The Mobile Monetization Conundrum: Google, Apple, Facebook Or… Who Will It Be?

Gianluigi is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

I came across this opinion on Forbes where the writer proposes a little theory for the New Year, namely that Apple (NASDAQ: AAPL) is being eaten away inside by Google (NASDAQ: GOOG). by writing the apps for various Google services they’re managing to take control of some to much of the iOS traffic on the Web. So, is this an advantage for Google’s mobile monetization?

The answer is simply No. Google faces exactly the same problem that everyone else does: how do you monetize mobile? Traffic is flooding from desktop to mobile and no one has yet really worked out how to make good money from mobile traffic.

Mobile CPMs are only 15 percent of desktop CPMs. As traffic migrates, seven ads on mobile bring the same revenue as one on the desktop, because the lower CPMs coincide with lower click-through rates.

Traffic is one thing, and certainly the enabler to actual monetization of mobile, but without click throughs on ads, it’s not more than just that: traffic.

As the writer mentions, people are using the Web differently, or perhaps size and form factor are too different to achieve the same results on mobile.

What Did the Past Teach Us?

Mobile is a totally different ball game. If we look at the social media revolution and the efforts by Google and Apple, these could give us a hint where all of this is going.

Google Plus

Google has made several attempts in social media, think of Google Wave and Google Plus. Google Wave was shut down and Google Plus isn’t doing any better. The only people on Google+ are marketers hoping to leverage the social network to gain rankings, impact SEO efforts and make sales and tech people busy.

Google simply isn’t capable to create social platforms. And that’s not strange, search, heavy data-driven applications needs a different company DNA, a different management, different developers and what more.

Apple’s Ping

Apple has officially shut down its failed social network Ping. Ping was launched in late 2010 and described as a social network for music, allowing iTunes users to share favorite artists and music. The music-centric social network is largely considered one of Apple's missteps, and another blemish on its track record of various Web services. Put simply, it failed to catch on. Many artists instead flocked to Twitter and set up fan pages on Facebook.

Here as well, it’s something profound, it's DNA, culture, people that are able to make a social network or not.

Core Business and First Mover Advantage

Two other aspects that could shed light on where mobile is going, is core business and first mover advantage.

For both Google and Apple, a social network was and is still not their core business. It’s something aside. This counts for mobile in relation to their business as well.

Regarding first mover advantage or at least being one of the first to really catch on is clear in relation to Google’s search engine money-making machine and Apple’s disruption and acceleration of smartphone usage.

Could they achieve this as well for mobile? I don’t think that is likely because it’s not their core business, even if Google has acquired Motorola and so on. Focus is still key, even in big business.

Well… Could it be Facebook?

If we look at Facebook (NASDAQ: FB), they have a massive user base and Facebook is focusing more and more on mobile first. Mobile is clearly on the company’s mind, especially now that people are spending more time using Facebook through mobile apps than on computers. This is closer to their core business than Google and Apple.

On Wall Street, investors are putting pressure on Facebook to master the mobile world so it can speed up growth. But again, as we mentioned earlier in the article, the challenge that Google and Apple face, is the same for Facebook. Mobile ads bring in less money than standard Web ads, so the shift to mobile threatens to undermine Facebook’s revenue.

Mobile’s Utility Focus

I think that utility is key when it comes to mobile. TNS NIPO (a Dutch market research firm) found from their research that most branded apps are not being used. Why? Because they don’t add any value in terms of convenience, utility and so on that can be monetized.

Mobile ads for sure do not add any convenience or utility. They’re even quite annoying if they take up a percentage of the small screen and need to click it away. Utility, local, augmented reality, the mobile phone being the primary personal device which always comes along. These are some of the triggers for mobile monetization, for usefulness and a relevant customer experience.

Facebook has the userbase; rumors about a Facebook phone could hint further that mobile is key to Facebook, but still it needs to find better ways –in the eyes of the users- to monetize their behavior, time and so forth. Ads simply won’t do it.

A New Entrant Taking Over Mobile?

I think this is a viable scenario, for two reasons:

  1. Mobile is different and it needs the full attention of the company.
  2. In the open and connected world, where APIs connect different platforms, where partnerships are being closed etc, a new entrant that knows a way to monetize relevant and useful experiences doesn’t need to build up its user base from scratch.

Legacy, culture, DNA, all kinds of aspects that a fully mobile focused company doesn't have to deal with, or can set right straight away.

What do you think?

GLCuccureddu has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Facebook, and Google and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Apple, Facebook, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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