You know those annoying mini-banner ads that pop up in the middle of a smartphone app as you're trying to use it? Well, a lot more money has been pouring into putting them there lately -- and you should be happy about it.
For a few years now, companies that produce content and services that people aren't willing to pay for -- which, let's face it, is a lot of stuff these days -- have been scrambling to reach users where they are, and figure out a way to monetize their eyeballs. They've already executed a huge shift from the physical world of paper, bricks, and mortar to the internet. You can't charge nearly as much for advertising online as you can in a print product, but there's at least space for it on the screen.
Now, though, they're coping with another migration: More and more people are accessing those content on their phones and tablets, not a desktop or laptop. Growth of the mobile Internet shows no signs of slowing down, and in developing countries, it's already leapfrogging desktops and laptops as the primary way people get online.
That growth has fueled an explosion in new businesses based on smartphone and tablet applications. Making money off them isn't easy, though, because you can charge even less for mobile ads: Some $0.75 per thousand impressions, compared to $3.50 for desktop Web ads, and as much as $100 for a thousand views in print. The reason for the pricing differential is pretty simple, if you've ever pawed at an ad on your phone to make it go away; there's just less space to work with, and advertising is more annoying on a small screen than on a full-size Web site where ad space fits easily with content. That poses as much of a problem for ad-dependent companies like Google and Facebook as it does for the little guys.
Finally, this week the Interactive Advertising Bureau released some cheerful news: Mobile advertising increased 145 percent in the first half of this year, to $3 billion, indicating that big brands like Unilever and Mondelez are finally finding it worth their while to reach people on the small screen. Mobile advertising doubled its share of the pie, which also increased in size:
Put another way, you can see mobile ad revenue zooming upward as traditional Web search declines:
Part of the growth has to do with the fact that ad formats are improving; there's an arms race on to create less obtrusive ways of integrating advertising into applications. But a lot of it comes simply from the fact that people are spending more of their time plugged to their phones and tablets these days, and companies are adjusting their ad budgets accordingly.
Ultimately, that's a great thing for the sustainability of the mobile ecosystem, and all the free apps that you download without thinking -- not to mention the journalistic outlets trying to make money when you read what they put out, without charging you for it directly.