Interpublic Calls Delta Between Mobile Ad Spend/Time Spent 'Staggering,' Says It Will Grow, Not Shrink

Smartphone-Levi-Ad-AThe good news is that media consumption will expand markedly over the next five years, rising from about 74.5 hours weekly per person currently to about 80 hours weekly in 2017. The bad news for Madison Avenue is that almost all of that growth will be coming from a medium that has proven vexing for advertising: Mobile.

“It’s pretty staggering,” said Brian Monahan, managing partner of the intelligence practice at Interpublic’s Magna Global unit, referring to its new projections for media consumption, and the fact that so little of it is proving monetizable as an advertising medium.

“Consumers are just so far out ahead of advertisers in terms of their use of mobile media,” he told Online Media Daily on the eve of Tuesday’s release of the latest edition of its periodic Media Economy Report during the CES conference in Las Vegas.

The report, which is subtitled “The Ultimate Mobile Deep Dive,” not surprisingly focuses primarily on the impact mobile is having in the overall media economy. The report finds that mobile may also be Madison Avenue’s ultimate paradox, because instead of growing as a percentage of the time consumers spend with mobile media, advertising will actually decline over the next five years for a variety of reasons -- including the fact that the ad industry has yet to develop a truly scaleable model for advertising on mobile devices.

“It’s the biggest delta between time spent and ad spending,” Monahan said of the margin between consumer use of mobile media and mobile’s share of advertising budgets. “And we expect that to widen over the next five years, not narrow.”

Even more remarkable is the fact that mobile will lose share of total advertising spending, even as it has emerged as the fastest-growing advertising medium.

According to Magna, mobile currently accounts for 1.3% of worldwide ad spending and will rise to 3.3% by 2017, thanks to a projected 30.6% rate of growth over the next five years. By comparison, total ad spending on all media will expand only 5.2% over that period, according to Magna’s latest forecast.

The problem, said Monahan, is that consumer time spent using mobile media will rise at an even faster rate over that period, accounting for a greater percentage of media consumption, but a lower share of total ad spending.

Mobile’s ad share paradox is even more striking when you consider the relative cost efficiency, consumer attentiveness and low advertising clutter. The CPMs, or cost of reaching a thousand consumers, via mobile advertising, currently averages only $1.31, according to Magna. By comparison, broadcast TV averages $29 and newspapers average $51.

Monahan said that disequilibrium likely will continue until several factors are resolved, including developing advertising models and formats for capturing consumer attention with ads while they are on mobile devices, and for measuring, targeting and serving ads to consumers exposed to them.

“Therein lies the billion-dollar question,” Monahan said, adding, “What is the ad model going to be?”

6 comments about "Interpublic Calls Delta Between Mobile Ad Spend/Time Spent 'Staggering,' Says It Will Grow, Not Shrink".
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  1. Tom Cunniff from Tom Cunniff, January 9, 2013 at 9:47 a.m.

    Recently, on another site, an industry booster posted "the mobile phone is the only thing that goes from the Boardroom, to the bedroom, to the bathroom!"

    While this is 99% true, the same claim can be made for belly-button lint.

    The truth is, ubiquity does not necessarily make a mobile phone a great medium for marketing. If we can deliver consumers genuine utility (especially around location and/or timeliness), it will probably be embraced. Most marketing, if we are honest, does not ft this definition.

  2. john kottcamp from Tahzoo, January 9, 2013 at 10:30 a.m.

    This report highlights another example of the difference between marketing and advertising. The rise in time spent is an opportunity for brands to create and deliver content that is relevevant to the context of the consumer. People are not interested In the same thing when thery're in the boardroom, bedroom or bathroom as the previous commenter mentioneded. The challenge is to understand what people are doing in each situation and produce branded content that helps them do whatever it is they're doing, from playing a game, looking up a recipe or buying toothpaste.

  3. Tom Cunniff from Tom Cunniff, January 9, 2013 at 10:39 a.m.

    Amen, John. Traditional marketing thinks in terms of viewers, but digital must consider *users*. This is very different kind of attention. More about that here: http://tomcunniff.com/2012/03/is-fab-farting-around-behavior-as-important-as-the-grp/

  4. Walter Sabo from SABO media, January 9, 2013 at 11:52 a.m.

    These are clowns. As long as the directive to their Media Depts is to buy as much TV as fast as possible, no other "platforms" will thrive.

  5. Bruce Braun from Bridge Digital Marketing, Inc., January 9, 2013 at 3:27 p.m.

    Agencies think about and deal with the media totality of advertising the message of a brand. Television networks have understood this for decades but Mobile as an industry, just doesn't get it. They don't think the way brand marketers or agencies do. Most Mobile advertising companies are overly enamored with the bells & whistles of their technologies and constantly barrage the marketplace with a never-ending stream of them. Consider just RTB's, DSP's SSP's, & Ad Exchanges. These technologies are all about removing or ignoring personal relationships in the buying and selling of media. How much time do you think sales people from the TV industry spend on selling in the technology of TV to an agency or brand? They position themselves as marketing partners. How many times have you ever heard of TV networks being referred to as a "vendor" or "solutions provider"? How much more impersonal can you get with those terms? The Mobile industry and in particular, the MMA have yet to grasp this. The Television folks focus on building personal relationships and trust, negotiating packages and pricing directly with living, breathing people and not abdicating to an algorithm. The Mobile industry might also want to consider how expensive, tedious and complicated it is to plan and buy Mobile with all of those extra cost and time-consuming technology layers. TV buying comparatively, is easier, faster and incredibly more PROFITABLE for an agency to buy.

  6. Walter Sabo from SABO media, January 9, 2013 at 5:23 p.m.

    Bruce...you first have to get on the calendar to have an interpersonal relationship. Then the buyer WANTS to turn that relationship into math and algawhatevers.

    The MMA is run by Greg Stuart and no one understands interpersonal relationships better than he does.

    Your note better applies to radio sellers. Agree there.

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