Mobile Apps Are the New Network TV, Without the Ad Dollars

Todd Wasserman2013-04-25 21:55:26 UTC

Researcher Flurry reported on Thursday that the audience for mobile apps has hit 58 million in primetime — 8 p.m. — a figure that rivals that of the top three TV networks on a very good night, but revenues are still just a fraction of those of TV.

The IAB estimates that the U.S. mobile ad market brought in $3.4 billion in 2012. The IAB didn't break out revenues for apps vs. the mobile web, but Flurry has estimated that 80% of mobile activity occurs on apps. Comparatively, Kantar Media calculated that TV advertising accounted for $74 billion in ad revenues in 2012. Even if apps generated 100% of mobile ad revenues, the market would still be just 4.5% that of TV.

Meanwhile, Flurry also found that there are now more monthly users of mobile apps than there are for desktop computers and laptops. Yet the the desktop ad market is still 10 times the size of the mobile ad market in revenues, according to the IAB.

Why?

Michael Becker, managing director of the Mobile Marketing Association, says there are several reasons, but the main ones are a lack of a unified buying infrastructure for mobile apps and a comparatively fragmented market. "Reaching this audience isn't as easy as making a TV buy," he says. "That's the big difference."

To execute a mobile ad buy, you have to choose between various networks and exchanges and real-time bidding platforms. The ads themselves are also different since they're often designed to prompt users to take action relatively quickly, which mean fewer branding ads and more direct-response executions. To ensure that the ads are effective, it helps to tailor to them to individual users' demographics and geographic location. To make things even more complicated, while on desktop, there are basically two operating systems, in mobile there are at least 10, Becker says and "hundreds of browsers and screen sizes."

The disparity between the reach of advertising via mobile apps and the complexity of the buying process is "both the challenge and the opportunity" says Peter Farago, VP of marketing for Flurry.

Flurry projects that the install base for mobile apps will double over the next year, which might lead some to conclude that mobile is a black hole that is eviscerating the TV and desktop market and leaving behind a much less lucrative ad industry in its wake. Yet eMarketer predicts that TV will continue to grow — and outpace digital advertising — through 2017.

One argument is that even though TV ratings are down — Morgan Stanley analyst Benjamin Swinburne recently found that they fell 50% over the past decade — TV is still the last place where you can find 5 million or more people tuned in at the same time to an ad. You may be able to get in front of 5 million people on Facebook, but if you use a display ad, only about one in 1,000 people will click on it.

Paul Gelb, head of strategy at MoPub, a mobile ad exchange firm, makes a more optimistic argument. In Gelb's view, mobile ad revenues are still low because the industry is so new. Eventually, he says, mobile will be bigger than TV. "The dollars don't shift in a meaningful way that's sustainable overnight," he says. Yet Gelb points out that bigger advertisers are jumping into mobile — Mondelez (nee Kraft) pledged last year to put 10% of its ad budget into the segment — and that both marketers and advertisers are experimenting to see what works. "Sometimes a blank canvas is a challenge," Gelb says, noting that "even in TV it took the industry years to get to the 15- and 30-second commercial."

Image courtesy of Getty, Justin Sullivan

Topics: Advertising, Business, flurry, mobile advertising if(window.pageChanged) window.omni({"channel":"business","content_type":"article","top_channel":"business","content_source_type":"Internal","content_source_name":"Internal","author_name":"Todd Wasserman","age":"0","pub_day":25,"pub_month":4,"pub_year":2013,"pub_date":"04/25/2013","isPostView":true,"post_lead_type":"Default"}); metaData = {"link":[["canonical","http://mashable.com/2013/04/25/mobile-apps-is-the-new-network-tv-without-the-ad-revenues/"],["image_src","http://rack.2.mshcdn.com/media/ZgkyMDEzLzA0LzI1L2E2L0FwcHMuZmYyYjcuanBnCnAJdGh1bWIJNzIweDcyMCMKZQlqcGc/62c6dbad/34a/Apps.jpg"]],"meta_property":[["og:url","http://mashable.com/2013/04/25/mobile-apps-is-the-new-network-tv-without-the-ad-revenues/"],["og:title","Mobile Apps Are the New Network TV, Without the Ad Dollars"],["og:type","article"],["og:site_name","Mashable"],["og:image","http://rack.2.mshcdn.com/media/ZgkyMDEzLzA0LzI1L2E2L0FwcHMuZmYyYjcuanBnCnAJdGh1bWIJNzIweDcyMCMKZQlqcGc/62c6dbad/34a/Apps.jpg"],["og:article:published_time","2013-04-25T21:55:26Z"],["og:article:modified_time","2013-04-25T21:55:42Z"]],"meta_name":[["description","Mobile apps are now getting a bigger audience than broadcast TV. So why is it getting just a fraction of the ad revenues? "],["keywords",["mobile-advertising","flurry","uncategorized","business","advertising"]],["twitter:title","Mobile Apps Are the New Network TV, Without the Ad Dollars"],["twitter:description","Researcher Flurry reported on Thursday that the audience for mobile apps has hit 58 million in primetime -- 8 p.m. -- a figure that rivals that of the top three TV networks on a very good night, but r..."],["twitter:image","http://rack.1.mshcdn.com/media/ZgkyMDEzLzA0LzI1L2E2L0FwcHMuZmYyYjcuanBnCnAJdGh1bWIJNTYweDc1MAplCWpwZw/1945175b/34a/Apps.jpg"],["twitter:site","@mashable"],["twitter:url","http://mashable.com/2013/04/25/mobile-apps-is-the-new-network-tv-without-the-ad-revenues/"],["twitter:creator","@mashable"],["twitter:card","photo"],["twitter:image:width","560"],["twitter:image:height","750"]],"short_url":[["short_url","http://on.mash.to/11nHyjK"]]};

View the original article here