By: Alan D. Mutter
Apple and Google, the two biggest powerhouses in Silicon Valley, have stepped up the battle to make their smartphones smarter so they can grab ever-larger shares of the local advertising market.
Their efforts are a major threat to newspapers hoping to capitalize on the enviable power of their local franchises to become significant players in the vigorously growing mobile space. Unfortunately, newspapers are woefully behind.
Mobile matters, because advertising purchases on hand-held gizmos are expected to climb 4.5 times from last year’s levels to $7.7 billion by the end of 2016 — a sum equal to approximately one-third of the combined ad sales of all the nation’s newspapers in 2011.
BIA/Kelsey, the private research firm providing the above forecast, believes that half of the sales will come from location-targeted local advertising, a compelling format that pushes messages to specific individuals in order to pull them into nearby businesses.
With more than half of Americans now equipped with smartphones, and pageviews more likely to be consumed on small screens than on PCs within 18 months, competition revved to a new level over the summer among the many technology companies hoping to grab real estate, mind share, and future revenues in the fast-evolving mobile marketplace.
The scramble kicked off in June, when Apple decided to boot Google’s long-dominant mapping software off the new iPhone scheduled to debut in the fall. Google responded within days with an improved version of Google Now, a voice-activated digital assistant for its Android devices that emulates — and in some circumstances surpasses — the revolutionary Siri assistant that Apple put on its iPhones last fall. At the same time, Google completed its acquisition of Motorola Mobility, for the first time providing the search king with the same end-to-end control over software and hardware that Apple has long enjoyed.
The result of these major strategic initiatives is that your next smartphone will move from being a collection of individually helpful but largely unconnected applications, to being increasingly dominated by a single master app that seamlessly and intuitively integrates the essential functions you commonly use. As master apps become more powerful — this won’t happen all at once — they will marginalize the value of freestanding, single-function apps such as those offered by newspapers.
Smarter smartphones will anticipate your needs and advise you at every point of the day by accessing your calendar, indexing your searches, learning what you like to read, tracking your purchases, and monitoring your location.
In the not-too-distant future, your phone will automatically wake you in time to get to your first meeting, taking into account weather and traffic conditions. It will guide you to the nearest Starbucks, where your standing order will be ready, and the device automatically will pay for it. The phone will route you around traffic jams and, at your command, tell your host how late you expect to be. While you’re driving, the phone will read aloud your incoming texts, emails, and voicemails so you can dictate immediate replies.
Meanwhile, the phone will be aggregating and curating information in real time on topics it has learned you like, ranging from the latest news to cheap flights to Maui. The phone will follow your voice commands to read the items you select and then fetch any additional information you request, alert colleagues to important articles, add items to your read-later list, and nag you when you don’t read them.
Over time, the phone will learn so much about you that it will be able to send you advertising, daily deals, and other commercial information tailored to your evolving interests and specific location. And a great deal of that advertising will be from the local businesses that historically advertised in newspapers.
The revenue potential for this intimate and immediate form of advertising is why Google and Apple are racing to make their phones as intuitive and helpful as they can be. Facebook, Twitter, Microsoft, Foursquare, and dozens of smaller wannabes are in the hunt, too.
Meanwhile, the mobile app at the typical newspaper is as static, unintuitive, and non-transactional as a brick.
The only thing most newspaper apps can do is post the publication’s editorial output for the prior 18 hours. As this content gets sucked into the master apps running next-gen smartphones, the traffic at these single-purpose news apps is bound to shrink. Publishers, of course, can block the export — but only at the risk of further cutting their traffic.
Even worse, most publishers never invested in capturing the sort of detailed information about individual readers that is the coin of the realm for modern digital advertising. Stuck for the most part with selling run-of-site banners by the thousands, publishers have neither the data nor the technology necessary to deliver individually targeted or geo-aware advertising.
Unless something changes incredibly fast, newspapers will miss the next big thing in media.
Alan D. Mutter is a former newspaper editor and Silicon Valley CEO who now advises media companies on technology and technology companies on media. He blogs at Reflections of a Newsosaur (newsosaur.blogspot.com).