Will Mobile Ads Ever Work for Publishers?

“Tablet spend isn’t necessarily being seen as mobile,” explained David George, COO of rich-media ad firm Celtra. “Users are more engaged with both content and ads on tablets,” George added, but perhaps that’s the problem. Brands aren’t seeing the same levels of engagement on smartphones thanks to the nature of the device itself.

The problems mobile advertising has faced are well known. There are back-end trafficking issues, a supply-demand imbalance and creative limitations. Apple’s experience with the iAd would seem to support the argument. Despite its plan to bring big-budget advertisers to its iPhone handsets, few have actually committed to those campaigns. Most in-app iAd impressions are now filled with direct-response ads for other applications as a result. After much fanfare, Apple executives barely mention iAds in its showy public presentations.

That lack of advertiser demand continues to fuel the problem. Mobile advertising, again following in the footsteps of desktop, has quickly been commoditized. Networks and exchanges sell it in bulk for next to nothing thanks to the millions of impressions churned out by gaming and social networking applications, for example. Publishers can’t compete in terms of either scale or price, and although some are attempting to resist pricing pressure by shunning networks where possible, they risk foregoing any revenue for that inventory as buyers focus on the efficiencies gained through network buys.

As a result, numerous major publishers are paying lip service to mobile to bet big on tablet-ad basket, perhaps to the detriment of the smartphone channel. Major content brands such as Conde Nast, AOL and others now appear more focused on their tablet products over their smartphone ones. Tablet campaigns are often easier to sell, publishers say, so perhaps it makes more sense to assign resources to that area, in an attempt to grab the lower-hanging fruit. But tablets in the main aren’t mobile devices. You don’t see many people putting them in their pockets. Take a look around the subway or at a bus stop, and you see far more people staring at their phone screens. Ignoring phone-based consumption would appear a major mistake.

Ultimately, the challenges facing the smartphone ad space in the short term continue to revolve around a lack of advertiser adoption. As more advertisers begin to embrace the mobile channel — and not just tablets – publishers will be better placed to more successfully monetize their content and to distinguish their inventory from the millions of sub-premium impressions that continue to flood the networks.

Until that happens, it’s not surprising publishers are choosing instead to focus their efforts on tablet-based products and revenue. If it doesn’t, then the smartphone ad space could find itself falling into the same trap as online, with direct-response ads traded at rock-bottom CPMs as publisher revenue continues to dwindle.