Mobile Advertising Sucks and That Needs to Change

I was not surprised to see a recent report from Trademob finding that 40% of mobile ad clicks are either accidental or fraudulent.

When I interned for Jerry Neumann, he had me take a look at the mobile vs. display ecosystem, which I did. Back then I was interested in the differences between mobile and desktop traffic with respect to audience buying.  My conclusion from that exercise was that existing DSPs were best-positioned to figure this out when mobile ad buying demand was big enough, so the risks of creating a mobile DSP probably outweighed the opportunity.

But after reading the recent Trendmob report on click results, I’m starting to think that we haven’t been looking at the ecosystem in the right way.  I previously thought of mobile the way a lot of people look at mobile: a smaller version of our desktop experiences with some nuanced differences in cookie technology. I’m building some new theories about mobile advertising.  I’m starting with the statement that mobile advertising fundamentally sucks, but also that it’s important for  it to eventually not suck.

Related to my point above about DSPs, even if we get better at audience targeting on mobile, we haven’t solved the engagement problem. Selling clicks on mobile is not an indicator of anything other than a bot or my fat thumb accidentally hitting a banner.  What’s worse: more and more, we’re consuming our content on mobile devices.  If your primary revenue driver is advertising and your customers are increasingly consuming your product in a medium that’s a bad format for advertising, you are going to have a big problem on your hands in the near term.

According to Mary Meeker’s 2012 Internet Trends Report,  here are a few disparate data points that, in my opinion, spell disaster for the ad-supported media industry:

  1. Mobile Internet Usage surpassed desktop internet usage in India this year.  I’m betting that much of the world is moving in the same direction.  While mobile traffic won’t replace desktop access in more developed countries, it’s going to become an increasingly bigger piece of the pie.
  2. eCPMs on mobile are $0.75 vs. desktop which are about $3.50. Based on The Law of Shitty Clickthroughs, this isn’t a great start to the relationship between advertisers and consumers on mobile.  It will likely improve, but probably not by much.
  3. Mobile monetization levels could surpass desktop in three years (but not through advertising).  Most revenue in the mobile ecosystem is commerce-based, whether through game in-app transactions, app purchases, etc.  So, while monetization levels will increase, there’s no indication that media companies will take part in that.

I see this as an ominous sign for publishers, as well as an opportunity to create value.