I’m betting against the Android ad supported platform model and the FaceBook stock remaining at >60x PE ratio.
JLG, long time since we barged into your office a few years ago. Have you given any thought to the fact that over 50% of F1000 and others are building apps, which are content heavy and ad-neutral. Maybe the “ad format” of the mobile is a engaging app, not an “ad”.
For long we have complained that ads are a) intrusive b) interruption based and c) annoying.
On the other hand, apps have *mostly* been a) engaging b) useful and c) informative.
The “opportunity” might be 1/10th of the $20B to develop apps that increase customer purchase and conversions, not just interrupt them.
I am also trying out an idea.
Great article and a wonderful pairing with your partner’s.
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Advertising is pretty deep in the American culture but I think it a BIG mistake to take for granted that it belongs on every conceivable interface to us. Lady Bird Johnson’s cleanup of our highways, for example, enriched the experience of drivers AND made us safer.
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I note that ads were the magic key to successful radio (and then TV) broadcasting. Why? The medium did not allow for personalized preferences of the sort that is dead easy (at least for a few successful pay walled sites) on the Internet.
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Today Americans “buy” $720/household-year of TV ads, paid in higher-priced Coke, Budweiser and Toyotas, so we can watch American Idol, Glee and whatnot. It’s a bad bargain: it burns up time that’s worth many times that to the median earner. With the Internet, especially with very purposeful apps, we pay quite a bit in hard cash; why should we be ball-and-chain tethered to such lousy, outdated economic models?
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As your sources note but then deny, we don’t need that model. It’s spectacularly ill-suited to mobile. The failure of mobile-based ad monetization and the shift to other ways for producers to communicate with consumers is the commercial news of the decade.
@JLG I retract and apologize for the Apple club remark but as a part of Apple’s thermonuke the Google initiative, a stillborn mobile ad business is rather sweet.
@ Mukund Mohan: Thanks for the memories
At the risk of riling @ Edwin, to your point about app/ads, see this David Smith post about iAd: http://j.mp/Kmslfq
@ Edwin: Very gentlemanly of yours.
As you probably know, I might have a little personal bias towards Android as several of my ex-Be colleagues work at/on Android
@ Walt French: Thanks. Interesting point about the $720 we “pay” through Coke’s and others’ marketing spent in TV ads so we can watch “free” TV.
See also Dish Network incorporating autoskippig of ads in their set-top boxes — and getting sued for it. Customers love the feature. Perhaps, someday, we’ll see TV channels and events as apps, click and pay
I’m really curious to see how Google TV will evolve in that regard.
RE: If the industry hasn’t cracked the mobile advertising code after five years of energetic and skillful work it’s because there is no code to crack. Together, the small screen, the different attention modes, the growing concerns about privacy create an insurmountable obstacle. <<
Have to disagree on this one.
We've built two browsers that allow the user complete control over their privacy, coupled with the ability to allow content providers to tailor much higher levels of personalization based on the users desires AND the exact device capabilities. All of this is available in real time, and we've even built in real time browser auditing (another first that helps verify your privacy).
Privacy is the really big issue. There's no silver bullet but there is a way to allow the user to control the collection, flow and use of his/her data. The reason no one has done it yet is because to solve the problem you have to get inside the browser to add data, and extend the HTTP protocol to support those changes. (BTW you have to do all of this without impacting the content provider)
Not the easiest thing in the world to do – but you can read how its done by searching on US Pat. 7,873,710 and 8,156,206
JLG thanks for this. Fascinating topic! (side note: didn’t you think that MM’s “re-imagination” was her way of saying “sorry, I lack imagination this year”)
With regards to your essay, I agree that the 20bn figure is wishful thinking and that banner ads (and the likes) don’t cut it on Mobile.
Now imagine (sic), you define “ads” as the mechanism(s) through which a product/service provider gets users to do something for a fee: the “mobile” ad opportunity is indeed significant.
$20bn assumes money follows time spent. This is true “directionally” (pardon my french) medium by medium : more time on a medium next year means more money should be spent there next year. But beyond, this is grossly inaccurate.
What is appropriate is to look at consumer decisions (those that have monetary implications and where several options are available): how are they made (e.g. impulse vs. long researched), and what mediums are used (/could be used) “as we make them”. From that perspective, Mobile is huge (potentially) because it is with you all the time. Particularly for “end of the funnel” actions. Think about in-store advertising. Think about getting you to go to the next block to get your gas for 5c cheaper right as you get to that well located but pricey gas station.
Granted this won’t happen as “banner ads”… but rather through dedicated apps where you will have explicitly granted permission (these types of deals will most likely be the purpose of the app). Granted this has been around for a while but has not materialized (yet). I think it is an execution problem.
Now who is in a position to benefit from that opportunity?
On desktops, it is mostly online service providers. Carriers, device makers, OS/browser makers have a hard time collecting a meaningful share of the ad pie (except as they play in the online service provider category).
