Mobile Marketing and Analytics Hits its Stride
Co-written with my colleague Neeraj Agrawal
Mobile could be considered the largest technological shift in history. Many of the largest outcomes in venture capital in the past 15 years have come from mobile-consumer companies: Facebook (which was famously slow to embrace mobile but now has 82% of its ad revenue coming from mobile) is the largest public company created in this period and now has a $338 billion market cap. WhatsApp, which was purchased by Facebook for $19 billion, represents the largest-ever acquisition of a VC-backed company.
And currently, the three highest-valued private companies, according to data from CB Insights, are all purpose-built for mobile: Uber, Xiaomi, and Airbnb. It’s well-known that mobile has crossed desktop PCs in terms of number of users–2014 was the first year this was the case–and the time spent on mobile devices is dominated by apps; 86% of time spent on a smartphone is in-app. Based on the trends we are seeing, desktop web traffic is now flat or declining. Instead, growth is being driven from mobile initiated sessions.
In the B2B world, however, the mobile juggernaut hasn’t generated the same level of interest and financial activity. If you take a look at our SaaS Success Database, none of the companies listed could reasonably be described as “mobile,” with the potential exception of TOA Technologies, a field-service management company founded in 2003 that Oracle bought for $550 million.
Why is this? Consumers gravitated towards mobile-first experiences over the last decade as early apps and services allowed them to operate their lives from their pockets. Smartphones did more than just replace the PC in many cases; they also brought technology to those who could not afford a computer or Internet access. What’s more–and what intrigues us as business-software investors–is that the leading mobile-first consumer businesses were so far ahead of the curve that they were forced to build their own tools to analyze and engage with all these new users. There wasn’t a market for the segmentation, study and reactivation/re-targeting of mobile users, as there is on the non-mobile Web, because only about ten companies initially needed such solutions.
This mirrors what happened in the initial days of the Internet. Businesses like Yahoo, Ebay and Hotmail created a significant amount of value in the consumer world, but it took another decade before there were enough such companies, operating at a large scale, to support sophisticated B2B companies to help them further engage users and grow revenues. Eventually, though, B2B companies like Omniture*, ExactTarget* and Responsys stepped in to fill the void.
We feel that the same thing is now poised to happen on mobile. We’ve seen mobile really cross over to become a mainstream core competency for almost all consumer-facing businesses in the last year. Businesses across industries, from retail to consumer products to insurance and banking, have recognized that mobile needs to be a core part of their overall business strategy.
*For a full list of all Battery investments and exits, please click here.