Mobile users may be as valuable to advertisers as desktop, Facebook results suggest
Cory Bergman, general manager of NBC's Breaking News mobile startup, published a blog post the other day with a provocative headline: "The Surprising Value of a Mobile User."
That familiar truism about trading print dollars for digital dimes, then for mobile pennies may no longer be true if it ever was, Bergman (a former member of Poynter's National Advisory Board) argues.
His evidence: Facebook's robust year-end financial report, released on Jan. 27, which shows measures of engagement and revenue per user trending higher even as its audience shifts quickly to smartphone.
"It's exactly the opposite of what everyone predicted," he writes.
Bergman is an enthusiast and has a stake in seeing mobile ripen as a business. But both in the piece itself and in a subsequent email exchange, he takes head on skepticism that the phenomenon may be apply only to Facebook with its enormous user base and sophistication at targeting content and ads for the following reasons:
- Twitter is also growing revenue much faster than its user base, "up 58 percent year over year, the vast majority on mobile."
- Facebook and other big mobile platforms are investing heavily in "rich video experiences." And company-commissioned research shows that engagement levels are as high on the smaller screen as on desktop (plus video commands attractive ad rates).
- Companies — newspapers among them — too often are still "porting over desktop products and business models" and thus failing to realize the platform's potential.
- Facebook itself in a 2012 securities filing wrote, "we don’t generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so is unproven." Nonetheless CEO Mark Zuckerberg forged ahead with big mobile investments, and monetization did follow.
Puny mobile ad revenues have often been cited as an impediment to the digital transformation most newspaper organizations are trying to bring off. So I asked Bergman whether it is realistic for them to aspire to an engagement and revenue spurt. He replied:
Big social/chat apps ...are certainly different from news-branded experiences in that they connect people around content instead of pushing content to people. Therefore they have a built-in scaling mechanism and all that user data....
Maybe the broader point here is that news should be doing more connecting to unlock that scale/data value, while at the same time getting better at leveraging other data sources to connect people with the right content.
I take that to be good news, in an oblique way. Video, social and data harvesting are all works in progress at most newspaper organizations. As they get better at it, per-user revenue growth — albeit not as spectacular as Facebook's — may be in reach.
Notable progress seems already to be taking place at The New York Times Company. I was struck last week listening to the company's most recent quarterly financial report that digital now accounts for a third of all advertising revenue and that mobile makes up 22 percent of digital.
Several different factors could account for the growth. In a conference call with analysts, CEO Mark Thompson cited "stronger visual impact" and the "launch of new ad units" as important.
A regional publisher told me that mobile rates hover at a modest $3 per 1,000 impressions and those ad revenues account for only about 1 percent of total revenue. But even allowing for differences in The New York Times' largely national audience and ad base, he said, the 22 percent was "a jump bar" worth noticing and "seems other publishers like us could do same."
David Chavern, CEO of the Newspaper Association of America, had similar a similar reaction, writing in an email:
I haven't heard from my members that they are seeing it (a fast rise in the value of a mobile user),... but it could also be that Facebook just got there first. I personally do believe that mobile (experiences) can certainly be more engaged and immersive than desktop.
McClatchy reported its fourth quarter and full-year results this morning, and other of the big regional public companies will soon follow. It will be worth listening to hear whether mobile is transitioning from frustrating challenge to emerging opportunity.