Consumer demand, technology boom – but where’s mobile advertising?

Published 9:08 am Thursday, July 7, 2011

I have a near-60-year-old friend who says he now spends more time with his iPhone and less time watching television and reading his local newspaper. He’s not alone. After years of anticipation, mobile technology is taking the nation – and the world – by storm.

I’ve been going to press association conventions for years and attended many sessions on the coming “Mobile Revolution.” Most of those shows in the 1990s proved to be less than prescient. That’s to say, the Mobile Revolution didn’t take off until the advent of 3G (third generation) cell networks that increased thru-put six times over 2G networks. New 4G networks will be in place by all major carriers by 2011 and increase speeds by three-to-five times over 3G networks.

Forrester Research estimates that of the some 277 million mobile phones in the nation, 17 percent are “smart phones,” defined as “a mobile phone or Internet-connected handheld device that uses a high-level operating system such as iPhone OS, Blackberry OSm Windows Mobile, Palm OS, Web OS, Symbian, and any flavor of Linux including Android.” And the number is growing, with Nielsen reporting that 25 percent of all new cell phones sold are now smart phones.

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Strikingly, Morgan Stanley has projected that by the year 2013, total shipments of smart phones will surpass the total of both personal computers (PCs) and notebook PCs.

Pew Research shows that smart phone users are heavy news consumers, with 62 percent getting news daily from at least three different online news sources. Another 25 percent of smart phone users report using at least six different sources of news on a daily basis.

Nielsen reported in 2008 that more publishers are producing content in mobile format, and those who do so see about a 13 percent audience gain. As smart phones become more widely used, that number should increase.

Early adapters of smart phones were largely business professionals – especially those who traveled extensively – who used smart phones to keep up with their emails. Nielsen said the widespread advent of social networking has changed that usage, at least somewhat.

More and more smart phone users are using their “phones” to stay connected on Facebook, Twitter and other social networks. Nielsen said accessing social networking via smart phones increased by 187 percent from July 2008 to July 2009. Search grew by 113 percent.

Ball State Media Center recently completed research that indicated that the introduction (April 3) of Apple’s new iPad may actually reduce the number of smart phone users, at least temporarily. The iPad needs a 3G wireless plan to be effective, and the Media Center said some users may buy an iPad and downgrade to a non-smart phone.

“We think there could be some unforeseen ripple effects in the marketplace,” Jennifer Milks, a project manager at the Center for Media Design, told Media Post.

While smart phone usage and content continues to increase, publishers have yet to see great advertising opportunities from the Mobile Revolution. Other than SMS text messaging ads, mobile advertising is challenged. In 2008, mobile advertising surpassed $1 billion. Borrell Associates reports that four-fifths of mobile advertising is national. Borrell estimated that only $4.7 million in mobile advertising was sold locally – but adds that local advertising should grow significantly. Some publishers hope the iPad might help traditional newspapers and magazine distribution, while easing Amazon’s Kindle from having a near monopoly on e-readers.

The advent of 4G networks will make it easier for consumers to view videos and even movies on their smart phones. Borrell predicts search, display and coupon advertising also will expand. Smart phone aps (applications) are the current chief revenue stream.

I’ve been at several meetings where this question is asked: How do newspapers make money on mobile? The most common answer is a “bundled sale” where mobile is included in packages that include display, search, print and other products.

The best content management systems include mobile edition products.

Two of the three legs of the stool exist. There is clearly growing consumer demand for mobile content. (The iPad only adds to consumer demand.) Technology is available to help publishers. The third leg – advertising revenue – is still largely missing.