SITO - What is the Mobile Web?
As smartphones become more ubiquitous, the way people access the internet is shifting.
The world has witnessed a dramatic shift from laptops to smartphones over the last several years as people switch to using mobile devices as their main mode of internet connectivity. The old practise of logging onto a desktop computer to connect to the internet seems relatively archaic in this new era.
Indeed, Forbes went so far as to name 2015 the year of the mobile web, and mobile web browsing outpaced desktop browsing for the first time in 2016. What’s more, according to a post on Stone Temple, 58 percent of website traffic came from mobile devices in 2018.
Nicknamed the Web 3.0, the mobile web refers to using the internet via a mobile or wireless connection on a handheld device. But what should investors know about the mobile web? Below we run through what it is, why it’s important and where the space is headed.
Using the mobile web
While mobile devices were once used for brief internet surfing on the go, today they have emerged as the primary screen for most people. That means people are more likely to turn to their smartphone than a laptop or desktop computer.
Cisco states that globally, mobile traffic will reach 77.5 exabytes per month by 2022, up from 11.5 exabytes in 2017. For reference, that’s the equivalent of watching 19 billion DVDs each month.
Use of the mobile web has steadily increased since 2009, The Guardian notes. As mentioned, mobile web browsing outpaced desktop browsing for the first time in 2016.
Aodhan Cullen, chief executive at StatCounter, told the news outlet at the time, “This should be a wake up call especially for small businesses, sole traders and professionals to make sure that their websites are mobile friendly. Many older websites are not.”
He continued, “Mobile compatibility is increasingly important not just because of growing traffic but because Google favours mobile-friendly websites for its mobile search results.”
Looking at the numbers, data from Cisco reveals that mobile data traffic will grow seven fold between 2017 and 2022, which translates to a compound annual growth rate of 46 percent.
Even more revealing, global mobile data traffic will grow two times faster than fixed IP traffic during the same period, while traffic will be equivalent to 113 times the volume it was in 2012. As such, the switch to the mobile web isn’t a passing fad. Instead, it’s the new frontier of internet use.
The companies that are poised to succeed in this new epoch of internet usage are those that are capitalizing on the uniqueness of the mobile experience.
The case of Snapchat (NYSE:SNAP) is a good example. Unlike its social media predecessors Facebook (NASDAQ:FB) and LinkedIn, now a Microsoft (NASDAQ:MSFT) product, which were both designed to be used on desktop computers and fixed-line laptops, Snapchat has only ever existed as an app.
In fact, when the app officially began trading on the New York Stock Exchange in March 2017, it was worth roughly US$25 billion. That was more than Twitter (NYSE:TWTR) at US$14.08 billion, although things have since changed — the current market cap of Snapchat is US$14.96 billion while Twitter is US$30.32 billion.
Mobile gaming is also taking the stage by storm. Mobile games reportedly accounted for more than half of global digital games revenue in 2018, raking in $61.3 billion of the $109.8 billion total.
Mobile marketing a key market for the mobile web
Snapchat’s value rests primarily in its ever-increasing advertising revenue. The strength of this model reveals another key feature of the mobile web: its revolutionary impact on marketing. New ways of collecting and organizing data have allowed targeted ads to supersede conventional forms of marketing, transforming companies’ means of generating user engagement and loyalty.
In March 2019, Zenith predicted in a report that the growing exposure of internet ads will increase global spending on ads. The firm says that global ad spending will see an increase of 4.7 percent in 2019, with internet advertising in particular expected to reach US$329 billion in 2021, representing 49 percent of all ad spending.
According to Zenith, companies spent more on mobile ads in 2017 than on desktop ads, with mobile ads contributing US$109 billion in 2017 and desktop ads chipping in US$104 billion.
Companies like SITO Mobile (NASDAQ:SITO), Engagement Labs (TSXV:EL) are all small-cap players making a big impact in the field of mobile marketing. By incorporating big data, analysis and the mobile user experience, these innovators have tapped into a new market unique to the mobile web.
For investors, the mobile web companies are certainly becoming attractive portfolio additions. An ever-expanding user base, coupled with innovative tech companies that are making the most of the medium, indicate that there are numerous opportunities in this space. Mobile marketing in particular is a strong area of growth.
And if that isn’t compelling enough, the near-infinite number of apps on the market almost guarantees that every investor will be able to find something in the space to get excited about.
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This is an updated version of an article first published by the Investing News Network in 2016.
Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.