Mobile advertising promise yet to deliver

01 Oct 2012

As featured on TM Forum's the Insider blog

It’s been a while since The Insider has seen a report about how massive the mobile advertising market is or will be. Past analyst reports quoted figures of astronomical proportions that would be spent by advertisers but never gave a breakdown of who, exactly, was getting what share of the revenues.

This, however, was enough to send mobile network operators and a slew of OTT players scrambling to take up a position in the space. Despite all the hype and optimism, it is difficult to find anyone, even those in the traditional advertising space, claiming big revenues from mobile.

There are many reasons for this. Firstly, the advertising world is a bit of a closed shop. Agencies vie for big accounts, develop campaigns, decide where to place ads and usually make lots of money doing so. (If you’re hooked on the TV series MadMen, you’ll understand where I am coming from.)

The other big winners are the offshoots that ‘place’ ads by buying space in media most desirable for the target market. Then comes the actual media that charges for the ad placements according to numerous metrics based on socio-economic data, spread, age groupings, income bands, race, religion, social awareness, etc etc.

It is pretty hard to find room in there where network operators can make a killing. They have tried to build platforms that insert ads in content and applications, distribute SMSs and even identify target markets using analytics, and the ‘know your customer’ (KYC) arguments, to provide specific target audiences to advertisers. They have even hired some of the best brains in advertising to consult to them but has all this investment paid off?

It seems to be that Google and it’s all encompassing search engine is making the big money, with access to millions of mobile devices and their users being provided courtesy of the networks, gratis.

One recent article reports that the worldwide advertising market will generate half a trillion dollars in revenues this year, but mobile will only account for little more than one per cent of that! The big winner is still good old TV. In America, the only thing people spend more time doing than watching TV is sleeping and working. Advertisers like that because watching TV is a focused, immersive experience and they presume their ads get more attention as a result.

But with so many people watching more and more video content on the internet you would think it would be fast replacing TV. Apparently not, TV beats the web on time spent and on focus of attention (or “frequency, reach and engagement” in marketer-speak), according to Matt Cohler on TechCrunch. Must be all that web-surfing, social networking and messaging that distracts the viewer.

Strangely enough, according to Cohler, “using a mobile device is also a focused, immersive experience. Like watching TV, the screen focuses the user’s attention on one thing at a time and “changing the channel” is even less distracting than with a television.” Go figure. So why aren’t advertisers rushing to mobile you get their message across. “The market is still illiquid and sub-scale, and great ad products haven’t had time to develop,” says Cohler.

Well blow me down, we have tablets and smartphones coming out our ears and we still haven’t worked out how to use them successfully as advertising media. How long is it going to take, and will yet another OTT player step in and take that market as well? Every single social site is driving to get users on board so they can make money from advertising, but every time I start getting hit with ads I tend to switch off.

Of course, we will be offered the option to go ‘ad-less’ if we subscribe to ‘premium service’ but how many of us will fall for that old line? Remember when cable TV replaced free-to-air ad-ridden channels with the promise of less or no ads if you paid the monthly sub? Now we get inundated with cable TV internal programming ads instead.

I digress, but I’m still trying to work out who will be the winners in the still-to-come mobile advertising bonanza. Any suggestions?

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