A Blog by Jonathan Low


Jun 15, 2012

What If Mobile Ads Just Don't Work?


The emperors new clothes. Shoeless Joe Jackson and the 1919 Chicago Black Sox: eg, say it aint so.

Or maybe it's chicken little or the big, bad wolf? A lot of hysteria about a threat that will dissipate. Something that is bound to work - eventually - once consumers and advertisers figure each other out.

Okay. But what if the doubters are right?

The article below raises a reasonable question: if, after five years, mobile ads have not taken off, is it because the combined talents in the tech and advertising industries have not figured out how to do it quite right? Or because the screens are too small and consumers too distracted to make this the mega-gold mine and many are hoping it is?

Both camps have their points. If social media is a guide to anything (and we get what a debate THAT could set off) both sides are probably right. The opportunity is huge. But maybe not as huge as hoped because of cultural considerations. Those being that people use their mobiles - just as they use social media - for very specific purposes in very specific ways. This is not broadcast TV with three channels (or one, as used to be the case in many European countries). As advertisers have learned the hard way with social media, a 'like' is not a purchase or a vote. Similarly, a quickly snatched view while crossing the street is neither one of those either.

Consumers may look for ads when they are in a store or in a mall or intend to go to one for a specific purchase. But it is conceivable that they are not trolling their mobiles with magnifying lenses on, searching for deals. And with the population aging quickly in the more affluent western countries, eyesight is as much an issue here as stiffening joints and limbs are for low-slung sportscar manufacturers.

It is probably too soon to say one way or the other which view of the mobile ad opportunity will prevail. As we have noted repeatedly, tech adoption cycles can be as long as forty years. Better layout and design could address some of the viewability challenges. That said, why all the rumors about Apple and Samsung coming out with larger screens? JL

Alexis Madrigal reports in The Atlantic:
There's a common wisdom among start-up watchers like Mary Meeker or the guys at Business Insider that mobile phone advertising is a HUGE OPPORTUNITY. That's because people are spending a lot of time on their phones and very little advertising revenue is being generated during those hours. By the iron laws of the universe, where the people spend time, advertising dollars will follow.

But there is another possibility, of course. It could be that advertising is simply inimical to the smartphone experience
In a great post at Monday Note, investor Jean-Louis Gassée explores this hypothetical and comes away convinced. The screens are too small and people are too distracted to pay any attention to the ads on their phones. And the seeming virtues of location-based ads don't seem that way to the people who'd be receiving them. Mobile ads just aren't going to work, Gassée concludes:

If the industry hasn't cracked the mobile advertising code after five years of energetic and skillful work it's because there is no code to crack. Together, the small screen, the different attention modes, the growing concerns about privacy create an insurmountable obstacle.

The "$20B Opportunity" is a mirage.

This would be a huge problem for just about every company that depends on Internet advertising. Most of them/us are seeing increased mobile usage, which means less and less of the time people spend with their brands is monetizable at the (already paltry) rates they'd come to expect on the web. Also don't forget that hundreds of millions of people in the developing world primarily access the Internet through their phones. So, it's not impossible that the mobile revolution may actually represent a doomsday for free ad-supported content and services.


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