To wrap up the year, here is a selection of notable shifts observed in 2015, and their expected impact in 2016 on digital advertising, mobile internet, and trends in emerging countries.
To wrap up the year, here is a selection of notable shifts observed in 2015, and their expected impact in 2016 on digital advertising, mobile internet, and trends in emerging countries.
It was a terrible year for digital advertising. No matter how media companies tweak their numbers, they won’t be able to hide the truth: the advertising engine is broken; fixing it will require drastic measures that only a few publishers will successfully undertake.
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In past months, ad blocking has been all over the news cycle. The phenomenon is growing in every possible dimension. Across the board, the number of ad blocker adopters is rising quickly, especially in tomorrow’s key demographics: the young, tech savvy, likely-to-become-affluent consumers are the ones who massively install ad blockers.
They vote with their mice to reject ads that have become unbearable.
Amazingly, all publishers I met over the last six months acknowledge the problem but, until now, have done little or nothing to solve it. Why? Fear of being the first mover, inability to decide between the short term (with a possible drop in revenue), and the longer view (deriving more income from a better user experience).
As if this wasn’t enough, the ad blocking problem appears much worse in emerging markets. First, the mobile web is much more developed in Asia or Africa than in Western markets where apps dominates usage. Second, mobile bandwidth is way more expensive—hence a greater propensity to do whatever it takes to remove data-hungry ads. As a result, 300 to 400 million people use lightweight browsers such as UC Browser or Maxthon that comes with ad blocking activated by default. Even more worrisome, a handful of cellular carriers currently serving 64 millions subscribers are considering blocking ads right at the source (see this recent Monday Note).
Another critical area: programmatic advertising. However you look at it, for the news industry, the benefit is, to say the least, dubious. Especially for the high value/low audience segment (i.e. quality news sites), that grew used to command high CPMs, as opposed to websites who bet on large audiences and generate barely more than one dollar per year per user.
Here are some significant data for the European market: 73% of the programmatic inventory is traded below $5 CPMs, 44% below $2, and only 13% above $10.
Mobile users are the most volatile. They relentlessly switch from one service to another, dumping apps right after downloading them, only keeping a few favorites. Altogether, news consumption represents about 10% of time spent on mobile, hence the importance of the following stat: according to Google research, 49% of users will leave a mobile site if it takes longer than six to 10 seconds to load.
During the critical moments of the November attacks in Paris, 70% of access to popular French websites came from mobile devices. On average, most news sites now see more than half of their audience using a mobile. The public has definitely switched. According to eMarketer, American users spend just short of three hours a day on their mobile devices, as compared with only 24 minutes a day in 2010. Mobile is now a platform in itself, with its own rules. The most crucial one is speed. It means optimizing contents in terms of HTML structure as well as editorial formats.
The Next Billion (of people connected) is not an empty promise. Dropping prices for handsets and an infrastructure deployed at a fast pace will all contribute to add roughly 600 million mobile subscribers in Asia-Pacific and 400 million in Sub-Saharan Africa in the next four years (source: GSMA). There will be 2.4 billion mobile subscribers by 2020 in Asia and one billion in Africa, not counting machine-to-machine connections.
In time, the smartphone will become the device of choice for knowledge acquisition, news, training, general education, heath, and transaction services. In Africa alone, 400 million smartphones will be activated in the next four years—most of those running Android.
Such growth notwithstanding, some realities needs to be kept in mind. In many emerging and developing countries, the mobile market is completely different from the Western world one. Take data. You and I consume about three to five gigabytes of data each month: email, browsing, apps, maps, etc. We are the 10% of users that generate 55% of global data traffic (source: Ericsson). In many countries, however, very few people can afford to use apps or mapping services. Getting a single gigabyte of data in Indonesia requires 10 hours of work at the minimum wage, 20 hours in India, and 30 hours in Brazil where half of all mobile subscriptions don’t include a data plan. In the next four to five years, data consumption will rise six-fold in these countries, but the price of the megabyte is expected to drop only by half. That sector will need to be creative.
That’s it for 2016 predictions. In the meantime, I want to thank every reader of Monday Note, which Jean-Louis Gassée and I have been writing for eight years now. We are thrilled to get constant and largely positive feedback for our work.
Merry Christmas, and happy new year to all. I’ll see you in early January.
This post originally appeared at Monday Note.