On Mobile devices, Device makers and Carriers have much more power. They should collect a larger share of the pie.
Add to that the fact that the cost of entry into the device maker category can be much lower (for one thing the hardware is cheaper, and for all the talk abt convergence, you may carry several devices, so a new entrant doesn’t need to beat the competition everywhere as Kindle illustrates). So I would not be surprised to see brands who can benefit from orienting a large share of your discretionary budget to join the party (cf. your previous fake story about Walmart – I agree they should not do it themselves but I bet there are plenty of OEMs happy to partner).
Advertising on the web and on tv is mostly an annoyance we put up with in order to benefit for whatever subsidy it pays for us: watching a show open tv or reading a news article online at no cost. It’s an annoyance nonetheless and for the most part we’d rather it wasn’t there.
After paying for HBO, Netflix, etc. I can say that I prefer paying in order to remove the annoyance. On mobile, I often pay one or two bucks for the ad free version of whatever app I want to use.
Perhaps more people will decide they’d rather not have the distraction and the annoyance and will be willing to pay for it. Apple benefits because they get paid directly and up front. App developers too. Companies that count on advertisements to get a return on their investment and profit afterwards (Google) do not.
Time will tell.
I would seriously consider living with more invasive ads if they paid my phone bill. The wireless carriers are all trying to figure out ways to harvest me for more cash, but my primary interest is in finding ways to reduce my bill – dropping SMS, minimum voice, even reduced data. Hell, I can rarely connect to data (even with 4 bars) on AT&T anyway.
The Mobile Opportunity is a mirage only if we think mobile as “The [new thing] is like the [old thing] only [smaller | bigger]”
Per Edwin:
“Ad placement is not limited solely to filling out empty spaces … Mobile web ads will be embedded in content, presented interstitially, audibly and probably many other very effective ways.”
*That’s* the always nut to crack: how do we use the medium and its specific capabilities to deliver something of value to customers, advertisers and publishers. It’ll be based on geolocation, proximity (to stores, friends, deals), calendars and other contexts. Attention and privacy concerns will be addressed to varying degrees of success. A few will get it right, then fewer will get it really right. It might not be $20BN, but mobile advertising’s no mirage.
Let’s try a back of the envelope business plan.
Let’s assume, to get rounded figures, population in the US at 300 millions, a 100% wireless penetration for phones (about right today), and a future smartphone penetration of 70% in the customer base. We get to a wireless base of potential ad recipients of 210 millions.
To achieve MM’s $bn 20, all players have to generate 100 USD/smartphone/year, quite far indeed from today’s results with traditional advertising business models…
Now let me ask all of you… how often do you touch the screen of your smartphone every day to read email, browse, engage in the various tasks described by MM and JLG… ???
Let’s take 7 times (when you take breakfast, when you start working, when you finish working, twice while working, when you arrive home, before going to bed..)…
If I now were to sell ONLY ONE SPACE and ONE TYPE of contact : our waiting screen (which runs when you are not using your smartphone but has to be activated to apps your way to happiness => ONE TRACEABLE CLICK)
Over one year everyone would click 7*365 = 2 500 times (rounded again)..
The “provider” of my waiting screen could thus generate 100 USD/year if it is able to sell $ 0.04 / contact-screen activation : 40 USD/CPM. Infeasible ? I leave it to the experts…
The point of this (extremely simplified) model is to say that getting close to $ 20bn probably requires a fresh look/innovation at advertising business models..
1) looking at time spent by customers…outside current “potential advertising time” i.e looking at TV, using an app….
.. Hence my proposal of “waiting screen”..running 1356 mn/day as opposed to 84 mn/day (using slide 19′s figures)
2) Clearly separating “advertising time” and “content time” on smartphones
relieving me from the pop ups which I hate, or the small banners I will not look at…
delivering a better experience on apps, purer, simpler, quicker (as I do not retrieve data from servers)
3) Transforming Ads into an app/a channel…
beamed to me, based on the brands I want to follow, my declared interests.
like a You Tube Channel… with serious and “surprising videos”.
downloaded when the wireless network is not loaded.
We are all talking about billions of dollars to be made with all thoese gizmos, does the regular “Joe” in the street REALLY NEED all that to live?
Might be a maverick thought but still a good question!
I’ve been saying this for years: Sulzberger once said that the web turns print dollars into digital dimes. My worry is that mobile turns those dimes into pennies.
There is a second dimension to this, I think. None of the big new business successes of the past ~15 years relied on advertising themselves in order to attain their success. Facebook or Google did not need huge marketing campaigns in order to get people to use Facebook or Google. Marketing is losing its value – it’s not mobile advertising that has lots of room to grow, it is all the other advertising that has lots of room to fall.
This is spot on. The web model of advertising doesnt stack up on mobile at all. The worry is for companies that are valued purely on their ads revenue is how are they to maintain ad revenue income as more of us use mobiles. In many ways, mobile could kill off free services we have come to expect from companies that rely on advert income….
