The Famous Chart Pointing To The Giant Mobile Ad Opportunity Overstates The Case

Every year, in her Internet Trends presentation, prominent venture capitalist Mary Meeker includes a chart that showcases the big gap between the high proportion of time people spend on mobile devices and the low percentage of ad dollars flowing to the medium.

This year, the chart shows that U.S. consumers spend 20% of their media time on mobile devices, but that only 4% of ad spend flows to mobile. Filling that gap would translate to a $US27 billion mobile ad opportunity.

But as we know, smartphones are used for many different everyday tasks. Some of the most time-consuming are those like email and texting, that would not easily support ads. BI Intelligence, Business Insider’s tech research service, thinks the chart overstates the mobile ad opportunity by about $US12 billion.

Here’s how we came up with our estimate:

  • The original chart’s data for mobile time-spend includes non-media related activities like texting and email. The chart relies on figures from eMarketer, which show that consumers spend about 20% of their media time on mobile devices, excluding voice calls.
  • But consumers spend 30% of their time on smartphones texting and emailing, according to data we have highlighted in the past. That’s a significant slice of smartphone time-spend during which users typically can’t be served up ads, and Meeker’s estimate does not account for this. While SMS text and email marketing do exist, the former is a tiny slice of the U.S. mobile ad market (less than 5% of the total), and email ads are generally desktop-native, i.e. fall under online ad spend.
  • BI Intelligence estimates that consumers actually spend just 12% of their total media time doing media-related activities on mobile devices. We created our estimate by eliminating the time-spend shares for text and email from the eMarketer figure for smartphones. Then we combined that with the eMarketer tablet time-spend figure, assuming all tablet time is media time. We’re being optimistic with tablets, since we do not account for the fact that some tablet time is also spent on email.
  • That drags the $US27 billion mobile ad opportunity down to about $US15 billion, meaning Meeker may have overstated the actual ad opportunity by roughly 80%.

All that said, $US15 billion is still a very substantial amount of revenue squandered, more than double the $US7.1 billion spent on mobile ads in the U.S. in all of 2013.

Advertisers should focus on the mobile categories where users are allocating more and more of their time. For example, app usage has soared to an 86% majority of smartphone time-spend, which begs for more spending on native in-stream advertising, app install ads, rich media, and mobile video ads.

BI Intelligence is a tech research service, providing subscribers with charts and analysis on the mobile industry. For full access to all our coverage, sign up for a free trial.

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