Media companies just closed the web gap, and now there’s a mobile chasm by Mathew Ingram @FortuneMagazine August 25, 2015, 2:59 PM EDT E-mail Tweet Facebook Linkedin Share icons Newspaper publishers and leaders of other media companies might be forgiven for thinking that the universe is conspiring against them. Many have only just managed to get their digital operations to the point where they are generating at least some revenue—although not nearly as much as print used to—and now they find themselves behind another eight ball. In this case, it’s mobile, where they are looking at another massive reduction in revenue, even if they do manage to build a sustainable business. It’s not like the growth of mobile should come as a big surprise to anyone. It’s been happening for the past several years: More and more web users are spending larger and larger amounts of their time on a mobile device, to the point where it has become the preferred way of getting news and other media content. But that doesn’t mean anyone is actually paying for it. According to the most recent State of the News Media report from the Pew Research Center, using data from online measurement firm comScore, mobile devices account for more than half of the digital traffic to 39 of the top 50 media sites. Unfortunately for most of those companies, however, mobile users don’t stay as long as desktop users — in part because most news sites are poorly optimized for mobile devices, and as a result take forever to load — and they also tend not to click on ads. And consequently, those ads aren’t worth as much. For years, media companies have talked about how the rise of the web forced them to exchange “analog dollars for digital dimes.” Thanks to the nature of the internet, where the next web page is just a click away and banner ads are seen as irritating wallpaper rather than a call to action, digital advertising has generated orders of magnitude less revenue per user than print publishing did. So for every print reader, newspaper and magazine companies have had to come up with at least 20 online readers. Now, mobile threatens to compound that problem. As a recent Wall Street Journal story explains, mobile advertising is even harder to pull off than web advertising was, and is likely to generate even less revenue. That’s because mobile devices have small screens — making traditional display advertising all but useless — and user behavior on a mobile device is even less conducive to interruptive ads than desktop browsing was. “The problem is that for many publishers, mobile revenue isn’t keeping pace—by a long shot—creating what industry executives are calling a ‘mobile gap.’ Selling advertising on mobile devices is proving difficult: It is hard to show mobile users enough ads, traditional ad formats like ‘banners’ perform miserably, and publishers can’t easily do sophisticated tracking and targeting of ads.” To take just one example of the mobile gap, the New York Times is one of the publications that gets more than half of its traffic from mobile devices—and yet, according to an NYT executive who spoke with the Journal, the company gets just 15% of its digital ad revenue from mobile. Somehow the phrase “mobile gap” doesn’t quite capture it. “Chasm” might be more accurate. So who is making all the money from mobile users? Facebook and Google, mostly. Facebook FB made $3.5 billion from mobile display advertising in 2014 — an increase of more than 130% from the previous year — and accounted for almost 40% of all digital display advertising in the U.S. One of the main reasons why Facebook and Google GOOG (and to a lesser extent, Twitter) are pulling in so much advertising revenue is that they can target potential consumers in a way that no media company can even hope to match. Facebook knows so much about its users that it can offer advertisers the ability to micro-target their audiences, based on gender, income, profession, interests and a host of other variables. Most newspaper and magazine publishers know comparatively little about their readers. That’s just part of the problem. In an attempt to generate as much revenue as possible, most media companies have bolted so many popup ads and tracking cookies and display modules onto their webpages that they take forever to load on a mobile device, and offer a horrible user experience even when they do. Graphic evidence of this problem appears in a piece at The Next Web, which looked at how much more quickly mobile sites load when an ad-blocking software program has been installed. The difference is mind-boggling in many cases. And that is going to become an even bigger issue once Apple releases the next version of its Safari browser, which reportedly has ad-blocking features built in. All of this, meanwhile, helps play into Facebook’s desire to have media companies host their content directly on the social network, instead of just posting links. One of the main selling points of the “Instant Articles” project — where partners like the NYT and Guardian publish stories directly to the network — is that it will allow mobile articles to load faster, and look better. The second big selling point is that publishers will get more ad revenue. Is piggy-backing on Facebook’s platform the only way publishers can make mobile work? Perhaps. Entering into that kind of relationship also involves a significant transfer of power from the media outlet to the giant social network, something that has long-term risks. But for most publishers—and even for the New York Times—subscriptions aren’t generating enough revenue, and few people are paying for their apps. For many companies that are watching the mobile chasm grow ever larger, in other words, there may be no other option. Their revenues are already so anemic that they can’t afford to build or buy anything that is going to move the needle. They can either play ball with Facebook and hope that will get them where they need to be, or they can stay on the sidelines and ultimately fade away.