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The eyeballs business has a big mobile challenge

A mobile phone shows a Facebook page promoting Hillary Clinton for president in 2016, in this photo illustrationA mobile phone shows a Facebook page promoting Hillary Clinton for president in 2016, in this photo illustration
A mobile phone shows a Facebook page promoting Hillary Clinton for president in 2016, in this photo illustration taken April 13, 2015. By one estimate U.S. online political advertising could quadruple to nearly $1 billion in the 2016 election, creating huge opportunities for digital strategy firms eager to capitalize on a shift from traditional mediums like television. REUTERS/Mike Segar - RTR4X894Photograph by Mike Segar — Reuters

We’re in the middle of earnings season for the big tech companies, and I’m paying attention to mobile advertising revenue. Facebook (FB) is leading the pack, thanks in large part to app-install ads from gaming companies. Twitter (TWTR) will say it’s been mobile-first all along. Yahoo (YHOO) continues to make the case it has figured mobile out, bringing in 22% of its ad revenue from mobile last quarter. And Google (GOOG), coming from behind, showed a lot of promise earlier this week.

But I can’t help thinking about comments that Facebook COO Sheryl Sandberg likes to make around Facebook’s share of ad spending. She argues that there’s a disconnect between the percentage of time people spend on Facebook and the percentage of money advertisers allocate to the platform. Eventually, the argument goes, that disconnect will correct itself.

Yesterday I realized that argument sounded familiar because it’s the same argument Yahoo made back in the 2000’s about all of digital advertising. Advertisers will see the error of their ways and distribute money according to time spent eventually! The problem is, we’re still waiting for the ad dollars to equal the time spent. Last year digital advertising made up around 30% of all ad spend, bringing in $50 billion last year. By some counts, we now spend more time on mobile devices than we do watching TV. But mobile advertising only brought in $12.5 billion last year, compared with TV’s $70 to $80 billion.

It reminded me of a story I in 2012, which is basically still true:

It’s time we faced it: Digital ad spend is nowhere close to reflecting the amount of time we spend online. Move to Plan B, Internet economy, because this one just isn’t happening on its own.

That’s because there was a fundamental flaw in the Silicon Valley premise that anyone on Madison Avenue could explain: Attention doesn’t equal a good advertising opportunity. That has never been the case in the offline world, so it’s perplexing that the brightest minds in Silicon Valley would think all eyeballs are equal. Since when did an hour with a magazine get priced on the same scale as a 3 second drive-by of a billboard?

For now, search remains the most profitable and effective digital ad format and it takes the least amount of time. (Four percent of our time spent online, in fact.) Now Google is trying to figure out how to win search in a format where almost everything we do happens inside apps, not searching on the mobile Web. (And when people do search for things, they don’t convert to buyers as frequently as they do on desktop.)

Google’s answer seems to be video. The company touted impressive growth in YouTube “watch time,” it’s key metric, last quarter, which doubled on mobile over last year. Google is not alone in this thinking — last night Andreessen Horowitz Partner Chris Dixon chimed in on Twitter that “online video could fix” the disconnect. Facebook, with its big video push, and Snapchat, with its Discover tab, are clearly hoping for the same.