NEW YORK, New York — I really thought the subject was provocative: “Mobile + Cloud Killed the Web.” But I was totally wrong. The NetForum members in attendance took my statement as a given. Mobile and Cloud are impacting the Web ecosystem in ways comparable to the way the Web disrupted Print (old media) starting 20 years ago.
Due to its membership rules, the NetForum is slanted towards people who currently or previously managed large Web P&Ls. They had to build digital businesses from trickling digital revenues while the analog world was collapsing around them. Now the foundations of that Web ecosystem are being torn apart. They’ve seen this movie before.
Mobile and Cloud are impacting the Web ecosystem in ways comparable to the way the Web disrupted Print starting 20 years ago.Click to tweet
At the same time, no one said it was a bad thing. One of our members said that the Web value chain (or production chain) was extremely inefficient with still too much manual labor and resistance to standardization (am paraphrasing a bit). Perhaps with Mobile and Cloud, things would be more rational.
How have mobile and cloud killed the web?
In what ways is the Mobile/Cloud ecosystem destroying the Web ecosystem? Our group focused on media and advertising. Their issue was simple: as consumers shift their attention from Web properties to mobile properties (read mobile apps), money will follow. Yet, there is no mobile app advertising monetization model in place yet (not quite at least). So, net net, publishers who see their audience shift to mobile apps will lose revenues as Web revenues dwindle without being made up by mobile revenues.
… as consumers shift their attention from Web properties to mobile properties (read mobile apps), money will follow.Click to tweet
Where has web ad revenue gone?
This is where things get complicated. Digital commands a disproportionate amount of attention time compared to TV/Analog media when viewed through the angle of advertising revenues per channel — meaning that Digital should be getting a bigger piece of the ad pie today. Why hasn’t that happened?
It is extremely difficult if not impossible for someone to reverse engineer the data and preferences profile of a mobile user.Click to tweet
The Web media ecosystem relies on cookies to assemble fragments of identity and interests across a person’s multi-site digital footprint. These fragments, and the fuller profiles that are stitched together by cookie-data aggregators, are used for targeting ad banners and for a host of personalization features that make Web sites easier to access and use. But mobile devices and their apps don’t allow/need cookies. It is therefore extremely difficult if not impossible for someone to reverse engineer the data and preferences profile of a mobile user. And without that the Web ad ecosystem is useless on mobile devices. (Of course, there are identity managers on mobile (like Apple and Facebook) and they will wield tremendous power.)
What’s next for web and mobile ads?
So where will all this lead? Some of our members said, in the end it will balance itself out. The ad money will follow the users to mobile and as mobile ad monetization matures, there will be more monetization options on mobile. This means that mobile ad prices will fall and the gap between mobile ad and web ad prices will shrink. A new price equilibrium will emerge. This of course presumes that productive mobile ad units will emerge that can be integrated into apps without destroying the user experience, at scale. As demonstrated by the underallocation of ad dollars to digital compared to TV, it is not universally agreed that the Web industry really figured this out, and we should not take for granted that the mobile ads will get it right either.
There were optimists in the room that believed that the Mobile/Cloud ecosystem would offer new benefits that the Web ecosystem could not offer — these benefits are associated with the concept of Internet of Things. For more skeptical people, IoT is the new Wild West of data, with streams of data captured and shared by more devices that ever imagined, creating opportunities to leverage that data intelligently or stupidly…
The Web ecosystem is in for a wild ride.