What Exactly Is Flurry Saying and What Does It Mean for Mobile Advertising?

Yesterday mobile analytics company Flurry presented data that was both compelling and potentially confusing. And the way it got reported was misleading: the value of mobile ad inventory to surpass PC display inventory. I want to take a closer look at what Flurry said and its implications for mobile advertising.

Here's what Flurry said verbatim: 

Flurry focuses on the size and growth of available advertising inventory within iOS and Android applications . . . The chart below shows that U.S. app inventory is not only growing at a staggering rate, but also poised to absorb the equivalent of the entire U.S. Internet display advertising spend by the end of this year.

This is confusing. It's also hypothetical.

What Flurry means is that mobile app usage is growing and thereby creating opportunities for advertising ("inventory"). The actual ads aren't there yet. Although some networks and exchanges promise publishers/developers near 100% fill the existing monetization doesn't match the growth of page views. 

Flurry assigns a value to that growing "inventory" ($2.50 CPM), which is how they project out the hypothetical mobile spend. Accordingly if there were advertisers sufficient to fill all the potential mobile "inventory" it could potentially exceed the value of online advertising. However the discussion is all about consumer behavior, creating opportunities for advertising -- not about actual monetization.

According to Nielsen, two-thirds of (Android) user mobile Internet time is spent in apps vs. one-third spent on the mobile Web. 

Android smartphone apps-vs-web

By comparison mobile search occupies relatively little time, whether in-app or through a browser. However it's currently driving more revenue than display by some estimates.

Regardless, the implications of the Flurry data are significant. Beyond the fact that they show consumer adoption and massive revenue potential accordingly, they also show that mobile display is likely to be a larger part of the mobile advertising pie than many forecasters had imagined. 

With that assumption, the second question is: how much of that ad inventory will be geotargeted or local? Some have assumed that "local advertising" would dominate mobile because of the better targeting options on mobile devices vs. PC. However local ads many not be a dominant part of the ad spend. Location may play out on landing or secondary pages rather than in the ad creative itself.

Local deals may be pervasive in the display space but so will brand and national ads.