Facebook has brought into the spotlight the fact that as we shift into a mobile era, there’s a persistent gap in the ability of publishers to make money off their users. Facebook might be extreme, but all businesses are dealing with it. WPP CEO Martin Sorrell recently noted that mobile is 8 percent of consumer time spent but just .5 percent of WPP’s ad spending.
Take the case of Pandora. The music service said today that two-thirds of its 150 million registered users access the service via mobile (including connective devices installed in cars). That’s good news. In fact, 70 percent of Pandora’s listening hours are via mobile or connected devices.
The downside is Pandora makes far less money off those listening hours in mobile. It has a healthy mobile ad business that now totals $100 million last year. And yet that represents 42 percent of revenue. That’s a far cry from the 70 percent of listening hours.
Pandora’s mobile ad business is impressive. It is pretty much the same size as Millennial Media’s entire business. (Pandora brought in another $34.4 million in subscription revenue in 2012.) According to Pandora, mobile ad revenue quadrupled from 2011. The only question is how long it will take the market to value time spent in mobile at a similar level as it does for the far more mature desktop ad market.