Thursday, May 29, 2008

What Google means when it says mobile internet ad revenues will outstrip web

When Eric Schmidt says mobile will be the next big advertising platform AND that within a few short years it will outstrip ad revenues from the web, it might be time to take a fresh look at your own predictions and assumptions about what advertising is.

Schmidt is Google CEO. He knows a thing or two about ad revenues, and particularly about those coming from the web. He has deals in place for advertising on MySpace and, of course, ad revenues from YouTube.

He has tricks up his sleeve for new and improved search and, and, and... but what he has identified is that the mobile internet is the right medium for the most personal of advertising. And the most personal of advertising is the most effective.

The mobile is the most edge-in, networked device we currently have. It is what makes it such an exceptional fit with the way the network works, and how groups form. I wonder if it's this that Google has identified when Schmidt says in an interview with Frankfurter Allgemeine Zeitung:
"Some things work, and others just don't – but the mobile internet always works."

If he's talking about response rate, places where the ad is the content and the content is the ad have a tendancy to high response rates. Where perfected the response rate ought to be 100%.

Google is working towards cost per action models. Where that action is purchase (and isn't that where all measurement is intended to lead?) then you can have 1:1 relationships between ad and content and charge accordingly.

I'll make a wild guess that Schmidt isn't predicting that there will be more display advertising or even more text-link advertising on the mobile internet compared to the fixed line.

He is predicting that ad models that take advantage of the personal nature of this edge-in device, which offer ad as content rather than as interruption, will prove way more valuable precisely because it will be way more effective.

He is predicting that ad models which are a better fit for the networked world will win.

He's not alone.

The rate of change is so rapid it's difficult for one person to keep up to speed. Let's pool our thoughts, share our reactions and, who knows, even reach some shared conclusions worth arriving at?