Dissecting the Mobile Advertising Ecosystem
Today, marketers find themselves in the “post-PC” era, one in which the advent of internet-enabled mobile devices have encouraged a dramatic upswing in mobile traffic to online businesses. Mobile traffic will inevitably become the dominant driver for website visitors as current trends and statistics suggest that a major shift in device usage and search patterns is already upon us:
- Google’s latest study suggests that by 2015 the number of mobile searches will have surpassed desktop queries.
- UK’s Association of Online Publishers estimates that mobile traffic accounts for 20% of visitors for over 85% percent of publishers.
- eMarketer expects overall spending on mobile advertising to rise 180% this year to top $4 billion, a significant upward revision from their last projection from September 2012.
If you have yet to jump on the “mobile train”, the time to get on board is now. However, making sure to jump on the “right train” is vital as the mobile advertising ecosystem is quite complicated – from app promotion, to hyper local mobile ad campaigns, to traditional Pay-per-click (“PPC”) based initiatives on mobile devices. Understanding exactly how you plan to reach users on their mobile devices, and what you plan to promote will help determine what type of mobile initiative requires your immediate attention.
The following is an overview of the current industry landscape for mobile advertising and how we, as marketers, can (and should) leverage the many different offerings within the mobile advertising world.
Understanding the ABC’s of Mobile Advertising
In the mobile space there is one central question that both advertisers and brands mustanswer before embarking on a mobile advertising campaign: What Am I Trying to Accomplish? Site/Service Engagement or Mobile Application Promotion?
- Web Site/Service Engagement: Are you interested in promoting a site or driving users to engage on your mobile enabled pages?
- Application Promotion: Are you interested in promoting a mobile application to increase download activity?
By determining which action a campaign is looking to accomplish, marketers can select the best strategy to push that engagement further using the various mobile advertising platforms available today. For example, if you are promoting a service, we recommend a focus on building mobile optimized pages for your existing website instead of a mobile application.
Getting Your Mobile Advertisements “Out There”
There are a variety of ways to engage with users on mobile devices. By now, most marketers are familiar with Google AdWords and the MSN-Yahoo! Search Alliance which still dominate and control the mobile PPC (paid search ad) format and landscape. Outside of the traditional PPC advertising channels, three major “technology options” have emerged to manage campaigns within the app and mobile display world:
- Mobile Ad Networks – Mobile ad networks currently hold a central position in the Mobile Ecosystem. These networks are responsible for aggregating advertising inventory (impressions) and matching it with the needs of advertisers. Within the mobile world, ad networks are particularly important because the audience is fragmented across devices and ad networks and these Mobile Ad Networks have the ability to reach audiences at scale. It’s important to understand that, in general, each ad network has access to the same inventory across the mobile web. This means that marketers working with multiple mobile ad networks run into the possibility of bidding against themselves for inventory and impressions. We recommend that advertisers speak directly with at least 2-3 different ad networks to determine the networks reach, targeting capabilities, and pricing formats before deciding on how to develop and determine campaign coverage as well as which specific network(s) to work with.
- Examples of Mobile Ad Networks: adMob, Millenial Media, inMobi, and iAD
- Demand Side Platforms (DSPs) –Marketers with a “traditional” media buying background should be quite familiar with DSPs and it should come as no surprise that DSPs are growing in popularity within the mobile ecosystem. DSPs create greater targeting opportunities in real-time by providing one central location to manage your mobile ad campaigns. DSPs provide more transparency into the advertising process than the mobile ad networks. At the moment, DSPs are complimentary to mobile ad networks, however, if DSPs begin to sell inventory on their own, they will compete directly with ad networks. DSPs are currently coming in at a higher cost than ad networks and ad exchanges, therefore, we recommend leveraging DSPs for mobile-based initiatives if the sole focus is on boosting brand awareness and delivering rich media-type ad units on premium placements.
- Examples of DSPs: mdotm, StrikeAd, and DataXu
Mobile Ad Exchanges – Mobile Ad Exchanges automate many parts of the mobile ad process and, most importantly, can connect publishers with multiple ad networks at one time. Traditionally, agencies do not leverage mobile ad exchanges as it threatens their role as a media buyer for a brand.
- Examples of Mobile Ad Exchanges: Tapsense, Mobclix and Nexage
At Elite SEM, we believe Ad Networks, DSPs, and Ad Exchanges are all viable options for mobile campaigns depending on a client’s goals. We recommend first understanding the client’s program & goal before deciding which type of system to use.
Both mobile ad exchanges and DSPs are viewed as looming threats to the longevity of mobile ad networks as publishers continue to leverage both to obtain better price transparency, scalability, and inventory liquidity. The same argument can be made from the advertiser side as DSPs and exchanges allow advertisers to work directly within one User Interface to scale and leverage multiple publisher placements. Ad networks will not dissolve or disappear from the mobile ecosystem but we anticipate an increase in the number of advertisers and brands that will work directly with exchanges and DSPs.
Three Issues That Plague the Mobile Space: Reconciliation, Ad Efficacy and Tracking Integration
- Reconciliation: With so many different combinations of devices, wireless operators, and operating systems, advertisers have found it difficult to ensure that ad targeting, delivery, and measurement work seamlessly across devices:
- Mobile-focused companies such as Google (Admob) and Velti (Mobclix) are working in conjunction with attribution and analytics companies to create measurement tools that will address these concerns, but none of the technologies have been fully vetted. In 2013, we expect to see major gains on addressing the issue with reconciliation across mobile ad placements.
