Gustavo Ballvé on April 14th, 2009
Investment Themes, Media

“Mobile is much more similar to search than a social network is… mobile actually monetizes quite well.” – Nick Fox, Director of Business Product Management for Ads Quality and Bidding at Google (good contender for “longest title ever” competition). That was on May 22nd, 2008, in Goldman Sachs’ 9th Annual Internet conference. We’ve been studying this trend and try to capture a few stories in this post, given its relevance for the mobile device/ online ads/ media industries.

New devices are key, continues Nick Fox: “iPhone users search at a rate of 50x normal users. Also, on mobile, there’s high volume on weekends and days when volume is low on desktop. So the mobile business complements the core business.” In a March 2009 guest post on TechCrunch, Google’s VP of Engineering for Mobile and Developer Products (they like long titles at Google) mentions a similar “heavy user” status for the Google-enabled G1 phones (and makes other interesting, data-backed claims worth the read). A quote: “The availability of a modern web browser explains why iPhone and Android users — just 13% of the high-end market — represent nearly 50% of Google’s smartphone traffic worldwide.”

Now back to February 25th, 2009. The Kelsey Group had just launched a Mobile Local Media unit and published the mandatory research paper on the subject. An excerpt: “Currently, an estimated 54.4 million, or roughly 20% of all US cell subscribers, are using the mobile Web- and only 5.2 million are doing searches of any kind. As the most prevalent mobile data service today, SMS still claims the lion’s share of mobile advertising- $100 million of the $160 million last year, compared to $39 million for search. But in five years, Kelsey expects that proportion to be flipped, with search claiming two-thirds of the $3.1 billion in mobile ad spending. ‘Local mobile search revenue is actually the fastest-growing curve we have,’ said Michael Boland, program director for Kelsey Group’s newly formed unit focusing on mobile local media. ‘That’s a combination of more search activity that’s local, but also the fact that CPC rates, and other ways mobiles ads are sold, are going to be higher than overall search because of that local targeting which commands a premium’.”

The story continues: “Local mobile search, like SMS, provides the highest ROI possible by way of letting advertisers only pay for actions that earn them customers, clicks, impressions, etc. The highly-targeted aspect of local-based search advertising allows local brands to spend their precious ad-budgets wisely, which is important for small businesses that have very limited budgets compared to the big guys.”

Finally, we mention an apparently unrelated article on yesterday’s NY Times (free registration required for recent articles) discussing “hyperlocal” web sites as news sources. Just think about the iPhone app that aggregates news content posted from a 1,000ft radius of where you are – and the, well, hyperlocal search possibilities. How do you even measure “conversion rates” when the result of a search may be walking into a store rather than clicking on a link? How will carriers, cell phone makers (think Apple) and service providers share this revenue stream?

Certainly a trend to keep our eyes on.

Tags: , , , , , ,

Leave a Reply

You must be logged in to post a comment.

Back to last page or go to the home page