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Meeker: People are flocking to mobile, but where's the money?

New data from VC Mary Meeker vividly illustrates just how quickly mobile use is taking off around the world -- and how hard it is for companies to capitalize on it.

Mobile ARPU is still behind.
Mobile ARPU is still behind. KPCB

It's no secret that more of us are picking up Web-connected mobile devices. But the growth with which that's happening is nothing short of impressive.

At the D10 Conference today, Kleiner Perkins Caufield Byers (KPCB) partner Mary Meeker revealed that at the end of 2011, there were 1.1 billion mobile 3G subscribers around the world, representing 37 percent growth over the prior year. The strongest growth came in India, where year-over-year subscriptions rose 841 percent. In the U.S. -- a market much closer to the saturation point -- 3G subscribers rose just 31 percent.

Despite that, Meeker said that total 3G penetration is just 18 percent globally, suggesting that mobile has a long way to go to catch up to the world's population.

With that many people using mobile products, you'd think there's definitely money to be made. And there is -- sort of, and not necessarily where you'd expect. At the end of 2011, Meeker said, total mobile ad and application spending hit $12 billion, having grown at a 153 percent compound annual rate for the previous four years. But only 29 percent of that sum came by way of mobile ads.

The average effective CPM (cost per thousand) advertisers are seeing in the mobile space is just 75 cents. In the traditional online ad world, CPM stands at $3.50. To make matters worse, among some of the top online brands, average revenue per user (ARPU) is much lower in the mobile space than on the Web. Pandora, for example, generated 1.7 times more revenue per user online than in mobile. For Zynga, that figure stands at five times mobile.


Although that might seem concerning, Meeker isn't necessarily bearish on the future of mobile monetization. The company examined Japan-based mobile game maker GREE International as an interesting model for the mobile-ad space. Based on that company's performance, KPCB found that over time, mobile ARPU "can rise rapidly." In addition, the company found that over time, "mobile ARPU should surpass desktop ARPU," as long as the market follows a model set in place by another Japan-based game maker, CyberAgent.

Finally, and perhaps most importantly, Meeker warned that no one should jump to quick conclusions regarding the issues facing mobile ads. After all, back in 1995, global Internet ad revenue was just $55 million. At the end of 2011, that figure hit $73 billion.