The Great Mobile Ad Compression

adsAt first, the joke was when mobile will finally "arrive."

And now the joke may be "I wish mobile had stayed away," as publishers report increased traffic for mobile (hooray!) but decreased ad revenues (ouch!) in comparison to its PC-based facsimile.

Of course, there's no turning back, as report after report signals the consumer's move to mobile. The tablet appears to be a compelling screen format for ad lovers – and it catches the user in more of a lean-back setting than the smartphone. But the smartphone appears to be the main culprit as (there must be an eMarketer graphic for this) decreasing screen size seems to mean decreasing yield. And that's just for starters.

Let's review attributes of "The Great Mobile Ad Compression."

The Data Dust Bowl

It's been well-documented, but targeting remains limited in mobile environments, including tablets. Ironically, the so-called consumer privacy protections of certain browsers to third-party cookies unwittingly drives power into the few big first-party data players – Google and Facebook, in particular. As these companies become embedded in consumers' lives, the need for the consumer to trade personal data for services is solidified, allowing these companies unmatched mobile reach and scale to affect addressable mobile advertising campaigns like PC-based ad networks in bygone days.

RPM = eCPM

Viewability aside, the days of multiple ad units on a PC website's page are slowly disappearing.  In mobile, RPMs (revenue per thousand page views) may end up equaling the eCPM of a single mobile display ad unit. The screen is small. That single mobile display ad may get $3 per thousand impressions, but those 5 units on the PC page are getting $10+ per thousand impressions.

The Long Tail Is Dead

Mobile may end up killing the Long Tail, unless the Long Tail publisher's interest doesn't go beyond the needs of a Tumblogger. On the other hand – I'm riffing here – companies like AddThis, ShareThis or even Twitter (widget providers with reach and scale who are collecting data) could end up providing some sort of universal login that, by virtue of some inventive Terms and Conditions, might provide the necessary first-party ad targeting in mobile. Oh, that's a nice stretch on my part. Here's another: maybe "old Grandpa contextual ad network" will return and be the answer for the Long Tail?  Hey, ya gotta target somehow.

Goodbye, Richie Rich Media

In PC publishing, "rich media" might be the answer to "juice" CPMs and improve customer engagement, but in the mobile environment, the last thing a user wants is their mobile display ad exploding into a mobile takeover that forces them to lose touch with whatever minutae-of-the-moment is happening on their smartphone screen. No thanks, mobile rich media – unless I'm playing a casual game and want to earn some freshly-minted bitcoins.

Experiences

The mobile experience on a smartphone is a brief one. The consumer is in and out. A video ad seems a more easily ignored commercial; mobile advertising drives a direct response opportunity where the user is (hopefully) nearing the bottom of the purchase funnel, ready to pull the trigger. Maybe that means your local car dealership can show you a Hyundai car ad at just the right moment before you go and buy one, but for campaigns associated with brand awareness like automobiles, the application of mobile will be driven by the accurate, just-in-time satisfaction of the consumer's needs.

The Myth of Second-Screen Viewing

If a consumer is reaching their favorite media outlet on their smartphone while they're reaching the same media outlet on their connected TV (some day) or personal computer, the thinking could be that increased engagement drives additional yield. I get it – seems logical for particular media publishers to some degree. On the other hand, though I'm sure many of you are good multitaskers, how many screens can you engage in a single instant? One. Is second-screen viewing really beneficial to the mobile publisher, or is it just a fancy way of talking about multitaskers? And now you have to produce double the content!

Commerce

Amazon couldn't care less about The Great Mobile Ad Compression. Yeah, sure, they have a media strategy and it can provide billions in incremental income (yes, I just said billions in incremental income) – but ecommerce is their mobile revenue stream. Where's Google's AdSense network going to play here in mobile? They've added "Enhanced Campaigns" while claiming it make things easier for advertisers. On the other hand, Enhanced Campaigns could set up a better arbitrage opportunity for Google, as advertisers hand over the keys to Google ad tech. Hey, it's a business, and service – even if it's automated – is key.

Enough! The Good News...

The good news is that it's still early days in mobile and there's still plenty of traffic on the PC. Big screens aren't going away. But the move to mobile will not stop until the user gets the personal computing hologram of their dreams.

 

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