I wrote this post just a few weeks ago looking at the worry of mobile for small and large companies that rely on revenue from ads….
http://andrewonedegree.wordpress.com/2012/05/31/will-mobile-kill-free-services/
At the end of the day, on our mobile we dont want ads, they simply get in the way. The ads model on mobiles currently dosent exist and im not sure it ever really will to the same extent we have online or on TV etc…..
J-L, Thanks for pointing to the David Smith post about iAd: http://j.mp/Kmslfq interesting
@lens: riddle me this: how can ads pay for something as expensive as cell service when they barely cover the cost of the time & data they consume? Why would you expect an ultra-cheapskate service to have higher quality than the premium one?
Not saying it’s impossible, but the incentives all seem to run the wrong way.
@ Walt
Ad revenues might not cover subscriptions, traffic, options, premium service..
but one could imagine a (Facebook ?) phone :
=> entirely subsidized by Advertising revenues
=> in exchange for open access to customer usage data, ad inserts on screens, etc…
=> If I look at US acquisition/retention figures one would have to find a way to generate 300 USD over the lifetime of a phone (18-24 months), even more challenging than 100 USD but why not for some segments
@Jacques Demaël: I’m under the impression that mobile ads generate somewhere around 0.1¢ per impression. Let’s be generous and triple that for Facebook since they know you so superbly.
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Then the $300 phone needs to display 100,000 ads to break even—136 per day. One new ad per minute for the two hours a day you might be on the phone. That carpet-bombing level can’t possibly be acceptable to an individual.
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Nor can it be effective advertising economics: no matter how well Facebook has me pegged, showing me dozens of ads for the San Francisco Ballet (as the NYT & others who use Google recently did), can’t possibly be dozens of times as effective as showing me one. (All the more since my Google searches were for cast sheets hard to find on the site, since we were already subscribers.) Meanwhile, Delta airlines, my favorite restaurants, farmers’ market shops, favorite coffee shop, haircutter, etc all have to be getting some incremental income out of me from this plague of ads.
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You already can often see Google’s PC-formatted searches desperately overwhelmed by ads that are pretty well guaranteed not to work on the tiny screen. Sure seems that in a year or two, when Facebook needs to show revenues, that the jig will be up. I think we’ve seen Peak Ad.
I’ve been working with ZEDO for a about a year now, and that company is focused on mobile advertising formats that can raise CPMs.
First of all, it is focusing on tablets for mobile monetization, for obvious reasons. And it is leaving the notion of the page behind, and realizing we’re dealing with screens: the latest ad formats are on-screen video that doesn’
t take a viewer off the original site. These ads, which “greet” the scrolling reader when she is present, can then show full screen video when clicked. So far, our testing publishers are selling them direct at $20 CPM.
I think the secret to mobile advertising is video. You’d be surprised how many people watch video on smart phones. Especially if the creative is good. That has to happen as well. There hasn’t been much creativity in online mobile advertising yet. As usual, it will be story that wins the day — now that high impact mobile video formats are possible.
@ Walt
For sure at 0.1 or 0.4 cents it cannot fly.. The traditional model cannot be stretched
If Francine is right one could get 2 cents/ video if i understand the quote.
Assuming this price is sustainable one would need to view 15 videos a day… 8 mn..of ad..
That may work if video viewing keeps increasing to TV level.. (1 hour / day with 8mn of ad breaks) hard to imagine currently on smartphones but might be reached on tablets.. Or if we have an extremely entertaining Channel.
I probably circle back to my earlier point..
To generate huge amount ads must become apps/channels and delivered in a very innovative approach or
Problem is unbreakable as Jean Louis concluded
@Jacques, I think you’re doing a fine job of proving JLG’s point about the impossibility of ads.
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Watching a 30 second ad in the midst of using turn-by-turn driving instructions? It’d be outlawed if somebody was so stupid to try. Gotta wait 30 seconds to check your friend’s phone number, or send a 15-second tweet? Not.
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People are going to pay for what they use (one way or another; ideally in the currency that’s least valuable to them as a ratio of its value to the service provider). Intrusive ads, by definition, aren’t going to work well on that measure. Is there another answer besides simple fee-for-service? Beats me.
