The attention surrounding mobile is old news now — as more people spend time with their handheld gadgets, content is becoming more streamlined for these devices. But mobile advertising? That’s a whole different story. It’s messy, inconsistent, dominated by tech platforms and not functioning well for most publishers. In the words of a Facebook status update: It’s complicated.
The raw numbers for mobile advertising tell us of a thriving, growing business. A recent report from the Interactive Advertising Bureau showed that mobile ads brought in $32 billion in 2014, a 65% increase from 2013, when it was estimated at $19.3 billion. And global ad spending is expected to reach $69 billion this year, according to eMarketer.
Yet a new report from the Wall Street Journal suggests the hype surrounding mobile advertising may be more about the talk and less about the show. Although mobile advertising is now a multi-billion dollar business, the profits aren’t keeping pace. A “mobile gap,” according to industry executives, is now at play with a great deal of money going to ad platforms and networks. And industry experts fear Apple’s upcoming release of ad-blocking on Safari with the new iOS 9 will threaten this already precarious scenario.
“In the short-term, ad-blocking is disruptive for almost everybody,” DCN’s Jason Kint told TheStreet.com. “The entire ecosystem should be aware of ad-blocking. It’s a topic too many companies are ducking and it’s time for the industry to come together to find solutions.”
The blessings mobile devices have offered users with their size and convenience have actually become curses for publishers and marketers.
“That’s because mobile devices have small screens — making traditional display advertising all but useless — and user behavior on a mobile device is even less conducive to interruptive ads than desktop browsing was,” Mathew Ingram explained in Fortune.
Forget the fact that banner ads don’t work on mobile devices. Mobile users also typically spend less time on a website than desktop users, using apps more. So they also just don’t see — and therefore don’t click — on as many ads as desktop users do. This makes tracking and targeting advertising according to user behavior much more difficult for publishers.
But online behemoths Facebook, Google and Twitter are able to sidestep many of these issues. Facebook accounted for nearly 40% of mobile display advertising in the U.S. in 2014 and earned $3.5 billion from mobile display advertising in 2014. Google alone earns about half of all global mobile advertising revenue. These tech companies can profit as much as they do because they know their users in a way no other platform or publisher does. Given the Facebook log-in can track which desktop or mobile devices people use, for example, Facebook can access consumer data that is so crucial to advertisers — and difficult for most publishers to obtain otherwise.
More Ad-Blocking Coming
This also could have rough consequences for publishers looking to maintain control over their content and reap the profits of mobile advertising, especially with ad-blocking coming to iOS 9. Most media companies have offered their users horrible experiences in their attempt to generate as much revenue as possible, because ads get in the way of web browsing and slow down page loading. The availability of ad-blocking on iOS 9 will certainly generate a more positive user experience — but it will make it even more difficult for advertising. Ad-block usage grew by 41% in the last year, according to Pagefair, a company that sells tools to fight ad-blocking, and there’s no doubt usage will increase.
Apple Poised to Profit
“Blocking ads on the web means it’ll force publishers toward the ‘News’ app which also happens to be included in iOS 9, where it’s not possible to block ads and Apple gets a cut of money made from advertising shown via its iAd network,” Owen Williams wrote in The Next Web.
The page loading/user experience/consumer tracking/mobile profiting trade-off is not dissimilar from what’s happening with Facebook, where its “Instant Articles” also load much faster, look better and offer publishers the chance at ad revenue — on the condition that publishers use Facebook to post and share their content.
The flipside, of course, is that Facebook maintains control. But at this point, disengaging from Facebook, Apple, or any other giant media company for that matter, may not be a realistic option. A mobile gap exists. Now is the time to close the gap and figure out how to reap the profits — quite possibly in partnership with platforms. And it is also likely that publishers and brands will be focused on native advertising, which won’t fall prey to ad-blockers, and better creative in order to stem the tide of increasingly negative consumer sentiment about online advertising.