Getting to the money with mobile

MobileOne of the really big trend stories of the year is the explosive growth in the portable media space. Apple got things going with the iPad, which will spawn a great many similar devices from other manufacturers. There was Google’s Android operating system that ignited sales of a new line of phones, and Apple’s iPhone 4. The mobile device space is hot, and along with it, content and applications that can run on the devices.

While Silicon Valley and other technology centers are in high gear in the portable space, legacy media businesses are reacting to this, that or the other thing in an effort to not get blind sided, like most of us were with the Web in the mid 90s. This is why Gordon Borrell has organized a conference next week here in Dallas that will examine every aspect of the mobile world, especially as it relates to local advertising and the ability of media companies to make money.

Gordon BorrellMaking serious money with mobile hasn’t really happened yet, but coupons and deals appear to be the sweet spots. I caught up with Gordon this week to get his feedback on 2010, the economy and next week’s conference.

1. 2010 is turning out to be a pretty good year. What’s the “story” of the year?

In terms of an individual event, I’d have to say it was Google’s purchase of AdMob for $750 million back in May. To me, this was harkening back to when Bethlehem Steel began branching out and buying a major shipyard and then a railroad back in 1913. Think of all the ships and rail cars built in the ensuing decades, especially during World Wars I and II. “Search” is the steel of our time, and “mobile” is the future transportation industry. Google has cornered both.

2. You’ve kind of switched your thinking a little bit about display advertising. If you add “targeting,” does that make it work? Is it that the advertising really works or is it that advertisers will pay for targeted advertising?

Creativity is a good quality to possess if you want to remain in the business of forecasting. Until a year ago we were forecasting a decline in banner ads, which pissed everyone off who was selling banner ads. It was like saying, “In a few years, your kids will be ugly.” The backlash was huge, but we had a lot of evidence to support our theory. When we took a closer look, we were forecasting big increases in what we called “direct” online advertising, which meant ads directed to individuals (as opposed to ads thrown on a website just to be seen by nebulous “eyeballs”). We found that while run-of-site banners were in steep decline, targeted banners were gaining steam. Our job is to provide actionable insights to the industry, so we recrafted the message about banners: General banners are indeed in decline, but stop getting pissed off about that and start finding ways to deliver targeted banners by Zip code, gender, year of birth, or other valuable demo. Most local media sites have at least 40% of their traffic from outside the market, so you’re deceiving local advertisers if you’re leading them to believe all unique visitors come from potential buyers.

3. The real issue is what’s coming down-the-road. Does continued weakness in the economy give you pause about 2011 and beyond? What are we look at for the next few years?

Oh, God yes. My vice president of research has consistently been spot-on with his forecasts, and lately I’ve been thinking Disney should hire him as the voice of Eeyore. Just last week he said, “There may be no recovery. Ever.” Think of that. The population is no longer booming, and everything seems to be getting smaller and cheaper. Jobs are evaporating, and media control is shifting from the plutocrats to knaves. Still, I believe that disruption and change always creates opportunity. It’s just that you have to be a lot smarter and stay awake a little longer each day to be able to remain in the game. There will ALWAYS be a market for information; it’s just that we can no longer rely on monopolies like multimillion-dollar printing presses or FCC licenses to keep us in the media business and protect us.

4. Obviously, with this upcoming conference, you’ve shifting a lot of attention to mobile. What’s that all about? I still don’t see a lot of people making much money here. Is this still the place to be?

Well that’s sort of like taking six seconds from a hockey game and saying, “Hey, why is Gretzky skating away from the puck?” In the seventh second, you’d see the puck crossing right in front of him, and of course that lightning-quick slap shot and then the blue lights. There’s not a lot of money in mobile today unless you count “deals” and coupons, but it’s time to skate to that spot. Fools will do one of two things: They will rush in with everything they’ve got, or they will wait because there’s no money in it today. The winners will lay out stakes, spend a lot of time figuring out the timing and strategy, and then invest appropriately, in a very aggressive but timed fashion.

5. Tell us a bit about the conference. What’s the “don’t want to miss” session and why?

For the reasons I mentioned in the previous question, it’s extremely important to get the timing right. That’s why we put together this conference. The killer session is going to be the opening keynote with Clark Gilbert. He’s left the academic world that preaches about media disruption and has taken the reins of Deseret Media as the CEO, overseeing The Deseret News, KSL-TV and two radio stations. In his first few months, he took charge and positioned the company for the future: He laid off 40% of the newspaper’s editorial staff, hired a top-notch digital team, and bought a mobile “deals” company. He’s got more than two dozen people working on the digital team for KSL-TV. Tell me a station that has that many people. Now here’s the kicker: The average TV station’s website has an 18% share of the local Internet traffic and is in second place to the local newspaper. KSL’s site it a distant No. 1 in Salt Lake City with a 62% share (according to the latest Media Audit figures). It’s mobile site is in No. 4 spot and closing in fast on the others. And since it’s really all about the money in the end, here’s the big kicker: KSL will bill more Internet ad sales than any other station in the country this year. And it’s in the No. 29 DMA! There will be a helluva lot of people paying rapt attention to Clark when he speaks. I’ll be one of them.

Got your ticket? I’ve got mine. There’s still room, so click on this link for instructions. Hopefully, I’ll see you there.

(Originally published in AR&D’s Media 2.0 Intel Newsletter)


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