Photo: Flurry Analytics
Many people think mobile advertising is a huge opportunity in part because it is the medium where ad spend is lagging the most behind time spent (see chart at right).
However, it will almost certainly never catch up. But this doesn’t mean it’s not a big opportunity.
Yesterday we spoke with Ernie Cormier and Victor Milligan, CEO and CMO at Nexage, respectively. Nexage is a mobile advertising exchange; it connects publishers, developers, ad networks, and real-time ad buyers. It is currently serving 12 billion ad impressions per month and, as such, has a pretty good view of the industry’s development and where it is heading.
Here’s what we learned about why spend won’t catch up with time:
- On mobile, as on the web, most people spend a lot of time doing other things than consuming media, like communicating (email) or working. TV, radio and newspapers, meanwhile, are pure media. Ads really only perform well when they’re against media.
- The amount of time consumers spend on their phones has skyrocketed in a very short period. This explains a good amount of the lag: advertisers are only starting to catch up with the new usage patterns. Cormier told us that “media ad share shifts [are] a ‘pause-pause-go’ sequence where [brands] pause to ensure the behavioural shift is enduring and take the the time needed to re-orient their business.” Despite 60 per cent annual growth in the market, he still believes most brands are in pause mode.
- Importantly, “the competency gap is catching up,” Cormier told us. In other words, advertisers have a better understanding of how mobile ads work, and what they can do with them. This is also the sense we got when we interviewed the head of mobile at Publicis Groupe.
- While inventory is large the biggest issue is properly matching supply and demand, Cormier said. This is where ad exchanges like Nexage come in.
Interestingly for the debate on native apps vs HTML5, Cormier also said that approximately 60 per cent of mobile ad spend on Nexage’s exchange is going to native apps, with the balance to the mobile web. He said that it’s not a zero-sum game between the two: some things will always be better with apps, and some things will be better with HTML5. We’re bullish on HTML5, but this is largely the conclusion we reached in our report on the trend: native apps will always have their role.
With regard to the time spent/ad spend gap on mobile, while it’s important to understand they’ll never catch up, it’s more important to understand that the debate is a red herring: with billions of people soon to carry smartphones on them 16 hours a day, ad spend doesn’t have to catch up to time spent for mobile advertising to be a huge opportunity.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.