Yesterday, I kicked off a two-part series investigating the pain points that marketers and publishers experience with their mobile strategies to offer some ideas on how to improve efforts. In Part 1, I chatted about marketers’ struggle with low engagement with the apps they create and the opportunity to first optimize their websites for mobile viewing in order to mine data to inform future app development. Now let’s take a look at what’s ailing publishers.
Part 2: Publishers’ Challenge and Opportunity of Monetization
Fortunately for publishers, the content they produce on a daily basis is something mobile readers want, so the publisher apps already have a much greater usage than marketers’ apps. For publishers, the pain points around mobile strategies are twofold: the rising cost of app creation and maintenance and the lack of monetization of the mobile page views currently generated on their mobile-optimized sites.
The first problem is the rising costs associated with the creation and maintenance of having a collection of apps. We frequently hear from the largest publishers that app creation is mandatory despite the sagging returns. Additionally, the development costs for new apps seems to be rising and the number of apps that need to be updated is also rising. So the line we often hear from publishers is “where does it end?”
In addition to the costs, apps are creating even more mobile inventory that needs to be sold, which brings up the second challenge: few publishers are actually selling through their existing mobile web inventory. Unsold mobile inventory is actually the bigger problem and also happens to be the biggest opportunity. The disconnect seems to be stemming from several issues: a misinformed sales team, a focus on app development instead of monetizing pre-existing mobile traffic and the uncertainty of how to best monetize it.
How It’s Sold
How a publisher’s sales team actually sells mobile is part of the problem. Many publishers do not have sales teams versed in mobile sales. If sales teams don’t understand an opportunity and lack the excitement around selling it, the new initiative winds up at the back of the sales decks, if at all. This is very close to what happened in the early days of selling digital with print. The digital slides were always last, and digital was sold as an added value — often forgotten or given away to secure a bigger print buy. Publishers would be wise not to make this mistake again on mobile because there is much more to lose (which I will explain in a later post). Currently, mobile plays second fiddle to dot com sales and until this changes, mobile won’t get a fair play in the face-to-face meetings.
Focusing on the Wrong Effort
From a page view perspective, the amount of engagement larger publishers have on their mobile sites compared to apps is staggering. The largest publishers have upwards of 100MM page views already generated (and unsold) on their mobile sites, yet the same publishers are burning large amounts of cash and resources on building apps that receive lower engagement. Selling the existing mobile inventory is the biggest opportunity here. With the mobile page view volume already in place, selling through the existing inventory is the low-hanging fruit. For example, if a publisher with 100MM mobile page views (this is a real example) were to garner $.60 net RPM, it would add $60,000 a month to the bottom line — and improve any publishers’ mobile P&L.
How to Monetize?
The big question is how do publishers earn a $.60 RPM on their pages? Carla Rover over at DigiDay wrote about the Trouble with Mobile Ads and cites this fragmented situation. It’s a hard problem to solve. In contrast to desktop publisher pages, where interruptive ad units have found a home, mobile readers simply do not want to be interrupted and have little tolerance for interruptive ad units. Thus, publishers are forced to find other creative solutions for generating revenue.
Here at Outbrain, we offer publishers a different kind of solution for mobile revenue generation – we offer mobile readers links to third party, quality content that is also made for mobile viewing. Other revenue-generating solutions likely include mobile content that is produced by a publisher and sponsored by an advertiser. For example, you can see a company like HopStop sponsoring the creation of a “New York Subway Tips and Tricks” article that a publisher like NY Daily News writes and publishes on their mobile site with a “brought to you by HopStop” disclosure.
Some publishers are testing overlays, which in my opinion will not scale. Overlays on mobile content is an annoyance and is based on “accidental monetization” – clicks coming from misguided thumbs trying to tap on something else, probably the close or back button. No matter the solution, on the small screen, monetization must include real value for all three of the critical players, the mobile reader, the publisher and the marketer.
Digging a bit deeper into the monetization situation on publisher mobile sites, it’s the actual device manufacturers that are driving the current demand. As you would expect, device manufacturers want to target mobile users by device. For example, Android would love to run on CNN’s mobile web pages that are displayed to iPhone users. This is akin to special interest magazine sales, where endemic advertisers will always want to run against segments of the endemic audience. Outside of this nascent device manufacturer activity, demand basically drops off a cliff and as a result, most mobile optimized page views for publishers go unsold. Like magazines, mobile sales teams need to reach outside of the endemic sales demand in order to increase the revenue generation.
So, we have a long way to go here on the publisher side, from how to sell through on the existing mobile inventory, to the technical perspective of how to best display content with revenue-generating units included. Of all categories, mobile page views are the only real growth metric for publisher inventory and a critical piece of any publisher’s strategic playbook.
While apps continue to bother both marketers and publishers from an ROI perspective, the real opportunity lies in ensuring their own sites are optimized for mobile and then leveraging the opportunities that follow. Once publishers get better at selling their mobile pages — where they already have volume — agencies and marketers will follow with much larger budgets and change the current mindset of mobile as a painful cost center to a revenue generator. With bigger buys will come more data for marketers, which will fuel growth in overall mobile spend. Then, with more data flowing through the mobile eco-system, creating targeted mobile environments and apps from a position of strength will be much easier for both publishers and marketers alike.
Outbrain will be moderating a panel at DigiDay Mobile on September 21st in NYC with several top publishers talking about these very issues. Please join us there to extend the conversation or let us know your thoughts about the pains with mobile in the comments below.