Another Trend Online Publishers Need to Worry About

Mobile Is Fueling Growth In Users, But Not Ad Dollars

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Last week, the skies opened and online publishers got some great news: according to eMarketer, U.S. adults are poised to spend more time consuming media on their digital devices than their TVs. This, of course, is the moment they've been waiting years for. And while ad dollars don't follow "time spent" in a linear way, the stat gives online some bragging rights and at least another bullet point for the deck when pitching for TV's $70 billion pot.

But not so fast.

As the Atlantic points out, and elegantly charted, the growth here is happening on mobile devices, a medium that digital publishers have yet to figure out. While media consumption on desktop is expected to fall by the end of 2013, mobile is expected to grow fast enough to push the entire digital category ahead of television. That's hardly good news for digital publishers, who have still not come close to matching the time spent on mobile with a proportional amount of ad revenue.

"From a revenue perspective, you could potentially be getting crushed," said Eric Franchi, founder of Undertone, a New York City based digital advertising company, of the shift's potential impact on digital publishers. Franchi pointed to a number of factors, including lower CPMs and fewer ad units per page, which make closing the gap between time and money spent on mobile difficult to close. According to eMarketer, 20 percent of consumer time will be spent on mobile in 2013, but only 4 percent of ad dollars.

"The CPMs for these little banner ads that most people don't recognize are there are far lower," Franchi said.

If analog dollars become digital dimes, then mobile is getting the pennies, which is why the mobile ad business has been colonized by efficiency-driven direct-response advertisers and app install ads. Yes, LowerMyBills is back, but this time they're buying mobile.

eMarketer's Fredricksen offered another reason for flagging mobile ad revenue: low mobile commerce numbers. Despite predicted growth in the category, mobile commerce made up only 11 percent of retail ecommerce in 2013, according to eMarketer. Direct response buyers, Fredricksen said, are wary of purchasing mobile inventory as a result.

And brand advertisers? It's hard to tell a story with a tiny sliver of real estate on a mobile device.

It's not going to get any easier going forward, either. eMarketer expects mobile consumption to from 93 minutes of a consumer's typical day in 2012 to nearly two and a half hours in 2013. In the same span, time spent on non-mobile internet is expected to fall by 8 minutes per day.

But there's hope. In just one year, Facebook erased any doubts people had about its mobile business, going from near dead-in-the-water to more than 40% of revenue from mobile. They did it not with banners but by moving its newsfeed ads to mobile and erasing the distinction with desktop ads. Facebook's success is not so much that they're social but that the unit makes sense in context, and there's no reason other publishers can't fast-follow.

Until then, mobile will remain a low-CPM business trapped in unloved banners and it will be Facebook grabbing all the pennies in sight.