Mobile advertising: Lots of hype, little revenue

Mobile now accounts for about 25 percent to 50 percent of traffic for media companies, according to a sobering piece today from the Financial Times, but “ad revenues remain minuscule.” While many mainstream news outlets tend to hype the mobile advertising industry, the Times piece refreshingly pulls no punches: It quotes a longtime ad veteran saying the transition to mobile is “going to get a whole lot worse” than the expansion from print into digital (which was brutal), and IDC analyst Karsten Weide predicts that mobile will “really have a negative impact online and on the broader media market.”
There are some key reasons mobile ad revenues have failed to live up to expectations, as the piece notes: The explosion in mobile apps and websites has created a glut of inventory, keeping prices down. The massive range of devices and platforms make deploying a quality, consistent ad campaign difficult and expensive. And the industry continues to stagnate due to a lack of innovation, leaving ineffectual banner ads as the default method.
Consumers clearly want to access quality content on their smartphones and tablets, but it’s clear that today’s strategies and business models aren’t working. For publishers and their partners, then, the choice is clear: Either find ways to get your users to pay for your mobile content directly, or come up with innovative marketing and advertising solutions that can support your mobile business. There won’t be a single solution here because the world of mobile apps and content is so varied — a social network may find that location-based ads are the key, while high-quality editorial content may have to rely strictly on paid subscriptions. But most publishers clearly have a lot of work to do to create a viable mobile business.