Tuesday, December 30, 2014

Mobile Advertising Will Soon Hit a Wall

Today, Facebook is one of the most successful internet giants at monetizing their mobile app properties using mobile advertising. However, a significant portion of Facebook's mobile advertising is coming from VC spending on mobile app downloads and related user acquisitions. Just spend some time on your Facebook time line and see for yourself. This is obviously not sustainable and a big concern for Facebook's long-term revenue growth potential.  Of course Facebook is not alone in this, but they are the king of the hill and they are riding the wave right now.

Now, we all know what happens when this type of startup and VC fueled spending ends and it will end once the land grab for mobile app downloads and mobile app users dies down and we move into a flatter mobile growth curve. It is one of those cycles that we have seen come and go. The successful players in the mobile advertising space are going to be the ones that are thinking beyond just online mobile advertising via sponsored posts and suggested products in a user's timeline. Next generation mobile advertising, that truly leverages the power of mobile technology, will be about customer engagement and not about how many friends you have. It is about where you are right now and what you might be interested in right now in the physical world (not just online).

The likes of Facebook need to augment their mobile advertising strategy toward more unbundled mobile apps and mobile apps that engagement users in the offline world as well as the online. Mobile apps that fuse to the real world with the online using all the tools available to mobile technology are the ones that will be successful in monetizing mobile users while providing sustainable and meaningful value to the the end user. This type of mobile technology includes integrating proximity and contextual computing into a user's mobile app experience. The definition of successful mobile advertising as we know it today will soon change, so get ready.

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