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OTT players and mobile ad revenue

My former Informa Telecoms & Media colleague Guillermo Escofet has published a great article on OTT players' struggle to monetize mobile advertising. Principal analyst Escofet argues that Facebook's $157 million loss in 2Q12 isn't unusual because other OTT players - Google, Apple et al - are also struggling to monetize mobile. You can find the article here:

While Escofet notes that the problems vary from firm to firm, I'd like to venture another angle. Simply, the world economic crisis is starting to bite.

The world is used to mobile applications and advertising by now, but there must be an element by which people just don't have the money to make in-app purchases or click through on adverts to enjoy 'special offers' anymore. Consumers are tightening their belts and, while there will always be tech leaders who spend their cash solely on having the latest smartphone and applications, the majority are starting to question just how much they really need to spend on mobile stuff.

If I'm right, it could prove a serious problem for the creators of free applications, who's monetization model is now mostly oriented around in-app purchases. People will still want to download the app, but if they're reluctant to cough up any money there seems little point in creating that app in the first place.

Friends who play games on Facebook are already telling me that they take longer to hit targets because they refuse to buy their way to glory. If they reach a point in a game where they can't continue without making a purchase, they just ditch it and move onto the next game.

I'm not sure what the answer is beyond cutting the cost of items offered within applications - or offering something that people just can't resist.