Mobile & the Technology Money Funnel

There are plenty of reasons why the mobile web industry is much smaller than the "regular" web. One could point to the number of smartphone devices (cell phones that can access the web) being much smaller than the number of laptops & desktop computers that can do so. They could also point out the fact that even among the smartphones, the web experience on many of them is still as stripped down and uninsipring as a WAP (Web Access Protocol - think the crappiest most basic kind of website...just links, maybe one picture, and text content, this is the easiest thing to get on a mobile phone that will go on all mobile phones and often depending on the type of phone you have or what they've created for their mobile users, it's all you get). And while I'd agree with this person, I would point out that even if everyone and their mom had a smartphone AND that smartphone was sophisticated enough to offer a richer web experience than some of the first web accessing phones, the problem would be far from solved thanks to the technology money funnel.

The technology money funnel (Rule #2, Noah Kagan, OkDork 2010) looks like this.

It basically shows the potential size of the consumer market that can interact with it on one end and then the number of opportunities that those consumers have to spend because of it on the other, NOT including the cost of actually purchasing the technology and NOT including the advertising...unless the consumer is the one spending money on it (of course the marketing firms are betting the farms...or should I say firms...that they'll spend money because of advertising, but that's a different issue).

So for example, the television money funnel would have probably the largest 'mouth' on the left because almost everyone watches TV. The right side though (the number of opportunities that people have to spend money directly because of that technology) would be really small because outside of your cable bill, you're pretty much done spending money because of your TV once you buy your TV. Same thing with traditional radio except even worse because the consumer isn't charged for its consumption. On the other hand the Xbox (or any video game system) has a pretty open ended funnel because once you purchase the game consol there are a TON of games you can buy and other peripheral devices, as well as online gaming opportunities that buying an Xbox gives you the opportunity to spend money on. SO the 'traditional' web looks like this....

There are a BUNCH of ways that visiting the web from your laptop will allow you to spend money. We pay money to access it as a whole, we pay money to access certain parts of it (i.e. subscription websites) we are able to purchase advertising on it, or a pizza, or rent DVD's, or buy a car, or book a vacation....all VIA accessing the internet. In some cases, this has become the main way that we take part in these transactions (I can't tell you the last time a looked in the newspaper classified ads for anything...if they're not smart enough to at least also put it on craigslist.com - I probably don't want to buy it from them).  NOW here's what the mobile web looks like....

The mouth is smaller of course because the number of phones that can access the internet is smaller than the number of devices that can access the traditional web. But, we know that this number of web enabled phones is increasing at a much higher rate than the number of laptops and desktops that are being purchased...AND we know that the potential for this market is much greater than the traditional web because...well...cell phones are cheaper to buy and easier to keep on your person. There are currently 3 billion cell phones in the world and only 1 billion computers. So greater penetration of the global market coupled with easier access to the device will ultimately throw the mouth of this funnel wiiiiide open.

But, the question I want to focus on is why the funnel is as steep as it is. The first couple we've already mentioned - you can't do spend money on your mobile phone in ways that you can on a regular computer. I brought this up at first in reference to phones that have incredibly basic web accessing functionality like the WAP only phones, but this isn't a problem only with these type of phones (think Motorola's Razr). It's also an issue with even with superphones like the iPhone. For example I doubt people are purchasing high end photography from their iphone due to screen resolution limitations. Also, people may be purchasing google adwords campaign (or admob campaigns) through their mobile phones, but I doubt the experience is very good.

An even bigger reason for this steepness, though, are the psychological barriers. People just aren't used to spending hundreds or thousands of dollars on their mobile phones...yet. 20 (or even 10) years ago, to imply that someone would buy a car online was proposterous...but they do now. Heck, they even buy houses, airplanes, and hundreds of thousands of dollars worth of stock. Some of these things are not possible to do on mobile phones yet, but even the ones that are just make people nervous. It just seems too 'informal' perhaps to spend hundreds or thousands of dollars after examining a product, service, or investment opportunity on a 2.5 inch screen. But it felt awkward and 'informal' to pick out flowers that you'd never seen in real life, or a car you'd never driven 10-20 years ago.

So, the technology money funnel will expand on both ends and is doing so more and more rapidly each year, but it's not just going to be getting more people to use better cell phones...it's going to be creating ways for people to spend money through them, and changing the social norm to make that as accepted as new cultural & technological changes like watching reality TV and keeping thousands of songs in your pocket.