Ever Increasing Gap on Mobile Web Monetization

The display ad model worked for a successful minority, but most of the learning does not translate to mobile where the average screen size is +90% smaller and where users are moving away from the browsing experience and into apps. Mobile Internet access will be larger than PC based web access by 2013-2015 (Morgan Stanley, eMarketer, Nielsen). Nielsen reported that by Aug 2011, among Android based mobile users, 1/3 of their time was spent browsing, versus 2/3 using apps. Among iPhone users, time spent using apps surpassed time spent on internet access in June 2011.

Yet the mobile web is failing at delivering on the promised revenues. For the past five years we have predicted that the mobile advertising boom was near. The ability to connect advertisers and users in a meaningful way is proving to be a hard challenge. Mary Meeker shared with us at Web 2.0 Summit, his macro view of the industry (KPCB Internet Trends 2011). I always enjoy her analysis and I am always puzzled with the mobile monetization chasm the industry is facing.

Industry predictions were very accurate in terms of size of the mobile web, mobile shipments being larger than PC shipments or the shift of visitors from portals to social and from "PC based" social to "mobile social" (Facebook sees now 33% of their traffic coming from mobile devices). Now in 2011, the only slide that remains unchanged is the slide that shows the ever increasing gap on time spent on mobile devices versus mobile media spend... maybe because advertising is not the best monetization mechanism for the mobile web.

The mobile web is rich in terms of ability to target users base on location, activities, demographics and behavior, but the issue is that while marketing channels exploded in the last 50 years, the advertising technique used in those new channels is the same one used 300 years ago with the first ads published in newspapers in the USA (circa 1704) or the first ads in targeted magazines (circa 1742) or the first mobile ads: Posters and Billboards (circa 1800). It is the same display ad, same clever combination of visual element that catches the viewer attention, clever and short copy and clear call-to-action. It is a tired mechanism that is disruptive in nature as it requires the individual to stop what she was doing in order to take action.

The mobile advertising business needs to be reinvented via technology and advertisers will engage with users in more meaningful ways than the 300 years old and tired display ad business model. Innovation is already happening thanks to many entrepreneurs challenging status quo, it is just a matter of time before the gap is addressed, but it wont be in 2011 or 2012.