A fundamental change has taken place in the last 12 months as audiences rapidly migrate from the desktop Web to mobile devices to consume media, with ad dollars flowing to the companies fastest to adapt to the changing digital landscape. That's according to Nigel Morris, CEO of Dentsu Aegis Network Americas & EMEA.
Commenting this week during a JPMorgan Webinar on the ad market in the second half of 2014, Morris noted that mobile ad spending has historically been limited by various factors including a complex wireless ecosystem, the expense of mobile ad executions and limited reach because of fragmentation.
“The exponential increase in the penetration of smartphones and video capability really started to change that. What changed also is the amount of time people are consuming on that mobile device,” he said, noting that 70% of Facebook’s traffic now comes through mobile.
In its latest cross-platform report, Nielsen found that 71% of American adults now own a smartphone and typically spend more than two hours a day using their devices. Furthermore, the mobile video audience is up to nearly 115 million, with the average time spent viewing reaching one hour, 41 minutes a month.
Much of the ad spending in mobile is going to big players like Facebook and Google, in part because they reacted in time to capitalize on the mobile shift.
“Facebook and Google…both recognized, probably a year before it was too late, they’d missed the start of a serious migration in their audience from browser to mobile, but then they threw their whole organizations behind addressing that,” he said.
The same mobile shift, however, is affecting all media companies, “and those people that can get their act together, and get their mobile platforms set up, are going to be the ones that get the dollars,” noted Morris. But he suggested that whether the same level of ad dollars will ultimately flow to mobile as the desktop Web is an open question.
One the one hand, mobile is still constrained as an ad medium by the smaller size of screens. But geolocation — a capability that sets mobile apart from other media types — could prove crucial in luring more ad dollars, given the proximity to point of sale. “The bigger the engagement I can have closer to the point at which they’ll part with their money, means it’s the most effective channel I can get,” he said.
Despite its huge impact on consumer behavior, mobile is attracting relatively few dollars, partly because it’s often placed in a silo apart from other media categories. Speaking more broadly, Morris suggested that digital media, including mobile, must be part of a holistic approach to media planning. “All media has to be driven, to a certain extent, with digital at its heart because that’s where more and more people are spending their time, and taking decisions around purchasing products,” he said.
Morris also discussed different client approaches to incorporating digital into the planning process. Some advertisers start from the current budget allocation and adjust — often increasing spending in digital. Others begin with a blank slate, with the goal of more closely matching spend to consumption patterns across media and devices.