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The Future of Mobile Advertising: Challenges and Opportunities in a Growing Market

In 2012, Henry Blodget emphasized the transformative impact of smartphones, which have overtaken PCs in sales. Despite the rise of mobile users and increasing time spent on mobile platforms, mobile advertising remains significantly lower than expected, with only ~$1.25 billion in U.S. ad spending. Key factors affecting growth include lower mobile CPMs, the preference for less intrusive ads, and the challenges of audience targeting. However, the future remains bright with emerging formats such as SMS ads, Twitter mobile ads, and geo-located advertising, as the industry evolves.

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The Future of Mobile Advertising: Challenges and Opportunities in a Growing Market

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  1. The Future Of Mobile Ads Henry Blodget CEO, Business Insider June 14, 2012

  2. Henry BlodgetFounder, CEO & Editor-in-Chief, Business Insider Matt Rosoff, Editorial Director Pascal-Emmanuel Gobry, Senior Analyst Alex Cocotas, Analyst

  3. Something profound happened last year…

  4. Smartphone sales overtook PC sales

  5. And will soon DWARF them… We are here

  6. Already ~1B smartphones, and still early in conversion cycle

  7. (The U.S. is more than halfway there…) Source: Pew Research Center

  8. Smartphone “demo” is young and rich (but will soon be everyone) Source: Nielsen, January 2012

  9. Tablets also a form of “mobile” and will also blow past PC sales… We are here

  10. Time spent on mobile is rising fast

  11. Mobile web traffic now 10% of total

  12. More than half of Pandora and Twitter usage is now mobile

  13. Facebook ~500 million mobile users

  14. So mobile ads must be huge, right?

  15. Nope.

  16. Mobile ads are still pretty small (~$1.25 bn in U.S. last year) We are here

  17. That’s a fraction of digital ad spending

  18. And most “mobile” ads are just web search + display ads viewed on mobile

  19. So why aren’t mobile ads bigger?

  20. Mobile monetization trails desktop

  21. Mobile CPMs are lower

  22. “Ad spending hasn’t caught up with time spent.” Source: Mary Meeker (KPCB),eMarketer, IAB

  23. Most people say this is because “mobile is in its infancy”

  24. But that’s actually not true.

  25. Mobile is already 5 (or 17) years old.

  26. Mobile ads have grown much slower than TV, Internet in the first 5 years

  27. So maybe there are other challenges here…

  28. The screen is really small…

  29. Smartphone users really don’t like intrusive ads

  30. Ads on smartphones may not be particularly effective…

  31. But still…

  32. It takes a while to figure out how to use new media…

  33. The future of the Internet is mobile

  34. Even sober analysts expect big growth… We are here

  35. And “native” mobile ad formats are emerging…

  36. SMS ads • The original mobile ad • Niche market, little growth expected as market evolves and matures • Ineffective, intrusive

  37. Mobile display ads • Similar to banner ads on desktop, but much smaller and much cheaper • Inventory is currently huge • Apple’s iAds are more interactive • Can download the app directly from the ad

  38. Click-to-call ads • New feature for regular search ads • Convenient for user, makes use of phone’s native features • Clear ROI for advertisers

  39. Twitter Mobile Ads • Success with mobile promoted tweets • Mobile revenue surpassed web revenue on many days last quarter • Dick Costolo, June 2012 • Of estimated $250 mm 2012 revenue, ~$125 mm will be mobile

  40. Pandora Mobile Ads • Mix of display, audio, and video ads • Mobile ads now account for 50% or more of quarterly ad revenue

  41. Facebook Mobile Ads • Just released “Sponsored Stories” for mobile • Brands can turn an action by a user into an ad • Facebook has ~500 million mobile users, but virtually no mobile revenue

  42. The Holy Grail: geo-located ads • Take advantage of phone’s GPS to offer something desktop can’t • Difficult to match the right inventory with consumers based on location • Groupon Now is a form of real-time local advertising

  43. Some key mobile trends…

  44. People spend more time on apps than they do browsing the web

  45. Games and social are the big apps

  46. Games sessions up 20-x in 2 years

  47. Social and gaming get most of the ad spending

  48. Photo and video apps huge, too

  49. And people are watching more long-form, ad-friendly content

  50. Mobile web audiences surging

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