Why Promotions Are Critical for Monetizing Mobile

by Matt Coen Second Street

The Challenge of (and Solution to) Monetizing Mobile

According to the Wall Street Journal, mobile now represents 25% of people’s media time, but less than 10% of marketing dollars. This divide could be even more serious for media companies. According to Ad Age, “Just 10% of the [New York] Times‘ digital advertising revenue was from mobile ads in the third quarter, but more than half its digital traffic came through mobile devices.” Mobile has been difficult for media companies to monetize because of the lack of space for display advertising.

I recently had the opportunity to hear Chris Lee, President of Deseret Media, talk about this mobile revenue gap at the Local Media Associations Innovation Conference in Philadelphia. Chris laid out the challenge in stark terms: While you may have 4 ad spots on your desktop pages, you may only have one on mobile (and it’s likely at a lower CPM).

Desktop DisplayMobile Display
100 million pageviews100 million pageviews
4 ad units per page1 ad unit per page
$5 CPM$5 CPM
$20 x 100,000 = $2,000,000 in revenue$5 x 100,000 = $5,000,000 in revenue

Chris spoke about how at Deseret is using native advertising in their mobile content feed to overcome this challenge. Listening to the talk, I was struck by how promotions could be (and already are) functioning in a similar – and maybe even better – way.

By putting a sponsored promotion or a promotion designed for an advertiser in your mobile feed, you are adding more revenue potential by increasing the number of spots on the page you can sell to advertisers. Take a look at these examples from Madison.com and KOB-TV to see what I mean:

Monetizing-Mobile-Example-Screenshots

People love the opportunity to engage – to win something in a contest, get a deal on a product or service, or participate in a quiz or survey, and promotions can capture as many or more clicks as editorial content because they are viewed as fun and engaging. Due to this high level of engagement, promotions have much more in common with native advertising than they do with with display advertising.

Chris Lee would call deals and other promotions “mobile-ready revenue spot”, meaning that they just as valuable, if not more so, for mobile as the banner ad is to desktop. Plus, since media audiences love engaging with promotions, you can add more than one to your mobile site, creating several new revenue spots.

The Shift in Spend Towards Promotions

Over the past decade, there has been a notable shift in spend from traditional advertising to online promotions. According to data from Borrell Associates, advertisers spent 88% more on promotions in 2012 than they had a decade earlier.

local-advertising

This shift in spend towards promotions is representative of a much larger trend. In fact, Borrell Associates projects that online promotions are expected to be an $80 billion industry by 2017:

Borrell-+-Second-Street-Updated-627.pptx

The shift in marketing spend towards online promotions is a huge opportunity for media companies, and mobile will only continue to accelerate this trend. This means it is imperative to offer promotions as a solution to your advertisers if you want to sustain and grow your digital revenue.