The Future Of Mobile AdsHenry BlodgetCEO, Business InsiderJune 14, 2012

Henry BlodgetFounder, CEO & Editor-in-Chief, Business Insider

Pascal-Emmanuel Gobry, Senior Analyst

Alex Cocotas, Analyst

Matt Rosoff, Editorial Director

Something profound happened last year…

Smartphone sales overtook PC sales

And will soon DWARF them…

We are here

Already ~1B smartphones, and still early in conversion cycle

(The U.S. is more than halfway there…)

Source: Pew Research Center

Smartphone “demo” is young and rich (but will soon be everyone)

Source: Nielsen, January 2012

Tablets also a form of “mobile” and will also blow past PC sales…

We are here

Time spent on mobile is rising fast

Mobile web traffic now 10% of total

More than half of Pandora and Twitter usage is now mobile

Facebook ~500 million mobile users

So mobile ads must be huge, right?

Nope.

Mobile ads are still pretty small (~$1.25 bn in U.S. last year)

We are here

That’s a fraction of digital ad spending

And most “mobile” ads are just web search + display ads viewed on mobile

So why aren’t mobile ads bigger?

Mobile monetization trails desktop

Mobile CPMs are lower

“Ad spending hasn’t caught up with time spent.”

Source: Mary Meeker (KPCB), eMarketer, IAB

Most people say this is because “mobile is in its infancy”

But that’s actually not true.

Mobile is already 5 (or 17) years old.

Mobile ads have grown much slower than TV, Internet in the first 5 years

So maybe there are other challenges here…

The screen is really small…

Smartphone users really don’t like intrusive ads

Ads on smartphones may not be particularly effective…

But still…

It takes a while to figure out how to use new media…

The future of the Internet is mobile

Even sober analysts expect big growth…

We are here

And “native” mobile ad formats are emerging…

SMS ads The original mobile ad

Niche market, little growth expected as market evolves and matures

Ineffective, intrusive

Mobile display ads Similar to banner ads on

desktop, but much smaller and much cheaper Inventory is currently huge

Apple’s iAds are more interactive Can download the app directly

from the ad

Click-to-call ads New feature for regular search

ads

Convenient for user, makes use of phone’s native features

Clear ROI for advertisers

Twitter Mobile Ads Success with mobile promoted

tweets

Mobile revenue surpassed web revenue on many days last quarter Dick Costolo, June 2012

Of estimated $250 mm 2012 revenue, ~$125 mm will be mobile

Pandora Mobile Ads Mix of display, audio, and

video ads

Mobile ads now account for 50% or more of quarterly ad revenue

Facebook Mobile Ads Just released “Sponsored

Stories” for mobile

Brands can turn an action by a user into an ad

Facebook has ~500 million mobile users, but virtually no mobile revenue

The Holy Grail: geo-located ads Take advantage of phone’s

GPS to offer something desktop can’t

Difficult to match the right inventory with consumers based on location

Groupon Now is a form of real-time local advertising

Some key mobile trends…

People spend more time on apps than they do browsing the web

Games and social are the big apps

Games sessions up 20-x in 2 years

Social and gaming get most of the ad spending

Photo and video apps huge, too

And people are watching more long-form, ad-friendly content

Mobile web audiences surging

Affluent consumers get highest CPMs

Women a more desired demo than men

Source: Flurry Analytics

Some content categories are more desirable than others

Tablets, by the way, are more promising for ads…

Tablet owners more receptive to ads

Tablets ads more effective

People consume a huge amount of content on tablets

So tablets ideal for ad-supported media

And here’s a key point…

People use their smartphones for shopping

Source: comScore MobiLens, 3 mon. avg. ending Dec-2011, U.S.

Mobile commerce is exploding…

30% of Gilt’s Black Friday revenue was from mobile sales

Boston Globe, Dec 2011

38% of U.S. consumers have used smartphones to buy products or services

comScore, Dec 2011

So, instead of thinking of mobile as an “ad platform”…

Maybe better to think of it as…

“Marketing, communication, and sales channel”

One thing is certain…

The future is mobile!

Thank you!