JLG,
Nice article, thank you! Its about time someone challenged the Queen’s utopian view! Let us not forget Queen Mary [1] is employed by one of the largest VC firms on the planet, where she works alongside Nobelprisen / Chicago Climate Exchange carbon trading fail [2] Al Gore (who just so happens to also be an Apple BOD member), both of whom kowtow to Emperor Doerr. All together, have a fiduciary duty to those whose money they “invest”. Thus, naturally Queen Mary is going to talk up the alleged $20B mobile advertising “opportunity”. Funny thing is, I doubt the Queen nor her old dot com cohort (the nervous, neurotic and dethroned King Henry Blodget [3]) have ever written a line of software code in their life or used a solder gun on a circuit board, so they just don’t possess the ability to heuristically grok things, they don’t understand gestalt in this context, and they lack the ability to develop real real insight, unlike you and a few others like the late Steve Jobs. Net result: all these people really do is talk [4] and then cast their bets speculatively. Queen Mary’s slides also help create a helpful diversion to the Ellen Pao case [5]. So, JLG, keep up the good work and keep the competing VCs, former Kings and Queens, all on their toes
[1] http://money.cnn.com/magazines/business2/business2_archive/2004/06/01/370466/index.htm
[2] http://wattsupwiththat.com/2010/11/08/public-carbon-trading-dead-in-the-usa/
[3] http://gawker.com/5490424/bloomberg-crowns-henry-blodget-king-of-the-blogosphere
[4] http://finance.yahoo.com/blogs/daily-ticker/apple-launches-more-great-products-needs-change-attitude-170441036.html
[5] http://techcrunch.com/2012/06/05/ellen-pao-quora-speaks-still-at-kleiner-perkins-quora/
Jean-Louis,
A great article and very timely too.
Isn’t it time that we all woke up from the blizzard of interruptions that ads have become in all our lives. Compare the levels of immersion in these examples:
Reading a book v reading an ad-filled magazine or web page.
Watching TV on the BBC as opposed to (say) any commercial US TV channel which shatters the continuity and flow of any entertainment.
Walking down a street free of billboards v a typical street in most Western cities.
etc. etc.
Then there is the inescapable truth that the cost of everything we buy is about 20-50% higher than it should be because of the built-in cost of advertising costs. Why do so few people realise that ad-makers are modern-day pickpockets. They steal from you but you never realise it……until you step back from their paradigm and think about it. When retailers get desperate, they let their (paradigm-sustainng) guard down. They make 3-for-2 or BOGOF offers that should tell any sentient being that if you buy one they will give you another one free, it can only mean that they were more than double-charging for that item in the first place – because even with that offer, they are still making a good profit.
Most people seem to be suggestible dweebs who have been taught, by the media, not to think too hard, or at all. What the mobile consumption phenomena may be able to do is to gradually wean everyone off this false construct that is the world of want-creation, advertising and treating the consumer as coerced slaves to the over-priced consumption model.
Your colleague Frederic, for example, spends a huge part of his blog output bemoaning the shredding of ad revenues in today’s publishing market. But really, in time, who except the publishers will care. They have lost control of the channels for disseminating information and entertainment. The Internet has given all of us choices that are too good and too disparate to be under easy control by those who would like us to remain docile and obedient consumers. Yes, there is a lot of dross out there, but I believe that the trend will be that the quality of the cottage-industry and solo publishers on the Web will gradually rise. With their rise may come the demise of managed and controlling advertising influences. We may find our way back to a model where ads are fewer, more targeted like a sniper’s bullet and the days of the shrill and intrusive presence of blunderbuss advertising are a thing of the past.
Thank you for a fine article and for being (perhaps (I hope)) the catalyst that sparks a larger, perhaps even global awareness and discussion of the curse of the ad industry.
Chandra Coomaraswamy
Hi JLG,
Is Silicon Valley really just an old boys club? What do you make of the Ellen Pao situation? You should write an article about it. Maybe there will be Kleiner Perkins iOS Soap Opera app with themes like “Al Gore fails on carbon trading, divorces Tipper, buys up Nick Cage’s SoCal mansion, and has a fling with Ellen”
I have to agree with Edwin’s first comment. I also think we are just beginning to see the real potential of the mobile ad market. Like I said in another comment on the Pro (Advertising) Choice article, I think the focus will move now from the overflowed web market to the mobile one. There are already companies specializing in mobile and app advertising (take madvertise, for example) and although there are already many competitors, tablets and smartphone are just beginning to spread among customers. The next couple of years will mark a defining moment, in my opinion.
over 50% of consumers have a smartphone, this is only growing, as is the technology/ speed of the devices that will allow for more engaging experiences with consumers. also, see morgan stanley’s research on tablet growth… tablets = bigger screen which seems to be an important factor for you. Plus consumers are using both devices for much of what they used to use the pc for. this is the decade of mobile, obstacles will be hurdles that brands will jump or lose market share
you say “Mobile ads aren’t merely smaller, they have less expressive power, they don’t seduce…and they’re annoying.”
quite a subjective comment… if the ads are targeted, they’re never annoying, no matter how big or small. are tv ads not annoying? reach and frequency are antiquated metrics, yet TV spend is still healthy… why?
with all due respect sir, you’re not a demo most brands covet, well maybe a few small ones. (subjective comment from me now) this coming from someone that is no longer in the most coveted demo either.
you say “Together, the small screen, the different attention modes, the growing concerns about privacy create an insurmountable obstacle.”
i say, want to make a bet that the obstacles are in fact surmountable?
full disclosure, i am in sales, but i’d happily debate this topic with you anytime sir
Brad, let’s do a bit more math per Daniel:
.
