I know you’ve heard it a thousand times already: »Mobile is important / This is the year of mobile / Wait, no, THIS is the year of mobile / I know, I said it the last two years, but now it’s for real, THIS REALLY is the year of mobile. «

The Mobile Opportunity

I know you’ve heard it a thousand times already:
»Mobile is important / This is the year of mobile / Wait, no, THIS is the year of mobile / I know, I said it the last two years, but now it’s for real, THIS REALLY is the year of mobile. «

Well, finally most US advertisers have started to be ”on par” in terms of budget allocated for Internet media and time spent by users on Internet media. Nevertheless, this is of course not the full value of the Internet. Mobile also plays a huge part, and mobile is by far the biggest opportunity for advertisers right now (yes really…).

Let’s put things into perspective here by the fact that the percentage of time spent on mobiles is more than twice as high as the Ad Spend on mobiles, thereby leaving a vast gap.

Google said it beautifully, earlier this year when they referred to mobile as a non-device.

Never before in history have we seen time spent in this way. Think about how big an advertising opportunity the Internet was back when it was only on desktops; now think about how much more time you spent on your phone than on your desktop. The potential here is amazing!

Unfortunately advertisers have been way too slow to see the opportunity in mobile. We are slowly seeing some good examples of branded utilities on phones (e.g. CITI Bike appThe Nike SB App). Sadly, the truth for a lot of advertisers is that they are only now catching up, and as I always say, if advertisers had really understood this opportunity, Instagram would have been invented by something like a Travel Industry brand. I advertisers really understood this opportunity; they wouldn’t act after the trend, but instead capitalize on the arbitrage in acting before the trend. Essentially, I think brands are thinking about this in the wrong way.

Too few brands worry about what’s actually relevant for their consumers, and what’s relevant for them. Too many brands worry about what they would like their consumer to think is relevant. The sweet spot is to be found in a very simple place: Relevant for your business – Relevant for your consumer. As Morten Gade (Head of Digital at Kontrapunkt) so eloquently puts it “Don’t serve your consumer chocolate-covered broccoli”.

Just Look At Us Move At The Speed Of Turtles

Thinking back on the gap of mobile spend vs. time spent, it’s quite incredible to see the growth rates of mobile over the last 4 years. The growth of the Internet, which a lot of advertisers have been happily milking away on for the last decade, is now slowing down. But guess what isn’t slowing down. Yup, mobile… Mobile is growing with double digits each year in advertising spend, and right now it’s accelerating.

You Need To Master Your GFY

A former client of mine told me that he had advised his team to master the “Go – F–k – Yourselves”. There are three platforms that you need to master as your base of everything online, Google, Facebook, and YouTube. GFY. The graph below substantiates this excellent quote (Shout out to Jesper Dichmann, Marketing Director at Albatros Travel).

These companies keep on developing their advertisement offering, and they have the largest platforms with the most visited sites on the web. You either master these platforms or you go home. They account for 76% (and rising) of the share of Internet advertising growth in the US. This kind of advertising oligopoly on the platform side has never been happening before and it might be due to data advantages, when these types of companies start scaling their businesses.

Internet Continues To Grow As Retail Distribution Channel

This year the Internet accounted for more than 10% of retail sales in the US. This may not be especially surprising, we know that amazon et. Al. are pretty huge business and we are all becoming increasingly adept at purchasing things online. 10% of retail sales might sound like a low number, but if we think about the impact of advertising, we also need to consider the amount of offline retail sales that is affected by online advertising. This becomes increasingly important to understand when online spend increases. Read more about our study on this with BAUHAUS.

What is really interesting is how the big online retailers are acting and expanding their businesses.

Stepping On Each Others Feet

Over the last decade the entry barriers for producing have become very low. Right now everybody is trying to step in on each other’s territory in the value-chain.

  • Producers become brands
  • Retailers become producers
  • Producers become retailers
  • Producers become brands

The most significant trend for me is retailers becoming producers. One of the primary drivers for retailers increasingly becoming producers is that they are exploiting their data to figure out what users are interested in right at this moment. Thus they have a very agile 3-step process of:

Driving big transaction volumes è Collect/Use data to develop product offering è Launch new products / Private labels

The examples range from Amazon and their new portfolio of private label brands to businesses outside of retail such as Netflix and their own-produced series and shows.

Video Doesn’t Only Happen On The Tube

Over the last three years, YouTube was your go to place for videos, but other popular platforms are now growing on consumers. As Google always says: fragmentation follows scale, and as YouTube became huge, others started taking interest in driving video formats on their platforms. Consequently, Facebook and Snapchat are growing their daily video views at extraordinary rates.

Snapchat having 10 billion video views per day and Facebook having around 8 billion video views per day puts them in the lead for… . So if you thought Snapchat is still a small social medium, well, you thought wrong. Both Facebook and Snapchat grew more than 500% over the last year in terms of daily video views.

Key Take-Aways

  • What can you offer consumers on mobile platforms?

    The key here is thinking about what’s actually relevant for them, and what’s relevant for you, not what you would like them to think is relevant

  • If you are a retailer, think about what your data is telling you about your consumers
  • Master the Go F—k Yourselves channels
  • YouTube isn’t the only place your consumers go to for videos
Rafael Cifuentes Partner