Mobile Advertising: Poised For Growth
Blog reaction to Mary Meeker’s recent slide presentation at the D10 conference focused a lot on how feeble mobile advertising revenue stacks up against the perceived value of internet advertising. Even though she had a number of slides showing global mobile usage growing quickly and that mobile is contributing an increasing share of the e-commerce market, attention was paid to the huge disparity between mobile usage and ad investment.
Her slide 17 (see below) points out that the large negative differential (10:1) between the amount of time people spend with their mobile devices and the respective advertising dollars, suggests a huge billion dollar opportunity.
Mobile Advertising: CPM rates not tracking usage
But what got attention was the statement that mobile CPM rates were five times lower than internet CPMs which was viewed by the mobile “doubters” as further evidence that mobile is still a minor league attraction for advertisers.
Mobile Advertising: Efficiency & Performance Will Win the Day
But I viewed this part of Mary’s slide presentation as extremely positive news because given mobile’s overwhelming efficiency compared to every other kind of media, the gap in CPM and usage should equalize quicker than cable TV or perhaps even internet advertising. As I wrote last year in a blog entitled, Mobile Advertising, The Next Big Thing http://stevenrosenbergmedia.com/?p=23, mobile advertising is 4X more effective in recalling brands than online, 5X more effective vs. online in promoting purchases and over 50% more effective promoting purchases against a combination of TV, print and online.
Cable TV advertising has been around 30 years, but for the first fifteen years or so, cable networks struggled to convince Madison Avenue that cable’s growing share of the viewing pie heralded a disintermediation in viewing habits worthy of higher CPMs and larger advertising investment. In the early to mid 1990’s cable TV nets were capturing almost 25% of the eyeballs but less than 15% of the total ad spend. In contrast, the value of internet advertising was recognized a lot earlier than cable and as a result its trajectory was a lot steeper. While it took 30 years for cable TV to reach $30 billion in annual ad spend, internet reached that mark in about half the time. But given the massive uptake in mobile smartphone technology (almost 50% of US mobile users), coupled with the development of mobile wallets, NFC, Square, etc., and the explosion of mobile apps and location based search, mobile advertising’s arc is poised to equal or even surpass the growth curve of internet advertising over the next fifteen years.