The US median income is something like $45,000/year and a full-time person works ~2000 hours per year. With a SWAG for tax, that’s better than 25¢/minute of after-tax income that an incremental minute of work generates: a person could hire himself to his current employer and get a few more pennies. If the advertiser delivers something that’s worth MORE than 25¢ per minute, this median worker should spend the minute(s) watching the ads.
.
But the content people don’t get anywhere close to 25¢ for the minute+ of delay that they impose on you to watch the Honda video. Nor does Google pay the NYT 25¢ for every minute of delay imposed on you to get distracted by the news-hiding banners, nor even the seconds it takes to sort thru the visual clutter. Maybe there’s an order of magnitude problem that, as JLG asserts and nobody has refuted, has yet to be cracked.
.
If it’s bad for the median user, it’s two to twenty times worse for the demographics of heavy users. We would be oh-so-much better off buying the news, movies, books and social-contact tools we favor, versus the volume of ads we’ll need crammed down into our eyeballs at the miserable CPMs of today.
.
Every problem is an opportunity, eh? Maybe better ads are the answer, although I think Do Not Track will dismantle those hopes. And for the life of me, I can’t understand why so many people want ads, which are inherently inefficient, to succeed. Let’s see some reason not just for how they can (to which the discussion here is extremely incomplete) but also how our economics are better off with them.
@ All: Thanks for all the comments, quality and quantity. My day job prevented from participating as much as I should have — but I thoroughly enjoyed reading the comment stream.
hi!,I like your writing so a lot! proportion we keep in touch extra approximately your post on AOL? I need a specialist on this area to solve my problem. May be that’s you! Looking ahead to see you.
JLG and All, thanks for a rich, mind-expanding thread on the questionable practice we call “mobile advertising” today. Here’s a disruptive thought that a couple of you, notably @steve_mcnally, touched on:
Realize that ads are software. Display adverts have a “leisure time” connotation that’s an anathema to mobile. But what if firms wanted to increase trust with defined users? The way you do that is help people get done what’s important to them. Software.
That means you do use cases and introduce information and functionality that adds value to users’ workstreams. *That* is adding value. Stop selling. Start serving. In case this is of interest, more detail here: http://rollyson.net/mobile-advertising-is-flawed/
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Hi I came across your piece on Internet add spend , I have a solution to the $20 billion dollar hole .
I would love to discuss with you if you have time .
I have actually been working on a solution for almost 3 years . It’s now ready
Brian
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111 Trackbacks
[...] is uitdagend. En legt een vinger op de zere plek. Opent een doos van Pandora. De schrijvers nemen de mobiele advertentiemarkt onder de loep en komen tot de conclusie dat het een luchtspiegeling is, een Fata Morgana. De mobiele [...]
[...] Last night Jean-Louis Gassée wrote of the challenges facing mobile monetization in the Monday Note. We agree that a truly engaging mobile ad experience has yet to be created, but [...]
[...] be solved over the next few years, it could make a lot of advertising supported businesses basically unviable on mobile platforms. Even companies like Google and Facebook are vexed by this [...]
[...] be solved over the next few years, it could make a lot of advertising supported businesses basically unviable on mobile platforms. Even companies like Google and Facebook are vexed by this [...]
[...] can’t be solved over the next few years, it could make a lot of advertising supported businesses basically unviable on mobile platforms. Even companies like Google and Facebook are vexed by this [...]
[...] be solved over the next few years, it could make a lot of advertising supported businesses basically unviable on mobile platforms. Even companies like Google and Facebook are vexed by this [...]
[...] be solved over the next few years, it could make a lot of advertising supported businesses basically unviable on mobile platforms. Even companies like Google and Facebook are vexed by this [...]
[...] be solved over the next few years, it could make a lot of advertising supported businesses basically unviable on mobile platforms. Even companies like Google and Facebook are vexed by this [...]
[...] can’t be solved over the next few years, it could make a lot of advertising supported businesses basically unviable on mobile platforms. Even companies like Google and Facebook are vexed by this [...]
[...] can’t be solved over the next few years, it could make a lot of advertising supported businesses basically nonviable on mobile platforms. Even companies like Google and Facebook are vexed by this [...]
[...] Advertising Revolution Has Arrived, but, Jean-Louis Gassee recently called mobile advertising the $20B opportunity mirage. Who’s [...]
[...] Gassée does a great job of distilling this buzz-inducing vapor into a hard shot of truth in a Monday Note column on mobile advertising’s missed opportunity. Gassée suggests that it’s a matter of the people creating space for ads and selling that space [...]
