The media industry's 2nd Apocalypse: The rapid rise of mobile

The media industry's 2nd Apocalypse: The rapid rise of mobile

Summary: The low revenues of mobile advertising is killing digital media companies — even Google is struggling as it pulls more than a thousand engineers off other projects.

SHARE:
8

The huge challenge facing media companies as readers shift to mobile platforms, is far worse than is generally known. 

Say Media, an online publisher and advertising network based in San Francisco, last year reported that mobile ads generate just one-fifth the revenue of a desktop ad. It's become even worse.

An industry source with access to massive amounts of advertising data tells me mobile ads are a disaster. He has seen detailed reports from large publishers and ad networks that show advertising on mobile platforms is generating as little as one-tenth the revenue compared with desktop advertising.

Traditional media companies that were struggling with online ads that produced one-tenth the revenue of print, now have to cross an incredible chasm: $1,000 dollars in print advertising becomes $10 on mobile. 

Digital media companies now find themselves in the same situation that traditional print media companies faced ten years ago: they are in the path of the next disruptive technology wave and they have to figure out how to transition to a business model that offers one-tenth the revenues from advertising. Do they show ten times as many ads? 

This second apocalypse is moving far faster than the first apocalypse, which was the shift from print advertising to digital ads. 

The revenue chasm can be seen in Mary Meeker's recent Internet deck. It shows the massive gap in mobile ad revenues (and it's not because print is "way over-indexed.")

MobileAds

Google's masked problem

Even Google is having trouble. The many news stories earlier this year about Google pulling out of its Google+ social network missed the real story: Google is struggling to monetize mobile and it is all hands to the pump as it transfers more than a thousand engineers from other projects.

Google's problem with mobile has been masked by Google's policy that forces a percentage of mobile ads into the total advertising bought by companies, even when mobile has no relevance to what they are selling. 

The saving grace of print

Paradoxically, media companies that still have significant revenues from their print advertising business have a temporary advantage over digital media companies because the decline in print revenues is far slower than the loss of desktop ad revenue.

The New York Times' newspaper business will be seen as an important protective asset, buying time while the media industry tries to figure out how to monetize their readers' shift to mobile. It certainly can't be done with ads.

Media hackathons

I was invited to take part in a recent hackathon to spend the weekend creating new types of media apps, as a way of trying to save journalism through innovation. 

Apps won't save journalism. It is innovation in the business model that's needed. A new way of presenting the work of journalists is useless without the means of generating funding for that work. If ads can't fund journalism on mobile then is there another way?

Journalism is losing its desktop ads revenues in the shift to mobile — it was lousy revenues — and now they are even worse. 

Billionaires can't save journalism

The best intentions of billionaires such as Amazon's Jeff Bezos, with his $250 million purchase of the Washington Post; Ebay's Pierre Omidyar and his $250 million investment in his First Look Media startup, cannot save journalism. Neither one of these billionaires, no matter how clever their technologists, can save the media industry alone.

A solution has to be found on an industry-wide scale in order to halt the media's crumbling business model and to begin to reverse the trend and rebuild its fortunes. 

Individual media ventures, no matter how well funded, or how much high quality content they produce, will not succeed as self-sustaining businesses unless there is a new media business model available to all. We don't have it. And it's the biggest failure of our digital age because media informs and educates all citizens and governments, and influences the many complex decisions that have to be made.

eGovernment

Garbage in — garbage out. We will make increasingly poor decisions on important issues such as the environment, economy, energy, enterprise, elder healthcare, education — and that's just the issues that begin with "e" — there's plenty of others.

This is why the media industry's crumbling fortunes cannot be ignored. They are tightly bound to everyone's future prosperity and quality of life. We need innovative media business models and we need them now.

I have some proposals that I will share soon. 

Topic: Disaster Recovery

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

8 comments
Log in or register to join the discussion
  • Screen Real Estate

    Traditional print media could put "pages" of advertising generating lots of ad revenue. Those pages were often far larger than 8"X 10". Ads could be big. Ads could cost a lot.

    Desktops reduced advertising to 1 page. That 1 page could be on a 15" 17" 25" and up screen real estate but it's limited to 1 page. Most internet users don't read pages and pages of article. An article longer than 1 page is to long.

