Meeker Report: Mobile Advertising Spend Falls Far Short Of Consumer Habits

When Mary Meeker, partner at Kleiner Perkins Caufield Byers, released her annual Internet Trends Report released this week there weren’t many surprises. However, one of the slides called out the gap in advertiser spending on mobile relative to the time users spend consuming media on mobile devices and the enormous opportunity mobile still presents.

The graphic is clunky, but the takeaway we’re meant to grasp for mobile is that it’s still being undervalued by advertisers.

Users in the US spent 20 percent of their time consuming media on mobile devices last year. Yet, advertisers dedicated a measly 4 percent of their spend to mobile. Contrast that to print in which consumers spent just 5 percent of their time consuming media, while advertisers spent 19 percent of their ad budgets on print advertising.

There’s a difference though between ignoring the value of a medium and not being able to realize value from a medium. I’d argue that, while there is always a level of inertia at play when a new medium rises, in general it’s not that advertisers don’t recognize mobile’s importance, it’s that roadblocks still remain before advertisers will be willing to invest at the level that meets consumer habits.

As with any emerging media technology, there are kinks that need to get worked out before advertisers jump on board. Challenges range from getting mobile-ready landing pages right, to solving tracking issues, addressing transparency and fraud problems, devising effective ad formats, to developing useful measurement and attribution tools and standards.

There are many players working to bring advertisers along with the surge in mobile media consumption, Google being the largest. Google’s introduction of Enhanced Campaigns, was of course an effort to push advertisers to invest in and embrace mobile (and the idea of device neutrality). Largely as a result of  enhanced campaigns, Marin Software estimates that 50 percent of clicks on paid search ads will come from mobile devices by the end of next year. EMarketer estimated that in 2013 mobile search ads drove 19 percent of Google’s ad revenue and predicts that by 2015 that number will rise to 30 percent.

On the attribution front, Google has introduced estimated cross-device conversions to help advertisers capture conversions actions that begin on one device and complete on another. The company is testing in-store conversion tracking and has already integrated call conversions into the AdWords platform.

Mobile ad formats have also come a long way in a relatively short period. The IAB’s Mobile Rising Stars ads are showing promise. Facebook cracked the mobile code on its site with ad formats in the news feed. Facebook’s video ad pilot has garnered plenty of interest from eager brands willing to pay top dollar.

For brands eying opportunities in mobile video, a challenge has been the lack of apples-to-apples measurement tools to target and measure online and mobile campaigns as they do TV advertising and to buy at scale. We’re now seeing real movement in this area.

Nielsen is fast becoming the standard bearer for video ad measurement tools that fit in line with traditional media buying metrics. Facebook adopted Nielsen Online Campaign Ratings for its Premium Video Ads pilot. Programmatic capabilities from companies such as OpenX and Adap.tv and FreeWheel, among others are helping to streamline the buying process for native and video mobile advertising at scale.

As more of the boxes get checked off the list of technical and creative challenges, we can expect to see mobile ad investment rapidly come into line with consumption habits.