What’s the difference between mobile and television?
About $22billion, at least where advertising budgets are concerned.
It’s known as the “Meeker Gap“, the difference between time audiences spend on mobile and the total dollars put against mobile ad campaigns. It’s a key data point from the Internet Trends Report over the last five years.
People spend 36% of their media time watching TV, so it receives 39% of the advertising spend. Fair enough. But people now spend 25% of their time on mobile, and it’s only getting 12% of the spend. And guess which audience is shrinking versus growing?
These numbers represent one of the greatest opportunities in media and technology right now. So why does this gap exist, and who are going to be the winners when mobile gets its fair share of marketing budget?
Firstly the gap exists because of fundamental issues with the delivery of mobile content. Quite often programmatic ads don’t execute in time, or there are delays due to network latency, or lost cellular coverage. Issues around attribution transparency, analytics and conversion of users have also been identified by marketers as challenges with mobile.
Overall digital is underweight in marketing spend and some of this money is actually flowing back to television. The 2016 Upfronts were a bumper year for the TV business, even as shrinking audiences are spread across an increasing volume of programming. But analysts still predict the long-term decline of TV ad revenues.
The beneficiaries of the mobile ad boom are Facebook, Google and recently Snapchat, a true 21st century media company. The mobile giants will continue to grow. But what about mobile operators and the hundreds of billions they spent over the last decade building out 3G, 4G and soon 5G networks, that allow the Internet majors to flourish?
With a media strategy with video at the center, operators can redirect some of that ad spend away from FB and Google. They have unparalleled first party data, the ability to zero-rate content, and can deploy intelligent content delivery to optimize their networks.
Solutions like Incoming’s artificial intelligence-based approach deliver smart ways of prepositioning video, and brand new contextual analytics. This is a whole new business model for operators as their subscribers turn into audiences, hungry for entertainment. New types of plans centered around premium content, app recommendations and value exchange will emerge as drivers of growth for operators.
Ad spend will continue to flow to mobile, television’s last gasp notwithstanding. But why should all those extra billions be siphoned off by Snapchat, Facebook, and Google? By capitalizing on escalating video consumption and a unique relationship with subscribers, mobile operators can make advertising a source of bottom line growth for years to come.
Mark Adams is CEO of Incoming Media, a startup creating new revenue models for mobile operators using smart video. Like this and follow me for regular updates on mobile, media and the video value chain.