    Phones are limited to 1 page and limited to 7" 10" screen. There's only so many ads one can fit in that size screen. Plus users are not used to ads on their phones as they are with desktops and web pages.
    CG IT
  • The availability

    Of 'almost the same but without ads' alternatives doesn't help. IE, people who use Wikinews instead of CNN's site, for instance.

    Consumers care about cost more than quality, to a point.
    luke mayson
  • Maybe they'll kill ZDNet ;)

    Maybe they'll kill ZDNet ;).

    "Garbage in — garbage out."

    . . . and ZDNet is often filled with garbage. Pretending that the "cloud" is the magical silver bullet for everything, back in the 2000s it spent years declaring Microsoft dead, and are now declaring the PC dead. Yeah.

    "This is why the media industry's crumbling fortunes cannot be ignored. They are tightly bound to everyone's future prosperity and quality of life. "

    LOL.

    I dunno. Sometimes something is important, but it often seems the media has spent more time trying to be entertainment and less time being informative. Everything has to be an opinion piece, and even when something isn't, the authors are so poor at understanding the difference between opinion and fact that it ends up being an opinion piece anyways.
    CobraA1
  • The article is flawed and misses important aspects

    Some forgotten ideas:
    Advertising in desktops is not growing, for Google per example is even declining a bit.
    Advertising in mobile is growing fast. In 2011 Google's revenue from mobile was less than 1/10 of revenue from desktops, now it's about 1/3 and projections for 2014 is that mobile revenue will reach half of desktop revenue. Revenue for Google if behind expectations is because facebook and others are competing like never before.
    For facebook, the importance of mobile revenue is even more important, the revenue for desktop is steady for 3 years, mobile will surpass it in 2014.
    Mobile devices are used by a lot more people and growing, it's obvious that the average income from those with a traditional PC is more favorable, but smartphones alone are selling 3 times more and growing.
    Mobile represents a huge opportunity for advertising.

    The traditional media industry is in trouble but not because of mobile, the decline is not from yesterday and was expected.
    AleMartin
    • Problem

      The problem is not number of units but ad rates for each type of unit. If the rates are very different as the article states, about 1/10, then moving the ads to a mobile device reduces the review by 90%. Also, if one is using a mobile device then one is not likely to be using a desktop. Thus, the revenue per user drops based on how much they are using a mobile device versus a desktop/laptop. There are finite number of people of whom only a portion are consuming content at any time. Included is surfing the web, reading a book, watching TV, etc. This has always been the advertising industries problem; how to reach the consumer with their ads.
      Linux_Lurker
  • I hope advertising leeches die a slow painful death

    Maybe some of us don't mind a few minute long stretches without some kind of sales pitch or product placement. We have all grown unresponsive to the rubbish that these slimeballs push so they have to find more tasteless and guerilla shock offerings to try to reach us. Eventually we will all be walking around with blinders on because that will be the only way to keep our sanity.
    zmudd
    • Agreed

      Years back when advertisers decided that I needed their obnoxious Flash ads zooming across my desktop, the war began. I won't use a browser without ad-block, my smartphones get rooted so I can install effective ad blocking software, and my favorite TV content is all recorded and the commercials stripped before viewing.

      Advertisers have no one to blame but themselves.
      cHarley1200
  • Move your stuff off the free web into subscription ecosystems

    When newspapers were sold a whole lot, they were sold in stores and stalls where people expected to pay for them. Things were good then. Then newspapers moved to the web, where people expected to not to pay for things, then things went south. Newspapers and media in general, have to move back to venues where people expect to pay for them. They just need to be modern, and offer a substantially better user experiences and value, than what can be found on the free web.

    I believe telecoms and cable companies are the best places to go, as these companies respect the value of media, and have subscription models in place media companies can take advantage of, as media companies persuade the telecoms and cable companies to release apps with their content on all the major platforms. The last place media companies should go is Google, as Google is the great exploiter of IP, as it tells everyone to make the stuff available for free or for next to zero profit, so that it can serve up their content / app / device, etc. with ads, where it able to make a buck, while its partners are all left holding the bag.

    After media companies, Apple may be the next place to go, because I have a feeling that it intends to use the Beats subscription service it acquired, to support a broad array of subscription content, and provide good prices for media and other small companies to sell their products. I had high hopes for Microsoft, but it hasn't demonstrated that it cares at all about its partners making money on Windows 8, or Xbox Live in the future. Who knows, I may wind up switching over to the Apple ecosystem, because I need to make money.
    P. Douglas