[...] —Mobile Advertising: The $20B Opportunity Mirage Share this:TwitterFacebookLike this:LikeBe the first to like this post. This entry was posted in Analytics, Start Up, technology. Bookmark the permalink. ← Amazon’s markup of digital delivery to indie authors is ~129,000% [...]
[...] Gassée does a great job of distilling this buzz-inducing vapor into a hard shot of truth in a Monday Note column on mobile advertising’s missed opportunity. Gassée suggests that it’s a matter of the people creating space for ads and selling that space [...]
[...] Apple executive Jean-Louis Gassée warns that we might be falling into what he called “an age-old and dangerously misleading [...]
[...] Tech guru Jean-Louis Gasse recently published an article describing the massive projections for the mobile ad market as a “mirage.” [...]
[...] Tech guru Jean-Louis Gasse recently published an article describing the massive projections for the mobile ad market as a “mirage.” [...]
[...] news because there are concerns that monetization on mobile platforms (particularly through other business models like advertising) may never match what is possible on the desktop web. However, the counter-example to this argument usually involves Japanese companies like DeNA or [...]
[...] news because there are concerns that monetization on mobile platforms (particularly through other business models like advertising) may never match what is possible on the desktop web. However, the counter-example to this argument usually involves Japanese companies like DeNA or [...]
[...] news because there are concerns that monetization on mobile platforms (particularly through other business models like advertising) may never match what is possible on the desktop web. However, the counter-example to this argument usually involves Japanese companies like DeNA or [...]
[...] news because there are concerns that monetization on mobile platforms (particularly through other business models like advertising) may never match what is possible on the desktop web. However, the counter-example to this argument usually involves Japanese companies like DeNA or [...]
[...] news because there are concerns that monetization on mobile platforms (particularly through other business models like advertising) may never match what is possible on the desktop web. However, the counter-example to this argument usually involves Japanese companies like DeNA or [...]
[...] news because there are concerns that monetization on mobile platforms (particularly through other business models like advertising) may never match what is possible on the desktop web. However, the counter-example to this argument usually involves Japanese companies like DeNA or [...]
[...] news because there are concerns that monetization on mobile platforms (particularly through other business models like advertising) may never match what is possible on the desktop web. However, the counter-example to this argument usually involves Japanese companies like DeNA or [...]
[...] Tech guru Jean-Louis Gasse recently published an article describing the massive projections for the mobile ad market as a “mirage.” [...]
[...] news because there are concerns that monetization on mobile platforms (particularly through other business models like advertising) may never match what is possible on the desktop web. However, the counter-example to this argument usually involves Japanese companies like DeNA or [...]
[...] earnest news given there are concerns that monetization on mobile platforms (particularly by other business models like advertising) might never compare what is probable on a desktop web. However, a counter-example to this evidence customarily involves Japanese companies like DeNA or [...]
[...] news because there are concerns that monetization on mobile platforms (particularly through other business models like advertising) may never match what is possible on the desktop web. However, the counter-example to this argument usually involves Japanese companies like DeNA or [...]
[...] news because there are concerns that monetization on mobile platforms (particularly through other business models like advertising) may never match what is possible on the desktop web. However, the counter-example to this argument usually involves Japanese companies like DeNA or [...]
[...] of course. It could be that advertising is simply inimical to the smartphone experience. In a great post at Monday Note, investor Jean-Louis Gassée explores this hypothetical and comes away convinced. The screens are [...]
[...] Jun 14 Earlier this week I came across an article from Jean-Louis Gassée titled, “Mobile Advertising: The $20B Opportunity Mirage”. In it, Gassée argues that while the projections for mobile advertising revenue continue to [...]
[...] you guys know that I love the skeptical economics. Well, this article is making my day. Even though I read it like 2 days ago. That’s how good it [...]
[...] Mobile advertising is also broken because neither direct response advertising nor branded advertising have truly scaled. When the internet world collapsed in 2001, the internet economy got back on its feet because; as it turns out, the web is a great place to advertise when you have something to sell. It all started with GoTo and scaled with Google. Despite the economic down turn, e-commerce companies and lead gen companies went head long into search and even display advertising to help create a “pricing” floor for most web based advertising inventory. Mobile, because of the difficulties of entering contact information and credit card information, simply haven’t attracted a significant number of direct response advertisers that are looking for direct ROI on their advertising spend. Because of the lack of a pricing floor, most remnant and network driven mobile inventory CPM’s has cratered in the last 18 month (plus the explosion of mobile usage also created a glut of inventory.) [...]
[...] Bookmarked Mobile Advertising: The $20B Opportunity Mirage | Monday Note [...]
[...] the towel on mobile advertising, lead by a provocative little piece from Jean-Louis Gassée titled, “Mobile Advertising: The $20B Opportunity Mirage”. While Gassée’s raised some valid points, we aren’t quite sold, and we decided to [...]
