New Online Markets Grow More Important

Alex Henderson

As 2013 enters the end of its fourth quarter, one of the cardinal rules of online adult commerce still applies: traffic is king. But traffic, like so many things in the adult entertainment industry, continues to evolve rapidly — and while desktop/laptop traffic is still profitable in many places, the need to be mobile/wireless-optimized shows no signs of decreasing in importance.

“Two years ago, a typical site had 5 percent of their traffic as mobile,” observed Nigel Williams, vice president of the Montreal, Canada-based AdXpansion. “Last year, it was 7 percent to 10 percent. This year, it’s more around 12 percent.”

Adult traffic shouldn’t be viewed as strictly desktops and laptops on one hand and smartphones on the other.

Judy Shalom, managing director of the Paris-based Affil4You, noted that when it comes to traffic, competition remains fierce among different mobile platforms.

“In the past half-decade, the mobile adult traffic has grown exponentially from rather slow devices using rather slow GPRS connections to the newest state-of-the-art handheld devices using 4G,” Shalom explained. “Within all this evolution, the big players distinguished themselves quickly. Where Apple took a major chunk of the adult mobile traffic, iOS is only representing about 30 percent of the traffic generated these days. With Android growing its share of the cake, coming to around 50 percent, it looks like this trend will not stop soon.”

As mobile adult traffic continues to grow in importance, webmasters will need to keep a close eye on mobile trends around the world.

Geoff Bonnechère, chief business development officer of the Barcelona, Spain-based ExoClick, explained: “Based on the volume of traffic, the U.S. remains the biggest country on both desktop and mobile. But based on the traffic value, eCPM, other countries appear to be more lucrative because of a higher demand for their mobile inventory. We can mention Italy, Spain, Belgium, Russia, some Latin American countries.”

The economic crisis in parts of the European Union has been hitting some countries especially hard, including Greece and Spain.

But Luxembourg-based Antoine Moreau, founder/CEO of StarEdition and the mobile affiliate program Mobidea, said that laws and regulations can have much more of an impact on adult traffic than a country’s economic problems. Moreau said: “Spain is still one of the best markets in the E.U. in terms of revenue from adult mobile services. In Mobidea, we noticed a slight increase of non-chargeable subscriptions in South European countries, but nothing to be afraid of. Even when the economy is doing poorly, people are not going to give up their phone — and of course, they keep visiting adult websites. Adult E.U. traffic is much more sensitive to fragmented local regulations that can [do more to] turn a profitable market into a ‘walking dead’ market than the state of the economy.”

Shalom cited the online porn filter that Prime Minister David Cameron wants for the U.K. as an example of the type of thing that could seriously impact adult traffic. “In the U.K., the government has launched a plan that will block porn from computers in the U.K. unless a user turns off a filter that will be on by default,” Shalom noted. “These kinds of censorships will, of course, greatly impact the adult traffic in Europe, and it might be that more countries will follow this example. Of course, this isn’t so much a ban, but more of a request that people opt-in instead of opt-out — all a user will need to do is to notify their Internet provider that they want access to porn, and they will provide the access. But the question is: how many people will be willing to do that and take that embarrassing, for many, step?”

Moreau pointed to StarEdition’s own experiences in Europe as a perfect demonstration of how important mobile traffic has become. Moreau recalled: “After four years building an online adult traffic company at StarEdition, running both web and mobile offers, we were amazed to see that in Italy — one of our strongest markets in 2011 — we were generating ten times more revenue with mobile traffic compared to desktop traffic, with five times less volume of traffic. We realized very quickly the opportunity that was in front of us, and in just a few months, we completely reorganized the company to be solely focused on mobile. Since then, we grew 50 percent per year, both in traffic and revenue.”

Moreau, however, predicted that for mobile adult traffic, “the growth in Europe in terms of revenue is going to slow down due to strict regulations enforced by regulators and operators, affecting both conversion rate and ARPU. But revenue will keep growing at a steady pace in other regions such as Latin America and Asia.”

The StarEdition CEO added that in developing countries where desktop and laptop penetration is lower than it is in the U.S. or Europe, many people are connecting to the Internet on smartphones exclusively — and such countries, he said, should be viewed as growth markets for adult traffic.

“These mobile-only Internet users represent the next billion of connected users,” Moreau asserted. “Internet adult companies now have a new audience to target and interact with.”

Bonnechère emphasized that when it comes to adult traffic, it’s a huge mistake to think of the EU as one big market — it must be viewed as a bunch of different markets.

“Contrary to the U.S., Europe cannot be considered as a whole,” Bonnechère said. “Every country has its particularities in terms of language and surfing habits — sites visited, preferred practices, best niches, etc. Billing methods, solvency and mobile carrier regulations are also very different from one country to another. Regulations have a deep impact on the business attraction of each country.”

Adult traffic shouldn’t be viewed as strictly desktops and laptops on one hand and smartphones on the other. Shalom said that on the mobile side, tablets are something to keep a close eye on. And Williams recommended keeping an eye on IPTVs. “More and more advertisers are coming up with ways to monetize specific traffic by country, in particular for mobile,” Williams observed. “There is also the beginnings of a demand for other device traffic like IPTVs and set-top boxes. However, it’s too early to tell if there will be any explosion of demand for IPTV traffic and other new devices.”