Publishers That Lust for Mobile Ads May Find Their Hearts Broken

Last Updated May 11, 2010 11:44 AM EDT

The speed at which print publications have chased the Apple (AAPL) iPad is astonishing. The entire industry sees it as group salvation: Buy into the platform and you, too, can rescue your business. The reason, I suspect, is that Steve Jobs probably did one of his masterful selling stints promoting what publishers often care about most: ads. But the industry, and most others, will become collectively disappointed in mobile ads because reality will never meet the hype.

Why do I think that Jobs liberally poured from the honey jar in discussing the advertising dreams of publishers? Because he understood two things. One was that the iPad would need major media content different from what you could find elsewhere. He needed publishers to buy in and create something new for the iPad if it were to compete with the Amazon (AMZN) Kindle, as well as a bevy of other devices, and (eventually) tablets from competing vendors.

Because Jobs needed the publishers, he told them what they wanted to hear, which gets to the second thing he understood. Publishers are stuck in old business models and views of the world. How long did most resist really moving to the Web and not just indulging in some feel-good experimentation? Although many media companies have considered paywalls, their true inclination is to rely on advertisers.

Jobs would know this as well as anyone who looked at the industry for more than two minutes. So he clearly would have dangled the promise of mobile advertising: attractive formats, heavy analytic data, and high prices.

How high priced? As my colleague Chris Dannen pointed out yesterday, Apple's activity has helped drive mobile ad demand in general, and this will eventually fuel increases in ad prices:
The missing link for media buyers is the proof of efficacy of mobile ads. But [mobile ad platform] Greystripe says their ads get even better click-through rates than Web display campaigns, with click-through topping 1%. By offering their "iFlash" ads for the iPhone OS, they're aiming to get advertisers to give them the exact same Flash ad they run on the Web, and serve it to mobile phones, so they can compare the results side-by-side and see what they're getting. There's also no waiting for a new, mobile-centric campaign; it's instant turnaround.
That may be true, but banking on future ad revenue is a gamble, particularly in the context of past experiences and consumer habits. We've seen hype over the incredible money-making potential of mobile before. In the late 1990s, investors and businesspeople flocked to m-commerce -- mobile commerce. Everyone would get ads and coupons as they passed local coffee shops and, hitting the brakes, stop for a cup 'o joe. It didn't work then, and I have a feeling that it's not going to work now for a number of reasons:
  • Screens are small. That's not a complete washout; after all, people manage to surf the web from smartphones. But still, there's limited real estate unless you go the Apple iAd route and make ads full screen, forcing the consumer to take an action to be able to again use the handset. Such interruptions will likely fall into the annoyance-ware category.
  • People already pay significant amounts for connectivity, so ads will seem even more intrusive and generate increased resentment.
  • Consumers are less whimsical than marketers think. When you're mobile, you're going from one place to another, generally with a purpose. Taking hold of someone's attention under the circumstances is difficult. You might counter that billboards fall into the same category, but they're just out there, large and easily seen. The consumer has to cooperate to see ads on a handset.
  • Over the years, people have become adept at ignoring ads.
For mobile advertising to be a huge success, it has to perform for the companies that spend money for their names to be on display. Unless an unusual amount of success quickly happens and sustains, advertisers will push prices down. They may not fall as far as over on the Internet in general, given that platform owners can effectively reduce the otherwise infinite available ad inventory, but that will only go so far.

Another reason for my skepticism is that too many people are certain of success. Think of big financial hits in high tech. Did Google (GOOG) co-founders Sergey Brin or Larry Page think on acquiring AdSense, "We are so going to be billionaires?" Did anyone see Microsoft becoming the size it did on largely selling operating systems and, eventually, office software? When Facebook was the darling of the university set, who foresaw the eventual economic value? Maybe some people see the possibilities, but it reminds me of the old Joe Kennedy Sr. story, that he knew it was time to get out of the market in the late 1920s, before the crash, because he was getting stock tips from the guy shining his shoes.

As former DoubleClick CEO Kevin Ryan notes, everyone wants to hear that mobile will be huge, and they're not interested in informed views to the contrary. When everyone is so desperate for success to be inevitable, I find it's generally wise to step out of the way and let the lemmings march.

Broken Heart Image: RGBStock.com user ba1969, site standard license.
  • Erik Sherman On Twitter»

    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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