The Cure for the Sorry State of Mobile Advertising

It’s becoming more apparent that mobile is the next frontier for social networks — and for advertising. However, despite sizable adoption of mobile devices by consumers, advertising on mobile has matured very little since its early days. The global web advertising industry is still dominated by the desktop versions of ads, but as technology and app use expand, mobile advertising is stuck in the doldrums.

According to data from KPCB’s Internet Trends 2014 report, the adoption of mobile has been substantial. Smartphone subscription is up 20 percent over the last two years, especially in previously unpenetrated markets like China and Brazil. In fact, mobile data traffic is up 81 percent and accelerating. Seventy-three percent of the world’s population now uses mobile phones, and 22 percent are using smartphones.

Despite the technology’s penetration, mobile advertising still pales in comparison to overall mobile spending. More than $100 billion was spent on desktop advertising in 2013, yet less than $15 billion was spent on mobile advertising in the same period.

According to Christof Wittig, founder and CEO of mobile advertising management platform LiquidM, the biggest problem is that the whole system is poorly optimized. There are more than 500 mobile ad networks all vying for the same banners, which can lead to trading between companies. This leads to less relevant ads for consumers, and significant markups at the same time.

“Advertisers, publishers and users all hate the 300-by-50 banner, but because it remains the industry standard, it still accounts for a significant percentage of the overall mobile media spend,” Wittig writes on The Next Web. With little diversity in ad presentation, the mobile industry is creatively stifled — much more so than desktop advertising. Inefficient vertical integration among ad companies also leads to wasted opportunities.

Wittig sees three cures for these problems.

1. Make mobile advertising attractive by implementing industry-wide standards and tools.
2. Reduce redundant competition through horizontal integration and specialization.
3. The industry needs to be revolutionized with an “iPhone moment.”

The third prescription is what Wittig says will do for mobile advertising what the iPhone did for mobile itself. “I’m more hopeful that other, better ‘mobile first’ ad units will emerge, and be as rapidly adopted as the world embraced the keyboardless iPhone, which helped boost the smartphone industry by 10 times within a few years.”