How Will Mobile Reshape Online Advertising?

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There's no doubt that the mobile revolution is reshaping the media and technology industries, but there's considerable uncertainty about how to best adapt to the changes.

At GigaOM's Mobilize conference in San Francisco on Monday, a series of panel discussions attempted to map the new business landscape.

Judging by the numbers, mobile clearly matters: Smartphone penetration is approaching 50% of all mobile subscribers in the U.S, according to Jonathan Carson, general manager of digital at Nielsen. And some 60% of new phones sold in the U.S. are smartphones.

"We think that what's happening with smartphones and tablets is truly, truly profound and will have a big influence on reaching consumers going forward," said Carson.

Find out more about how Amazon's forthcoming Android tablet will shake things up. See Amazon Tablet Ready For Its Close-Up?

Many in the industries affected by the mobile revolution may not find this surprising after observing the impact of Apple's iPhone and Google's Android operating system over the past four years. But seeing the wave coming and understanding how to ride it are not the same thing.

For businesses and consumers, the meaning of mobile is still being worked out. Mobile devices are changing the way that people consume digital media. To illustrate that, Carson presented figures showing how media consumption on tablets differs from media consumption on mobile phones. Tablet users, he revealed, consume 3.7x more books, 3.9x more TV, 5.2x more magazines, and 3x more movies than mobile phone users.

Mobile, he said, "introduces concept of always-with-you, always-on media consumption."

But reaching that audience remains an evolving challenge. GigaOm analyst Phil Hendrix observed that issues of privacy and compliance are likely to become more vexing even that financial regulations. He anticipates opportunities for companies that can handle real-time data processing and analysis.

Hendrix also noted that advertisers need to focus more on customer engagement, a proposition echoed by a group of subsequent panelists.

AT&T Interactive SVP William Hu said that engagement has increasingly become a topic of discussion and that in the next 12 months, he expects to see more efforts to monetize mobile ads based on call conversion and foot-traffic in stores.

"Sometimes in the advertising industry, we forget our goal is to help advertisers generate business," he said.

Engagement matters as an alternative way to measure mobile advertising because cost-per-click and cost-per-impression ads have limits in a mobile context. One, as noted by Pontiflex CEO Zephrin Lasker, is that 48% of mobile ad clicks are accidental. Faced with the prospect of wasting almost half their advertising budgets, companies obviously have an interest in focusing on alternative metrics like engagement.

Such focus has yet to reveal a clear path forward, which explains the emerging ad models pursued by companies represented by other panelists like Kiip, which attempts to monetize in-game achievements, and Appsfire, which promotes app discovery.

Despite the obvious impact of mobile technology, companies and consumers are still figuring out what side they're on and how to define their strategies and goals.

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