The big, invisible, mobile billions that nobody can grab

There are billions upon billions of ad and spending dollars in our phones, waiting to be snatched up. Why can't big, cynical corporations capture them?

Here’s a fun little conundrum for your Monday morning: Mobile advertising is a potential $20 billion per year industry in the U.S. alone. So why is Google, the far and away leader in electronic advertising, making just $10 billion per quarter from all its advertising around the world? The answer, if there really is one, is that mobile advertising isn’t a huge industry shift or paradigm change: it’s money left on the table.

Jean-Louis Gassée does a great job of distilling this buzz-inducing vapor into a hard shot of truth in a Monday Note column on mobile advertising’s missed opportunity. Gassée suggests that it’s a matter of the people creating space for ads and selling that space underestimating and misreading the impact of smartphones and tablets. We thought they were like laptops with different screens. We were, Gassée writes, very wrong:

At the D8 conference in 2010, in front of an iPad-toting audience, a bellowing CEO dismissed Apple’s tablet as just a PC, minus the keyboard and mouse …

Now we have advertising on smartphones, and we’ve fallen into a comfortable, predictable rut: “It’s just like Web advertising on the PC, shrunk to fit.” We see the same methods, the same designs, the same business models, wedged onto a smaller screen.

Gassée’s post includes nice examples of the common ideas in mobile advertising, and ample evidence of how anyone who’s had a smartphone or tablet for more than a few days just knows they’re wrong. (He also references Mary Meeker’s latest web trends presentation, which is well worth a peek).

Here’s another take on what’s happening, written nearly a decade before: The Innovator’s Dilemma. Put simply (and summarized in a Quora post about working for Zynga, of all things), the book explains how new markets are emerging, markets that doesn’t value the things that great, market-leading companies do well. So those market leaders disdain the new thing, try to ignore it, and then they’re all of sudden trying desperately to prove that they’re the best at the thing that they originally claimed was irrelevant.

Unlike, say, the gadget market, however, it’s much harder for upstarts and innovators to move the advertising market around—it’s a big Old Boys Network with multi-multi-year contracts. So we’ve yet to see what really smart, forward-thinking, mobile-smart firms can do to release some of that hidden $20 billion.

For another look at hidden billions of dollars in mobile money, held down in large part by old thinking and corporate contracts, check out the mobile payment maelstrom. Instead of giving 4.5 billion people the ability to pay with their cellphone, some of the biggest and smartest companies in the world are waiting for NFC technology to slowly infiltrate the smartphone market, which will likely move past NFC in one or two iPhone release cycles.

Next time you check out your cellular bill and gawk at the data pricing, just think: they could be making way, way more from you. The mobile scene is not a nefarious plan, it’s just a bunch of executives, shooting in the dark at what they think are uniform targets.

Top image via Mary Meeker's 2012 Internet Trends report.

Insider: How the basic tech behind the Internet works
Join the discussion
Be the first to comment on this article. Our Commenting Policies