Poorer is the key word. If publishers once lamented that offline
dollars turned into "digital dimes" as content and audiences moved
to the web, here's what might be keeping them up at night: Digital
dimes are turning into mobile pennies. The effective cost per
thousand impressions on the desktop web is about $3.50, according
to data crunched by Mary Meeker, partner at Silicon Valley
venture-capital firm Kleiner Perkins Caufield & Byers. On the
mobile internet? A whopping 75¢.
That should be of particular concern to publishers, given the
rise in media consumption via mobile devices.
In interviews, media companies from Condé Nast to Gawker
Media say visits from mobile phones and tablets have more than
doubled in the past 12 months and now account for 20% to 30% of the
overall traffic to their content. In many cases, this growth has
caught publishers unprepared, with sales staffs often lacking the
necessary training or clear strategies to monetize mobile
audiences. Some media companies are taking a wait-and-see approach.
In a rush to cash in on this shift, others are often relying on
what they know best: the banner ad, which is proving to not be much
The ad experience on mobile phones is challenging for a number
of reasons. The smaller screen sizes make most ads unattractive,
privacy settings restrict targeting and short user sessions make
providing more than one ad in front of a user nearly impossible.
Meanwhile, encouraging readers to pay for mobile content has been
an equally tough battle for many media companies. "There's no easy
way to push 300 by 50 [pixel] ads and build big money off of it,"
said Mandar Shinde, AOL's senior director of mobile and mail
In general, advertisers haven't specially prepared their
messages for mobile and are retrofitting what they know from
desktop-web marketing -- with some ugly consequences. As Mr. Wasef
and several other media executives noted, one doesn't have to look
far to find big brands whose campaigns and ad experiences aren't
optimized for the phone. Often they link to broken pages and
frustrate users. (On one major mobile publisher's app, this
reporter was greeted by an ad for a retailer that sent him to a
webpage with an error message; another ad from a popular
beauty-products company directed people to a Facebook mobile
log-in.) Accidental clicks on touch-screen phones can also add to
Meanwhile, media companies have inadvertently cannibalized
mobile pricing by pawning off ad sales to mobile ad networks. These
networks have gotten their hands on mobile-ad inventory much faster
than ad networks did with desktop-browser inventory. As a result,
they have been able to build high-volume businesses that sell
mobile ads for prices below what many top-tier media companies such
as NBC Sports believe is fair market value.
"As you go to market and look to bring really interesting
sponsorship opportunities to buyers, the objection that does come
up a fair amount is the great pricing disparity," said Nick
Johnson, head of national sales for NBC Sports Digital. "And that
tends to be an objection that is difficult to overcome, which
prevents you from having a very strategic conversation."
For their part, representatives of mobile ad networks say it's
not their fault that they beat many publishers to the opportunity.
"Consumer adoption is there, but the reality is many publishers
haven't caught up in selling it," Jumptap CMO Paran Johar said.
As a result, companies such as Gawker Media and Atlantic Media,
owner of the The Atlantic magazine and the new business site
Quartz, are banking on building their mobile businesses around
branded content more than advertising. Both companies are selling
small ads on some mobile properties -- either directly or through a
network -- but each have sites where the only monetization is
coming via brand-sponsored posts, according to business executives
at the companies.
"[Mobile] advertising right now, from a pure creative
standpoint, leaves so much to be desired," said Gawker Media's
chief advertising officer, Andrew Gorenstein. "I don't see that as
a huge opportunity."
But it's not all doom and gloom -- yet. Mobile content
consumption, for the most part, is additive and not yet
cannibalizing desktop consumption, making its low revenue per user
more of an opportunity lost than a business crisis. Mr. Shinde
estimates that about half of all the people who visit AOL sites do
so both from a desktop and tablets or mobile phones. AOL is trying
to figure out how to show more ads to these users without scaring
them away. But Mr. Shinde said that 's hardly a singular