Remember when using your smartphone or tablet to access the Web was a relatively ad-free experience? Now there are seemingly ads everywhere you go – pre-roll segments on videos, paywall roadblocks, subscriber messages that ask you to sign up for newsletters, ads in your news feeds, floating ads that cover inconvenient parts of the screen, and most importantly — sites that won’t load properly until you instruct them that, no, you’d rather not download the app and read the content there.
But don’t blame the big tech companies for your deteriorating mobile Web experience, blame Wall Street. That’s because tech companies and publishers have been given an implicit directive by Wall Street investors: Go out there and monetize the mobile Web. Now that the number of mobile Web users has eclipsed the number of desktop Web users, it’s no wonder that companies are introducing a growing panoply of mobile advertising options, all competing for your attention. That’s where the consumers are. By 2017, there will be more money spent on mobile advertising than on radio advertising.
Consider for a moment the experience of Facebook, which learned back in 2012 that investors would punish the company if it failed to monetize the mobile world. When it went public, Facebook admitted it made almost no money from mobile advertising, and the stock promptly sank from its IPO price. Investors said it was all because Facebook hadn’t figured out mobile. Now the share price of Facebook is back up to the mid-50s and the answer is simple: Facebook learned how to monetize mobile. In its latest quarterly earnings, Facebook reported $1.34 billion in mobile ad revenue. Combined, Facebook and Google now control two-thirds of the mobile advertising market. Expect that number to increase once Facebook launches its new mobile ad network.
All of this has very real implications for the way that we use the Internet. In a worst-case scenario, it could lead to the decline of the mobile Web as we know it and, more broadly, to the decline of Internet innovation if people become dependent on a handful of apps for Web content. “Surfing” the Web is an anachronism already for iPhone and Android users. It’s already the case that 86 percent of users access the mobile Web via apps and that percentage could inch even higher over the coming months as companies dedicate more and more resources to winning the mobile app game. Twitter, which ranks a distant third in mobile advertising revenue behind Google and Facebook, is planning to up its mobile advertising game.
In a provocative blog post (“The Decline of the Mobile Web”) at the beginning of April, Internet entrepreneur and investor Chris Dixon argued that this could lead to a situation where the mobile Web becomes so saturated with ads that it essentially just becomes a place to try out a service before you download an app or a place to check out long-tail content every now and then. The mobile Web experience is fast becoming so broken that we will all be accessing the Internet entirely via apps, caught in the ecosystems of companies who manage to get their apps on the home screens of our smartphones. As Dixon suggests, it will be like the current world of cable TV, where a few big channels are dominant and everyone else gets relegated to the long tail of content that you browse at 2 a.m. when you’re flipping cable channels.
In short, we’ve quickly transitioned from a situation in which Web companies have a mobile advertising problem, to a situation in which the mobile Web experience has an advertising problem.
One gets the feeling that the situation for mobile users is not going to get better any time soon. Check out the latest stats from Gartner, which is forecasting a massive growth in global mobile advertising, from an estimated $18 billion in 2014 to almost $42 billion by 2017. That’s more than a doubling of ads in a very short period of time. In order to make these ads as effective as possible, advertisers are dreaming up ways to boost the engagement of these ads — like the creation of video ads that start playing automatically even if you do nothing or new forms of “native advertising” that trick you into thinking that you’re actually clicking on content rather than advertising.
Just as companies faced challenges in transitioning their business models from offline to desktop, they seem to be facing the same types of challenges in moving from desktop to mobile. The risk is that this rush to monetize mobile ends up in a dramatically deteriorating mobile Web experience that leads to a whole host of unintended consequences for the way we consume content. Given the huge spike in mobile advertising forecasted for the next few years, you can view this as a golden age for advertising innovation. Or, you can view this as a possible sign that the Don Drapers of the digital advertising world should be rethinking how they ply their trade when it comes to our smartphones and tablets.