Here's Why Mobile Monetization Might Catch Up To The Desktop

2011 U.S. Ad Spending vs. Consumer Time Spent By Media

Photo: Flurry Analytics

The rise of mobile is mostly an exciting phenomenon, but one worrisome part of the phenomenon is that the monetization of similar services seems to be much lower on mobile than on the desktop. This is in particular a problem for companies like Google and Facebok that are seeing their mobile share of usage explode, which is putting a brake on revenue growth.In her latest presentation, however, Mary Meeker lays out the bull case for mobile monetization:

  • She points out that ad spending still has a long way to go to catch up with eyeballs. It takes a long time, but spending does usually catch up with eyeballs. In mobile, we think it won’t fully, though we think it will somewhat.
  • New mobile commerce tools will come on line. Once it’s easier for people to purchase stuff with their mobile, ARPU should go up.
  • App and in-app monetization works. On the web, most websites are free. On mobile, people are trained (and it’s easy) to buy software and in-app upgrades.
  • In Japan–the most developed mobile market–mobile monetization has caught up to desktop.

This last argument is the most compelling. The rest are close to wishful thinking. The basic problem is that advertising spend is driven by how much ROI marketers get out of it. If marketers get the same additional sales from an increasing amount of captured consumer attention, the price of each unit of attention is going to go down. What would make mobile intrinsically more monetizable would be some form of new advertising or transaction paradigm (perhaps something a la Groupon Now that drives local commerce). Maybe someone will invent it (and if so, they will have one of the most valuable companies in the world); until they do, though, high mobile ARPUs seem to be wishful thinking. 

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