InMobi Pulling Out Of Africa illustrates the problem with Mobile Ads

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So by now you should have known that InMobi is pulling out of Africa as we had reported here. When I saw the news for the first time, the issue of how hard it is to make money on mobile ad came to my mind immediately. Many people have tried to answer this basic question but I think at the moment nobody has given out a complete and comprehensive answer to it . The same question is tied to another question which is being asked by many, “why is it so hard to make money online so far in Kenya”.

Many times people have argued that the number of people online at the moment is not big enough and therefore that is where the problem is. I must say personally I have had the same kind of view for a while but then it hits me that our biggest problem with making money online through online ad or otherwise is “Mobile”, yes mobile phones.

The narratives around the world is that Africans are now using mobile phones in droves and if  you want to be internet millionaire move to Africa..David Rowan of wire magazine UK recently wrote:

If you want to become extremely wealthy over the next five years, and you have a basic grasp of technology, here’s a no-brainer: move to Africa.

Huh, I like such talks, it seriously inflate our egos but the reality is at the moment the clear cut way of making money online is still not there. To become extremely wealthy as suggested by David we need to urgently fix the mobile revenue problems.  Let’s look at Kenya. Out of 14 million internet users according to the latest Communication Commission of Kenya (CCK) stats,  98% percent access the net through a mobile device. That is  awesome and it is the reason why every developer is rushing to do mobile app, and the publishers are out to attract people to their mobile sites. The problem is even in the mature markets like US, mobile  revenue is still a challenge. Facebook apparent struggle since going Public has been largely due to the fact that they are unable to monetize the mobile. For sometime, people have thought it is a problem for   Facebook only but now there are others. The latest Google woes has confirmed how hard it is to monetize mobile. According to wired.com

But there’s a problem: Mobile doesn’t pay. At least not as much.

Analysts placed the blame for Google’s disappointing earnings results squarely on mobile — specifically the lower value of mobile ads versus those on laptops and desktops. Google said the average “cost-per-click” spread across all its ads had fallen by 15 percent compared to the same time last year.

And

The reason is that mobile ads simply don’t engage users at the rate their desktop cousins do. Which makes sense: When you’re banging out a Google search on your smartphone, you’re more likely on the go and more likely to need to do something with that information. The leisure to tap an ad that captures your eye isn’t there.

Coming back here and my biggest disagreement with Linet Kwamboka, the ICT Board Open Data lead is whether the developers should abandon the  feature phones and go for smartphone. Linet maintains that the number in terms of the users is on the side of  the feature phones. Which I agree with entirely. At the moment the best estimate of the smartphone users in Kenya is below a million. Compare that with the 29 million total mobile users according to the latest CCK stats and you get where Linet is coming from. On my side I think it is time for the developers to abandon feature phones and develop for smartphones. The user numbers  might favor Linet point of view but the reality is, there is no money on the SMS and USSD applications. Doing it with smartphones is still a challenge as we have seen with Facebook and Google, now you can imagine how hard  it is with the feature phones.

The problem with SMS and USSD application is not about engagement alone but about the business model too. There are those who have tried the free SMS  apps and systems. They come with embed ad at the end of the messages. The problem with this is that the cost of sending SMS has reduced significantly in Kenya to the extent that just shouting it is free will not cut it for the users. The other problem is the emergence of the Twitter. Twitter is even killing the normal sms itself for the mobile network operators. We have seen husbands and wives communicate and even fight on Twitter. At this point It is not off the mark to say that the  DM on Twitter is becoming the default channel for dating. The final problem on this came when Google brought in the Free SMS on Google gmail. The Google option is attractive option for the users because there is no ad attached at the end of each SMS. I think given the choice to choose between the two, users will go for Free without ad at the end of SMS.

As for the other USSD applications, I have not seen any viable way to make money out of them and that is why I keep on saying that Smartphones are the way out. People around the world might still be struggling to get the best out smartphones but I think it is just a matter of time before somebody hit the right spot.

One example commonly given in the recent time  is the success of biNu especially on the fund raising front.  Recently they raised $2 million from venture funds including the Savannah Fund. biNu is a platform that is meant to bring smart apps to feature phones. Basically it enable feature phones to  exhibit high-end smartphone-like capabilities. I like it and I have used it on the Nokia Asha 305 but the question  at the moment is, how will they make money. I am very interested to know how they will monetize the app.

Having said that, it  should be noted that the app is not just a normal sms/USSD application but kind of a smart app

 

 

What is your opinion on the topic?
Kennedy Kachwanya
Lead Blogger at Kachwanya.com
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Kennedy Kachwanya is a technology blogger interested in mobile phones both smart and dumb, mobile apps, mobile money, social media, startups ecosystem and digital Savannah. New media must not forget the strength of old tech.
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