[...] della tecnologia, ha illustrato i dettagli di questa “rivoluzione mancata” in un suo recente articolo: i dispositivi mobili (Gassée si riferisce soprattutto ai cellulari) hanno schermi diversi da [...]
[...] Gassée does a great job of distilling this buzz-inducing vapor into a hard shot of truth in a Monday Note column on mobile advertising’s missed opportunity. Gassée suggests that it’s a matter of the people creating space for ads and selling that space [...]
[...] Why the big discrepancy? Part of it is the simple fact that some advertisers haven’t fully caught on to the mobile trend, but there’s a much bigger, more fundamental problem here, and it’s that there’s not much real estate on a smartphone screen. When you’re painting on such a small canvas, there’s a much bigger chance that advertising will annoy the end user. [...]
[...] desktop users in 2014. So why hasn’t the mobile advertising problem been solved? In fact, why do some tech pundits think that mobile advertising revenues will NEVER materialize, and are only “a [...]
[...] widespread concerns that mobile advertising may never work as well as ads served to people’s desktop and laptop computers, several companies are [...]
[...] * Glass could finally provide a way to measure the impact of online ads on in-store sales. One of the big issues in mobile advertising today is that people often search on a product, even click on an ad for it, then see they can buy it in a nearby physical store. Problem is, marketers have no way to know that the ad prompted that in-store sale–so they’re not as willing to pay for mobile ads yet and Google, Facebook, and other online sites and services can’t charge as much and, some believe, never will be able to. [...]
[...] that mobile advertising will never amount to much have investors worries about even relatively strong companies such as Google and Facebook. And [...]
[...] that mobile advertising will never amount to much have investors worries about even relatively strong companies such as Google and Facebook. And [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] last couple of quarters raised questions about lower prices on its mobile ads. Some folks question whether mobile ads will ever really work [...]
[...] Advertising History – From 2.5 Pound “Brick” to Multi-Billion Dollar Industry A recent blog post from an investor named Jean-Louis Gassée raised some provocative questions about the future of mobile advertising, and suggested that mobile [...]
[...] Mobile advertising numbers remain relatively teeny — and some claim they’ll stay that way. [...]
[...] Mobile advertising numbers remain relatively teeny — and some claim they’ll stay that way. [...]
[...] Mobile advertising numbers remain relatively teeny — and some claim they’ll stay that way. [...]
[...] Mobile advertising numbers remain relatively teeny — and some claim they’ll stay that way. [...]
[...] tens of billions of dollars potential have however been questioned repeatedly due to its slow growth in actual revenue. While part of this underwhelming performance is simply due to the fact that the market is still [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook‘s stock price, sitting at half its IPO level partly [...]
[...] that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook’s stock price, sitting at half its IPO level [...]
[...] uncertainty builds over whether advertising on mobile devices will work anything like their desktop Web [...]
[...] As uncertainty builds over whether advertising on mobile devices will work anything like their desktop Web counterparts, YouTube today tossed out its bet that they will. In a blog post, Google’s video service said it’s now launching its most successful ad format, skippable ads called TrueView that it has offered since late 2010, on mobile devices. [...]
[...] second angle referenced a brilliant post by Jean-Louis Gassée, (the founder of Be, the forefather of Palm) who clearly calls out the difference between [...]
[...] — it is nosediving on the web and it failed on mobile (read JLG’s previous column Mobile Advertising: The $20 billion Opportunity Mirage). Readers come, and often go, as many digital publications are unable to retain them beyond a few [...]
[...] promise – it is nosediving on the web and it failed on mobile (read JLG’s previous column Mobile Advertising: The $20bn Opportunity Mirage). Readers come, and often go, as many digital publications are unable to retain them beyond a few [...]
[...] promise – it is nosediving on the web and it failed on mobile (read JLG’s previous column Mobile Advertising: The $20bn Opportunity Mirage). Readers come, and often go, as many digital publications are unable to retain them beyond a few [...]
[...] promise – it is nosediving on the web and it failed on mobile (read JLG’s previous column Mobile Advertising: The $20bn Opportunity Mirage). Readers come, and often go, as many digital publications are unable to retain them beyond a few [...]
[...] promise – it is nosediving on the web and it failed on mobile (read JLG’s previous column Mobile Advertising: The $20bn Opportunity Mirage). Readers come, and often go, as many digital publications are unable to retain them beyond a few [...]
[...] – it is nosediving on a web and it unsuccessful on mobile (read JLG’s prior mainstay Mobile Advertising: The $20bn Opportunity Mirage). Readers come, and mostly go, as many digital publications are incompetent to keep them over a few [...]
[...] – it is nosediving on a web and it unsuccessful on mobile (read JLG’s prior mainstay Mobile Advertising: The $20bn Opportunity Mirage). Readers come, and mostly go, as many digital publications are incompetent to keep them over a few [...]
[...] open to a challenge from a company that really gets mobile.Chunka’s second angle referenced a brilliant post by Jean-Louis Gassée, (the founder of Be, the forefather of Palm) who clearly calls out the difference between [...]
