Last week at GigaOM’s paidContent Live conference in New York, we hosted a break-out Mapping Session to assess what the mobile media industry sees as the strategies and technologies with the most promise of generating revenues and/or disrupting the sector. The resulting consensus was that mobile sponsorships and apps bundled with things like special offers or utility functions would be the horses media and entertainment companies should ride for the next 12 to 24 months.
GigaOM Research Mapping Sessions are facilitated discussions that tap into the GigaOM community to test hypotheses on new technologies, business models, customer trends, etc. We’ve hosted Mapping Sessions on topics like mobile shopping and next-generation user interfaces. They often feed into and set up more detailed analysis we deliver through Sector RoadMap reports.
Media companies have embraced apps – both for truly mobile content and in support of tablets – partly to deliver a user experience optimized for the (small) screen and gesture interface, and partly because they could charge modest sums to consumers for them. Not to mention that mobile is where the audience is. We wondered if that ability to charge would lessen over time — would competition drive away paywalls a la the desktop web, or would HTML5 alleviate the need to customize apps for mobility? HTML5’s solution to the mobile experience will likely take some time, as Facebook and others have realized. But overall, session participants did not seem excited about the ability to charge for media apps other than games or semi-exclusive content like databases, financial news/analysis, and streaming music.
At the same time, mobile ad pricing – outside of search – is higher than that of display ads on the wider web. But as mobile inventory increases, will mobile display ad rates follow online’s declining CPMs? Session participants were more bullish than I am. They believed premium pricing will maintain, driven by 1) the omnipresence of mobile phones, 2) the potentially superior context (location, real-time activities, in- or near-store shopping) that mobile ads can deliver, and 3) the opportunity for mobile ads to be shown deep into a shopper’s purchase cycle. That’s the promise, anyway. Currently the reality is that mobile ad spending is dominated by search – which few media companies can leverage – and Facebook’s volumes of cheap, lightly targeted inventory. On an earlier panel discussion, digital marketing maven Jeff Dachis said mobile was an “engagement” rather than advertising medium.
Assessing market disruption and opportunity
GigaOM Sector RoadMap reports — on categories like crowd labor platforms and work media tools — are collaborative research efforts that match up competitors’ abilities to align with what we call Disruption Vectors, i.e., the key technology or market forces that drive emerging markets. Smart vendors can harness Disruption Vectors to gains in revenue or market share. We steered the Mapping Session towards identifying the mobile media monetization Disruption Vectors, and came up with the following near-term outlook. We asked the participants to vote on the trend or market force they though would be the most important for monetizing mobile media in the next 12-24 months and then choose the one they deemed second most important. I roughly tallied the results from the room:
Source: GigaOM Research Mapping Session, April 2013
Mobile sponsorships/native advertising. After noting that the top iOS paid apps were mostly games, session participants gravitated towards sponsorships. So-called “native advertising” – i.e., the latest buzz-phrase attached to age-old marketing tactics like sponsored content and advertorials – seemed to fit into this bucket as well. There’s only so many content types that fit into a game format, so exploiting this opportunity may be limited, or require much softer ROI analysis, like sponsorships in traditional media.
“The Polybag effect.” Participants were intrigued by a somewhat similar strategy to that of sponsorships: that of bundling content, apps, and utility services, possibly via real-time audience or behavioral targeting. The idea would be that, like a polybagged magazine that included other offers or content, mobile apps and content could be matched up at download time.
Payment system momentum. The people in the room also felt that even though mobile payments and location technologies like NFC might be a ways off in terms of mass adoption by users, there would be enough action on the supply side to create interest and opportunity.
Mobile ad differentiation. A handful of participants thought that mobile advertising rates would hold up strongly, due to the targeting and other differentiation noted above. Many in the room seemed interested in the longer-term payoff from better contextual targeting and even augmented reality integration that will figure in mobile advertising’s future.
Data licensing. The single most popular secondary disruption vector was licensing. Despite concerns from the panelists about privacy, potential legislation, and most media companies’ inability to spawn dedicated data licensing businesses, there’s a lot of hope around this model.
Charging for apps. Few thought media companies could make much money charging for apps. Lkiewise, up-selling virtual goods seems mostly games-related, and dependent on the minority “whales,” who are the most addicted users.
This was a lively session, with lots of good discussion. I’m not convinced we’ve properly weighted the different Disruption Vectors in mobile media, but clearly the participants favor advertising over fee-based apps, while they’re gazing fondly at the promise of creating a data business.
We welcome your feedback on these disruptive trends and whether or not they represent real mobile revenue opportunities. What do you think will accelerate the success of mobile media apps? Have we missed or mis-emphasized anything that you believe will be key to driving the sector over the next 12 to 24 months? Continue the discussion by leaving a comment below.
Mapping Session panelists
The GigaOM Research analysts that participated in the Mapping Session were:
- Rick Bruner
- Ross Rubin, principal analyst, Reticle Research
- Aram Sinnreich, Assistant Professor, Journalism & Media Studies, Rutgers University
- Paul Sweeting, Principal, Concurrent Media Strategies