The future of mobile ad sales, 3.4 billion to 80 billion!

Research flurry is reporting that mobile apps hit 58 million users during primetime. Yes, that’s primetime network television, 8 PM. When you compare the $3.4 billion generated in revenue in 2012 with the network television 74 billion dollars in 2012 it begs the question as to why mobile apps make such little money in advertising. That’s only 4.5% of revenues seen in television advertising.

There are several reasons why generating revenue with mobile Ad marketing is far less profitable than on TV, despite a competitive number of eyeballs. To buy advertising on mobile you have to choose between several networks, which is pain in the ass. It’s also a real time bidding platform, which advertisers don’t like. Brand advertisers do not like how mobile apps are geared towards immediate call to actions as well. There’s a major loss in revenue for branding ads as CTA goes against the traditional beliefs of bran advertising.

There are also technical challenges that need to be overcome. Under desktops we have a couple of different operating systems. In mobile there are over 10. Taking into consideration all of the screen sizes and browsers, creating an ad is not so easy. This alien to advertisers who see mobile app advertising a real pain.

Mobile also lacks real advertising insights. Even the best research today is highly anecdotal. Unlike television advertising, mobile advertising is hardly a science. Market research see themselves a statitions and you need to show data to demonstrate and ROI.

Apple and Android both have failed to recognize the opportunity to create a centralized ad platform. They have yet to produce a unified ad buying experience based on real data for all ad placement.

Right now we are seeing small startups attempting to make waves into ad sales in the various app stores. It’s only a matter of time before the app stores recognize this revenue stream and lockout third-party ad placements.

Centralized ad placements is both a good and a bad thing. 1st is that there will be a lack of competition. This is always bad because much like Google ads the price will be astronomical. On the good side, there will be real data to make the ads far more effective. Also seen as a real positive is the ease in which buying effective ads will be.

Once this platform is fully realized and both app stores you will start to see revenues in the tens of billions. Make no doubt about it, its coming.

Now here’s the real kicker! Viewers are canceling their cable subscriptions by the millions in favor of streaming television. This also means a significant portion of this online content will be viewed via apps. This will give the app store the ability to advertise directly in content television.

Mobile apps on their own are set to be bigger than network television. Throw in streaming television into the mix and you are looking at a media giant the like of which the world has never seen.

We already are seeing Apple begin to lock down advertising in their store. It’s now impossible to advertise for any app you they don’t own. The regulation that allows them to do this has already been interpreted in a very fast and loose way. Expanding it to include any advertising is just not that difficult to do.

The opportunity is there, were seeing some moves to regulate advertising in the app stores. With tens of billions of dollars at stake you can expect to see the world of mobile advertising change dramatically in the next couple of years! Be ready!

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RichardKastelein
17 May 2013, 3:23 p.m.

<irony>I would bet a lot of those people who are looking at mobile ads during primetime, are doing so during commercials. </irony>

RK

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