Why mobile and native ads are a big deal

There’s a lot of chatter about the mobile revolution in the mainstream press these days. In my views, the chatter isn’t nearly enough. Mobile is going to change how we do things at a fundamental level. To illustrate, I’d like to take a look at advertising – an industry that has changed a lot in the past decade. Advertising is also the engine that propelled Google’s incredible growth (and, given Google is the poster child of the modern day tech company, advertising is probably the engine for the web 2.0 as well) over the past decade. However, the very engine that propelled Google’s growth is is also turning out to be a problem thanks to mobile.

The other day, my wife was scrolling through her Facebook news feed to show me a video when we passed a native ad. She spent an extra second on the ad and continued to scroll down till we found the video.

Before we discuss it, let’s discuss what a native ad on Facebook looks like

Sidecar ad

 

And, now, let’s contrast it with a traditional search ad for the term “share car Chicago” – A Zipcar ad pops up.

 

Car Share search

 

The Zipcar ad on Google search takes up roughly 10% of my screen area while the Sidecar ad on Facebook takes up practically 100% of my screen area. In an age when attention is so precious, a native ad takes 100% of your attention for a few brief seconds.

The other interesting implication of native ads is the subconscious effect they have. My wife says she occasionally finds herself remembering a native ad she saw on Facebook and searching for more information. That’s not surprising.

And, finally, Facebook and the cookies on my browser have a ton of data on what I’m interested in, searching for, and shopping for and I’m sure these ads will get more relevant over time. This has equally big implications for niche social networks like LinkedIn (not sure 332M users is all that niche but let’s run with that), Twitter and Pinterest.

So, why is this a big deal? See this graph on Facebook’s mobile revenue growth from Statista.com

Facebook mobile revenue

Once Facebook flipped the switch on mobile in Q3 2012, they reached a run rate of about 1.5B dollars per quarter. Mobile devices are probably half of what they will be 2 years. Everyone at the Googleplex in Mountainview ought to be worried..

If that doesn’t feel a big enough deal, consider this – mobile is barely 10% of US ad spend. And, the US ad spend is worth $220B. Print ads still account for ~15%. This is changing, of course. And, this opportunity is going to be huge.