Are Mobile Digital Advertising Expectations Overly Optimistic?

During the Q&A session for Google’s Q1 2014 Earnings Conference Call, Nikesh Arora, Senior Vice President & Chief Business Officer began his response to a question with what I consider a pretty ambitious claim: ” . . . Over the medium to long term, mobile pricing has to be better than desktop pricing.” (quoted from a recording of Nikesh Arora from Google’s Q1 2014 Earnings Conference call) The veracity of this claim, of course, is up to the listener to determine.

Arora supported his claim with a rationale, as follows: ” . . . in mobile you have location, you have context of individuals, which you don’t have on the desktop and the more you know about the user and their context, the more effective advertising you can provide them, ah, the better the conversion is likely to be for a search or any piece of advertising that you do.” (ibid)

My immediate response to these claims is to ask about the type of products Arora has in mind. After all, if a prospect is considering the purchase of an intangible, for example, a term life insurance policy, then the location of someone viewing an ad for term life on a mobile device is pretty irrelevant, and, likely, not worth much to the advertiser.

In my opinion he’s envisioning tangible products sold to retail consumers, for example, a wedding dress, or the like. Searching online for something from a smart phone, or tablet computer, or viewing an ad on this type of device doesn’t, inherently, provide any more reliable indication of conversion likelihood, unless the kind of products we have in mind are tangible, and the people viewing the ads we’re talking about are retail consumers.

So, with this in mind, several other of his answers to questions make a lot more sense. For example, certainly Google would want to compete with TV Broadcasters for this type of ad dollar and using Youtube as a perfect site for their efforts makes a lot of sense.

But there is little I can find in this argument to support a confident assumption mobile advertising will enjoy better pricing. Of course, Arora is not the only advocate of this view. Facebook executives have made similar claims. There is little availability, as of yet, in the way of advertiser reaction to these assumptions. The next couple of quarterly reports from Google, facebook, Twitter, and even LinkedIn should provide us with some useful information, one way or the other.

It’s also important to note how Arora’s comments paint more of a picture of a hole in Google’s digital market strategy, and, in all likelihood, the strategies of its competitors: there is no mention here of any better methods of supporting advertisers marketing intangibles with better digital marketing tools.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

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