A lot of chicken little’s have been heard from this week proclaiming the doom of everything as “digital dollars are turned into mobile pennies”. Specifically, I saw two articles that caught my attention:
Digital Cinders in the Financial Times:
While mobile ad spending is the fastest growing among all media categories, it captures $6.5bn, or just 1.3 per cent of total advertising revenues, according to Interpublic’s ad buying firm MagnaGlobal. In five years, mobile ad revenues will inch up only slightly to 3.3 per cent of total ad revenues, the group predicts.
They act like this is terrible, but this is a CAGR of > 20%! Billions of dollars flowing in every year.
Similarly, I saw this comment on AdExchanger:
Pandora reported better than expected (but still a loss) fiscal fourth quarter earnings late Thursday as the company continues to concentrate on a mobile future. See the release (PDF). The Wall Street Journal digs into the details, “Mobile ads still aren’t as lucrative as those on traditional computers. The latter garnered $52.82 per 1,000 listening hours, compared with $25.05 for mobile.”
Now, you read that and you say, “Man, mobile totally sucks!” But keep in mind, that the CAGR is 20%+ YoY!
Display advertising has been around for more than a decade! Mobile advertising is just starting. From a market size perspective, digital advertising was around the same size as mobile is today way back in 2005! It seems to me that if mobile is in “2005″, being at 50% of desktop’s monetization is actually pretty good. I would expect that in the next two years, that 20% CAGR could increase Pandora’s revenue on the mobile side fairly dramatically.
The efficient growth of mobile value for publishers promises a bright future in the mobile advertising space. There is a lot of headroom!