BII REPORT: How To Solve Mobile Advertising's 'Monetization Problem'

Despite its potential, legitimate questions surround the widespread assumption that mobile ad spend will skyrocket to meet engagement.

Mobile faces a big gap in advertising dollars vs. consumer "eyeball time," and eCPMS are sometimes as low as 20% of their desktop counterparts.

In a recent report from BI Intelligence on the mobile advertising ecosystem, we explore the "monetization problem" in mobile, give an overview of the mobile advertising industry's size, and examine the mobile platform wars' impact on advertising, as well as the potential industry split between smartphones and tablets.

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Here's a few issues contributing to the "monetization problem" that need to be addressed:

• Targeting needs to be improved: Mobile advertising has found it hard to shake the impression that it indiscriminately sprays users. It is technically challenging to track mobile users and deliver relevant audience demographics. That's because the fragmented mobile landscape lacks the common standards and protocols that enable relatively seamless ad delivery and measurement on PCs.
• Cracking the local advertising opportunity is essential: Local is a potential blockbuster mobile advertising opportunity. Theoretically, advertisers could target advertising to consumers block-by-block. Some believe it will be a while before inventory and demand can be matched up at the precise second; others argue that no technical obstruction exists and local will be a substantial part of the market by next year.
• Enhanced ad delivery and advertising analytics could fuel growth: More efficient ad delivery models will likely be a major theme driving growth over the next few years. And better ad tracking and fine-tuned audience data are gradually allowing ad buyers to see what works and what doesn't on mobile.
• Fraudulent clicks need to be addressed: According to Trademob, as many as 40 percent of clicks on mobile ads are fraudulent or accidental. Of that 40 percent, 55 percent are accidental clicks, many of which are presumably the result of the smaller screen.

In full, the report:

• Gives an overview of the mobile advertising industry's size.
• Explores the "monetization problem," in terms of both the challenges to revenue growth and the trends working in the industry's favor.
• Examines the mobile platform wars' impact on advertising, as well as the potential industry split between smartphones and tablets.
• Outlines what is being done, and what needs to be done, for the mobile advertising industry to grow more quickly