Perhaps the worst thing the Internet has brought to our society is a warped sense of time. CNN.com brings us minute-by-minute updates on Britney Spears’ life, search engines give us millions of results for any given query in the blink of an eye and RSS delivers us the latest news from our favorite sources without having to lift a finger. Suddenly, all information is old within a few hours, and we have become increasingly impatient with any process that takes more than a few minutes.
Investors also seem to be more impatient, especially when it comes to mobile and video. While no one can deny the appeal of richer media and wireless communications, their relatively slow stroll down the advertising path has kept these two investments on the backburner. Over the past few months, I’ve heard the same line from investors, acquirers and agencies: The technology is cool, but until advertisers start to pay, I’m not spending time or money on these sectors. In a recent meeting with a top agency and an M&A shop, I finally chimed in with my take: I’m patient.
Whenever a new medium receives undue pressure, I revisit the history of older media, such a newspapers or television. Regular newspapers have been printed for hundreds of years, yet it wasn’t until the 1800s that advertisements took the shape they maintain today. The first televised show was broadcast in 1928, 13 years before the first television commercial was broadcast. Knowing that it has been fewer than two years since YouTube revolutionized online video consumption, I still hold out that the industry will find a way to capitalize on the format.
In the case of mobile devices, CITA, the International Association for the Wireless Telecommunications Industry, estimates that, seven years ago, there were only 97 million wireless subscribers in the US, spending just $137 million on wireless data. There is no data on SMS messages sent in that year. Today, there are more than 256 million current wireless subscribers spending over $19 billion on wireless data and sending 240 billion text messages. Sure, the screen is small and traditional formats don’t make sense. It’s not that mobile advertising won’t work; it’s just that the right entrepreneur hasn’t come up with the right idea yet.
Part of this is the normal course of business. It takes time for firms to grow and mature to the extent that they can provide reliable service for a large firm. This is very much the case in video. There are a good number of start-ups that are now poised to offer the services advertisers have been waiting for. Once this is achieved, it will be a few budget cycles more before advertisers start adding that line item to the marketing budget. Just five years ago the search industry bemoaned that the Fortune 1000 was not spending on PPC and SEO. Today, few firms don’t have a search budget in place.
Finally, we cannot ignore that the same technology that enables mobile and video delivery is what holds us back. The first newspaper ad was delivered to everyone in the same format. Literacy was probably the biggest challenge in reaching an audience. Today, the ability to target and measure has raised the bar for the type of online video advertising we deliver. For the mobile sector, competing technologies within a complex web of wireless carriers, handset makers and software developers must be overcome. Only time will tell which technologies and formats will win, or if an interoperable approach will bridge the whole. Until then, I’m patient.
