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Why mobile computing is stumping even the tech savviest disruptors

Posting in Technology

Today's leading tech, marketing and advertising firms -- built and led by the disruptors of our time -- still don't know quite what to make of the mobile computing disruption sweeping the world.

That's the observation of the Washington Post's Craig Timberg, who points out that mobile computing is breaking down the online advertising model -- developed and finely honed and mined over the past decade by the globe's leading disruptors.

Indeed, e-commerce was a huge disruptor, and is now accompanied by the multiplier effect of social media. The problem is that online advertising models are based on PC-based Web searches, in which users are situated in one spot and are likely to whip out their credit cards to make on-the-spot purchases.

But consumer behavior is different when browsing or searching from a smartphone -- which tend to be based on end-users' locations. Mobile computing is increasingly cutting into this dynamic -- comScore estimates that the percentage of Web pages viewed from mobile devices is now about 13%, up from 7% a year ago.

The challenge, then, is to appeal to users who may be searching the Web while in a store for the best deals or more information on a product. But, Timberg notes, "advertisers potentially lose out, too, because that research does not always lead directly to a sale." The user may leave the store and go to a competitor. In turn, this lack of a direct connection between advertising and direct sales mean smaller marketing budgets. Typically, as a result, rates for ads on mobile search queries run about one-third less than for queries made from PCs.

This, in turn, is making things difficult for tech companies that have built huge businesses on online advertising, Timberg writes. "It’s the riddle many in the tech industry are desperate to solve."

Even Google -- the unflappable wunderkind of the tech industry -- is feeling this pain, Timberg illustrates. "The money advertisers had paid per click was off by 15% compared with a year earlier. Driving this shift was the increasing share of ads appearing on the tiny screens of mobile devices instead of personal computers."  Only Apple, with its large iPhone franchise and developer ecosystem -- seems to have the most highly engaged strategy on this disruptive new trend.

Eventually, tech firms, marketers and advertisers will adapt, and learn how to more accurately measure and monetize the mobile Web. Or, the online advertising revenue model may splinter down and be based on a more granular collection of data on return by device types. By that time of course, if history is a guide, a new disruptive force may be in the making.

(Photo: Joe McKendrick.)

— By on October 21, 2012, 3:07 AM PST

Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure