Mobile first? Not so fast

No one would argue that mobile is a game-changing platform for publishers and advertisers. In the fourth quarter of last year, more than 100 million smartphones shipped – surpassing PC shipments for the first time. Tech researcher IDC predicts that 44 million tablet devices will ship this year.

Chrysler, one of the advertisers for last month’s Super Bowl, said mobile searches on its brand were 102 times their normal rate after the ad appeared – compared with a 48x increase in searches from desktop computers. GoDaddy, another Super Bowl advertiser, saw its mobile searches increase during the broadcast by 315 times their normal rate.

Those last stats were offered by Google's former CEO and executive chariman Eric Schmidt who, during a keynote speech at the Interactive Advertising Bureau’s annual conference in Palm Springs, called the smartphone “the iconic device of our time.” What’s more, Schmidt encouraged the audience of advertising and publishing professionals to adopt a “mobile first” strategy.

The reason? Mobile will be a key driver in the digital display advertising market, which Schmidt boldly predicted could reach $200 billion over the next several years. That’s a significant leap from the less than $30 billion in online advertising revenues predicted for 2011.  

This growth “is happening faster than all of our predictions,” said Schmidt.  “The next generation of companies will be built with a mobile-first approach. You should build your applications first for mobility.”

Easier said than done.

In fact, it’s unrealistic to expect publishers to adopt a mobile-first strategy – considering that many of them are still defining their digital-first approach to Web publishing. The digital ecosystem is still forming, with advertisers and publishers still struggling to work through foundational issues such as measurement standards and supply-chain complexity.

And as complex as the supply chain is currently, here comes mobile, with its myriad device types, development environments, and new players from outside the traditional publishing space.

“Mobile is far more complex than the Web is,” Randall Rothenberg, the newly (re)appointed IAB president and CEO, said during an interview at the conference. “It’s dominated by a set of key constituencies in the supply chain – scores of device makes and telecommunications companies – that have no native experience with content or advertising. To corral this entire ecosystem into consensus around the kind of things that work for content development and delivery is difficult.”

As is the development work that must go in to supporting multiple device types, screen sizes and operating systems, forcing publishers and advertisers to either cherry-pick certain platforms or devote resources to all of them. Neither option offers a favorable long-term outcome.

“Any content producer must continually customize for individual form factors in ways that are dis-economic,” said Rothenberg. “Eventually, you can go out of business because you spend all your time customizing.”

Laying a foundation for mobile

So while IDG Communications CEO Bob Carrigan says publishers must go “full bore” into reinventing themselves, he remains pragmatic about flipping the switch on a mobile-first strategy.

“There’s a way of structuring your business where you can consider the fact that things will be mobilized going forward,” Carrigan said in an interview at the IAB event. “You can think about creating information products that lend themselves very well to the mobile environment.”

IDG is funding its mobile investment with R&D money. One of its businesses – the PCworld/Macworld publishing unit – has been tasked with taking the lead on mobile initiatives. “We’re asking them to experiment and develop solutions for the present and future, and the rule is they have to share that information with the rest of the company,” said Carrigan.

“There’s no question we’re trying to socialize this idea inside our company about the clear proposition for mobile,” he added. “It’s challenging because the revenue proposition is not quite there. But it will catch up.”

Mass market engagement

Schmidt certainly believes it will. At the IAB event, he talked about the critical role mobile will play in “mass-market engagement” – delivering a unique experience to users, but in a way that can scale quickly. Executing this concept will require significant enhancements to what in many ways is a dysfunctional digital supply chain.

“It’s still too complicated to get a campaign up – that’s really a problem,” Schmidt admitted. The key, he said, is automating more parts of the supply chain – from operations to measurement – to improve efficiencies and increase scale.

During his opening remarks at the IAB event, Carrigan, the newly elected IAB chairman, offered a single word of advice to any publishers and advertisers who are stressing out over mobile: Chill.

“Don’t obsess over the first models out of the box,” he said. “Be thankful for the new marketplace and get excited about new opportunities for innovation.”

He cautioned publishers against “resting on legacy laurels” and conceding ground to new competitors. He cited IDG’s own approach to ad exchanges as an example of how publishers can carve out new businesses. In a space that has been dominated by new competitors, IDG decided to create its own ad exchange, called Tech Media Exchange. “This allows us to remain a category leader that’s directly connected with our customer base,” Carrigan said. And capture revenues that otherwise would be funneled off to third-party providers.

Carrigan’s final message to fellow publishers: “Rather than ceding market to competitors, we should be seeding our own internal startup operations.”  It’s not quite “mobile first,” but it certainly lays a path toward innovation that may eventually get us there.