[...] attention modes, the growing concerns about privacy create an insurmountable obstacle,” said Gassee in a note this summer. But considering the increase in mobile usage rates for everything from socializing to search, [...]
[...] The reason this is significant is advertising. The expectation for mobile advertising was that users would finally be getting relevant ads because their phone would know exactly where they are. As Jean-Louis Gassée points out, mobile ads have so far not lived up to this expectation, and there’s reason to believe they never will: [...]
[...] Whether mobile ads ever catch up to online advertising in revenue will have huge ramifiations for big companies like Facebook, Twitter and Pandora whose audiences are rapidly shifting to mobile devices. Currently, the sectors that spend the most on mobile advertising are telecommunications, retail and restaurants, automotive, finance and education, according to Millennial Media. Many brands, however, are still just experimenting with mobile and are spending a very small percentage of their ad budget there. [...]
[...] Whether mobile ads ever catch up to online advertising in revenue will have huge ramifiations for big companies like Facebook, Twitter and Pandora whose audiences are rapidly shifting to mobile devices. Currently, the sectors that spend the most on mobile advertising are telecommunications, retail and restaurants, automotive, finance and education, according to Millennial Media. Many brands, however, are still just experimenting with mobile and are spending a very small percentage of their ad budget there. [...]
[...] to Inneractive, a mobile ad exchange, and thus the ad rates are also higher for the iPad.Whether mobile ads ever catch up to online advertising in revenue will have huge ramifiations for big companies like Facebook, Twitter and Pandora whose audiences [...]
[...] Whether mobile ads ever catch up to online advertising in revenue will have huge ramifiations for big companies like Facebook, Twitter and Pandora whose audiences are rapidly shifting to mobile devices. Currently, the sectors that spend the most on mobile advertising are telecommunications, retail and restaurants, automotive, finance and education, according to Millennial Media. Many brands, however, are still just experimenting with mobile and are spending a very small percentage of their ad budget there. [...]
[...] Whether mobile ads ever catch up to online advertising in revenue will have huge ramifiations for big companies like Facebook, Twitter and Pandora whose audiences are rapidly shifting to mobile devices. Currently, the sectors that spend the most on mobile advertising are telecommunications, retail and restaurants, automotive, finance and education, according to Millennial Media. Many brands, however, are still just experimenting with mobile and are spending a very small percentage of their ad budget there. [...]
[...] Whether mobile ads ever catch up to online advertising in revenue will have huge ramifiations for big companies like Facebook, Twitter and Pandora whose audiences are rapidly shifting to mobile devices. Currently, the sectors that spend the most on mobile advertising are telecommunications, retail and restaurants, automotive, finance and education, according to Millennial Media. Many brands, however, are still just experimenting with mobile and are spending a very small percentage of their ad budget there. [...]
[...] struggling with mobile ads. In June, we went through most of the causes (see Jean-Louis’ note Mobile Advertising: The $20bn Opportunity Mirage). Problem is: there are still few signs of improvement. Inventories are growing, ad creativity [...]
[...] struggling with mobile ads. In June, we went through most of the causes (see Jean-Louis’ note Mobile advertising: the $20bn opportunity mirage). Problem is: there are still few signs of improvement. Inventories are growing and ad creativity [...]
[...] struggling with mobile ads. In June, we went through most of the causes (see Jean-Louis’ note Mobile advertising: the $20bn opportunity mirage). Problem is: there are still few signs of improvement. Inventories are growing and ad creativity [...]
[...] struggling with mobile ads. In June, we went through most of the causes (see Jean-Louis’ note Mobile advertising: the $20bn opportunity mirage). Problem is: there are still few signs of improvement. Inventories are growing and ad creativity [...]
[...] deliver the numbers. Facebook and Google share prices have suffered as a result. But above all, mobile advertising doesn’t deliver a good experience on mobile. In the UK the operators announced a joint project called Weve, so expect to hear plenty more about [...]
[...] for advertisers and brands. As I mentioned in my blog about the year of mobile , there is no guarantee that this potential will be realised. As it stands, with standard mobile banner advertising, it doesn’t look like this [...]
[...] that worry about how the lack of mobile ad revenues will hurt Facebook, Google, and a raft of startups? [...]
[...] that worry about how the lack of mobile ad revenues will hurt Facebook, Google, and a raft of [...]
[...] Mobile Advertising: The $20B Opportunity Mirage – http://bit.ly/KZRV8k [...]
[...] be solved over the next few years, it could make a lot of advertising supported businesses basically nonviable on mobile platforms. Even companies like Google and Facebook are vexed by this [...]
[...] promise – it is nosediving on the web and it failed on mobile (read JLG’s previous column Mobile Advertising: The $20bn Opportunity Mirage). Readers come, and often go, as many digital publications are unable to retain them beyond a few [...]