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The RAAKonteur #87 – How much ad money should you spend on mobile?

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4 June 2012

What does the Internet look like today?

A ground breaking report was released this week by KPCB, detailing current Internet trends. As can be expected, the US is reaching saturation point in terms of Internet users, and the developing giants, China and India, are taking the spotlight in a very big way right now. More interesting is the explosion of mobile, and specifically 3G, which now stands at 1.1 billion subscribers worldwide. This is, however, only 18% of the total mobile subscriber count, so the global saturation point is by no means near yet. Year on year growth in the US and Japan is easing at 31% and 9% respectively, but China and India are exploding at 115% and 841% respectively. Yes, that's not a typo – 841%!

So how much money should we spend on Mobile?


Mobile Internet traffic hit 10% of all Internet traffic in May 2012, and at the same time in India, mobile usage surpassed desktop usage for the first time. There is a dampening factor to these stats, however. Revenue per 1000 impressions (eCPM) on mobile ads are only $0.75, compared to $3.50 on desktop. Furthermore, Average Revenue per User (ARPU) on mobile is between 1.7 and 5 times lower than on desktop, as reported by Pandora, Tencent and Zynga. Google reports an increase in click volume driven by mobile, but a simultaneous lowering in cost per click. Facebook reports that mobile drives more users, but doesn't grow ARPU.

So, what's the problem with Mobile then?

Well, nothing. There is, however, still a problem with mobile content. One Japanese Mobile Game maker, GREE, reported a sudden skyrocket in ARPU when they introduced the "right game" (a game called Tanken Driland). This effect was confirmed by another Japanese mobile game maker, CyberAgent, whose mobile ARPU surpassed desktop ARPU (not due to a drop in desktop ARPU, mind you, but solely due to mobile ARPU growth). What's special about Japan? A 95% 3G penetration, in other words, a mature market. If we look at stats of media usage (meassured by time spent on media), versus ad spend on that media, we see the following:

TV: time spent: 43%, ad spend: 42%
Internet: time spent: 26%, ad spend: 22%
Mobile: time spent: 10%, ad spend: 1%

The combined potential ad spend market opportunity in Internet and mobile amounts to $20 billion! Mobile opens a new world of opportunity; it's a blank slate. There's a lot of media evolution that has to happen to accommodate mobile. This goes beyond screen optimisation. This means rethinking means of consumption. There's way too little happening in audio, for instance. The average American spend 52 minutes per day in a car, largely untapped. It's time to rethink the Internet, again.

Facebook Like buttons cost you Facebook traffic


This is an interesting one. This post on SimplyZesty references a tweet by UX guru Vitaly Friedman, aka @smashingmag, which stated that, since removing Facebook Like buttons from Smashing Mag's blog, Facebook traffic increased. According to Friedman himself, this is due to users sharing it on their timelines, instead of just liking it. Furthermore, it entices users to speak about your content in their own words, which makes it more likely for their friends to react to. Point: it all still is about good content, and there are no silver bullets. (It is interesting to note, however, that Friedman has since deleted the tweet. We wonder why?)

The real reason behind GM's pulled Facebook ads

A while ago we reported on GM pulling $10 million worth of ads from Facebook. At the time, they said they just didn't get their money's worth from the ads. It seems, however, that there's another version of the truth. Apparently GM wanted to do a so called page takeover. You might have seen examples of these on YouTube, where a brand gets total control of an entire page, to apply their branding to it, or do creative campaigns. Facebook said no. Or, to elaborate:

We have 900 million-plus people on the platform, and our job is to make the advertising on the platform as good and as compelling as content from (users') parents, or their friends, or their boyfriends or girlfriends. So when a marketer asks for something like that, that's just not what works on Facebook, so we would say no.

At this point GM threw their toys down, and left the room (taking their ads with them). If this is accurate, we'll have to agree with Facebook on this one.

Amex partners with Foursquare


Yes, you've heard right. Foursquare. That location-based checkin service. The one you used in 2010. We recently reported on Amex partnering up with Twitter, and now they're offering their users discount at several UK high street brands if they check into the brand's venue on Foursquare. We can't help but wonder if Foursquare really has enough active users to make this worthwhile.

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