Why Mobile Ads Are ‘A Little Scary’ (And Potentially So Valuable)

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Mobile-Apps-iphone-androidAs we reported yesterday, Borrell Associates is projecting that local mobile ad spending will more than double this year, from $1.5 billion to $3.2 billion. Gordon Borrell told us that the growth was so dynamic that it was actually “a little scary.”

This news comes on the heels of Mary Meeker’s latest Internet report projecting a “$20 billion opportunity” for mobile advertising. The graph below is the one getting all the attention. It compares various forms of media in two key areas: the percentage of time spent with each and the percentage of advertising spending. On the far right is mobile, and you can see that there is far more time spent with mobile than advertising dollars can justify. Logically, this has to change, because advertisers want to go where the eyeballs can be found.

The upside for mobile

There exists, however, one enormous problem in the fulfillment of projections about the upside of mobile: Madison Avenue wants to apply the same mass marketing paradigms to mobile as it does with any other form of advertising. Solve Media’s hilarious YouTube video by comedian Harrison Greenbaum called “Why does mobile advertising stink?” cleverly nails it: “I’m trying to just live my life, and you’re throwing signs in my face.” Watch for yourself.

Cory Bergman posted this video on his Tumblr and noted, “Why does mobile advertising stink? Because we’re just inventing it.” This is insightful and challenging, and before we get too far downstream on inventing mobile in the image of everything else, we need to take a really hard look at the matter. Mobile is not just another device on which to practice advertising methods from the last century.

In the name of creating an advertising machine that equates to a lot of money for a lot of people, we’ve lost sight of the fact that the whole point of the practice is to drive business or grow business for the advertiser. In mass media’s paradigm, one could throw enormous sums of money at the problem, and the return produced business growth. If the numbers worked right, that meant profit, despite the money spent. This is what built the Mad Men era, that beehive of commerce known as Madison Avenue.

But mobile isn’t a mass marketing vehicle; it’s my one-to-one, highly intimate connection with the Web. It’s a personal device, and its connection to me is private (or not), powerful, and controllable entirely by me. It is, in fact, a portable, electronic version of me, and I will not permit interruptions in the name of commerce for long. Nothing, as I’ve said many times, is worth the price of interference from someone trying to grab Mary Meeker’s projected $20 billion “market.” Frankly, and although I can’t prove it, I’d wager that one of the current attractions of mobile is its dearth of traditional ads.

So how exactly are we going to get to that $20 billion figure or beyond? That question is one of the things that makes Gordon Borrell say that “there’s something a little scary about mobile.”

While I agree with Mary Meeker’s trajectory for mobile advertising, I think there’s a major flaw in the calculations. It’s screwy to think that time spent with media is equally valuable across all media. Does the enormous amount of neck-bending time spent with mobile devices equate to the same dollar-for-dollar value of the enormous time spent oogling TV programming?

Here’s the really scary thing: It’s the quality of time spent rather than quantity of minutes or hours. So I think the time spent with mobile is MORE valuable. In that sense, Meeker’s numbers could be, well, meek.

Borrell thinks mobile is far more like directories than other traditional media like TV, radio, or newspapers due to its potential proximity to purchasing. Merchants may well spend beyond the reach or time spent with mobile, which would make it the most in demand advertising mechanism ever created.

But how will that look exactly? What could we possibly build that could produce that kind of revenue without trashing the reality of content via mobile devices by using the kinds of things demonstrated in the hilarious video from Solve Media?

My advice to clients is what I first called “ads as items” in a news feed. That was in 2005. Today, it’s called “native advertising,” a subset of the phenomenon known as “content marketing.” We’re getting there, but we’ve certainly not fully arrived just yet.

Native ads in a news feed — which is what “works” so very well on mobile devices — function in exactly the same way as any other content item in the stream. There’s two forms of value: when the headline and accompaning text (if any) appear in the app, and when users click through to read or watch it. It’s the same tactic YouTube employs with its 4-second prerolls. As long as the content originates from the presenter’s server, counts can be recorded for billing purposes. The technology exists to do this immediately, but the problem is on the creative side, where, as Cory Bergman noted, we’re making this up as we go along.

In order to provide native ads, publishers must provide a user interface that is friendly to the concept. The only place traditional media publishers seem willing to do that is in mobile applications, which means that, in spite of themselves, they’re already positioned to hop aboard the content marketing train.

Regardless of what we use and how we use it, ads presented via mobile devices are going to have to be something other than what’s available today. The potential for serious revenue alone ought to have us experimenting to find a sweet spot for both users and advertisers. Clearly, there’s a lot at stake.

TerryNaplesTerry Heaton is President of Reinvent21, a consulting company specializing in business reinvention for the 21st Century. He’s an internationally-recognized creative expert on all things web-related, especially as they relate to local media.

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