- Google is looking to address the concern of seamless engagement across all platforms. During Google’s Q3 Earnings Call for FY 2012, Google’s CEO Larry Page shared how the company plans to tackle the reconciliation issue by combining mobile and desktop ad experiences so they flow seamlessly between devices. “…There are separate campaigns for desktop and mobile right now. This is more arduous for users and mobile opportunities possibly get missed. Advertisers should be free to think about their audience while we do the hard work of dynamically optimizing their campaigns across devices.” http://searchenginewatch.com/article/2219061/Google-Plans-to-Combine-Mobile-Desktop-Ads
- Microsoft Windows 8 is looking to change the way users engage both on mobile and desktop as well. The focal point of Windows 8 was to make device usage (whether PC, Tablet, or mobile) compatible and seamless by using one’s hand instead of using a Keyboard and Mouse. As Microsoft’s GM of Advertising Andy Hart in the UK states, “Windows 8 presents brands and agencies with a canvas that delivers free-flowing brand integration across its ecosystem — offering a platform with ‘immense reach’ and the opportunity to create effective campaigns against the backdrop of changing consumer behavior towards multiple connected devices.” This shift in thinking will help make online advertising seamless in the sense that the user’s experience will not change from one device to another and also ensure that brands no longer battle to determine which is more important.
- Ad Efficacy: Users of mobile devices are more opposed to ads than desktop users and a Nielsen survey indicates that only 19% of U.S. smartphone users believe mobile advertising is acceptable. How do marketers counter this negative perception?
- In lieu of traditional banner ads and ad delivery methods, companies such as Appsavvy are looking to counter the perception that ads are intrusive by coordinating ad delivery with natural breaks in consumer mobile engagement. This ad delivery method is built upon the premise that ads should be the primary focus upon delivery, but delivered less often.
- Another ad delivery method that has found some success in mobile advertising is SessionM’s opt-in system. The opt-in system is built upon rewards and incentives, whereby users can accumulate points or achieve milestones that will provide access to gift cards and other goods. Points are allotted relative to ad involvement and interaction. Flurry also offers a similar reward-scheme mechanism through their App Circle and Clips media offerings.
- Tracking Integration With Mobile Ads: This issue presents a larger problem for those advertisers looking to promote and monitor app installation and usage. The majority of ad networks have their own code packages [SDKs] which will track engagement stemming from their specific network. Unfortunately, this means that multiple tracking packages would need to be implemented to track across networks which can be quite cumbersome on developers.
- Currently, the only workaround for mobile tracking is to work directly with a mobile DSP or ad exchange (i.e. MdotM, TapSense, Mobclix) instead of a mobile ad network. This allows advertisers to leverage multiple ad networks through one UI, eliminating the need for multiple tracking codes.
- Analytics/adverting networks such as Flurry have developed tools to measure app engagement post install (audience reach, retention, conversion, revenue, etc.) regardless of what network or exchange delivered the installation of the application. Flurry’s analytics solution is free for all app developers and we strongly recommend implementing their SDK to gain a stronger understanding of how app engagement is performing “post install”.
The Agency Role in the Mobile Space
One concerning trend in the mobile ad industry is the perception that agencies are “out of the loop” or just don’t get it. Currently, more than half of publishers blame agencies for low mobile ad revenues. With mobile usage increasing, agencies are slowly starting to “buy-in” to mobile and, as a result, are improving their competency in this space.
For the most part, this perception and attitude adjustment for agencies is due to industry leaders pushing mobile on both brands and advertisers. Google, for example, has begun to focus a significant amount of their training and resources on educating advertisers and brands alike on the power of mobile. Their push to mobile includes the acquisition of their own ad network (Admob), and the development of Google’s “Mobile Playbook” (http://www.themobileplaybook.com/en-us/).
At Elite SEM, we strongly recommend that all SEM agencies and brands take a deeper look at the potential in mobile advertising and begin allocating resources to develop mobile properties and strategies that can be leveraged for the long term.
The Bottom Line
- Figure out EXACTLY what your client or company is looking to achieve for their online campaign and then determine the necessary steps to tackle that initiative within the mobile ecosystem (whether site or app promotion).
- Many brands lack a “user-friendly” mobile destination that is necessary for an effective mobile ad campaign and need to begin working on that ASAP. A survey conducted by Google last year concluded that 79% of large online advertisers do not have a mobile optimized site. Make sure you or your clients are not part of that 79%! Google is now cracking down on advertisers that are actively targeting mobile devices but driving users to a non-mobile optimized experience – increasing CPCs to get placement and dropping ad quality score. Delivering users a mobile optimized website will help improve user experience and engagement as well as to ensure the lowest possible marketing costs are incurred. http://googlemobileads.blogspot.com/2011/09/mobile-website-optimization-now-factors.html
- Mobile ad networks are being squeezed by ad exchanges and DSPs but can maintain central position if they keep an edge in audience targeting and measurement. We recommend that marketers check out all three types of offerings (mobile ad networks, DSPs, and exchanges) to determine which one is most suitable for their needs.
- Mobile’s dominance is only going to continue to rise and marketers need to start investing now in the resources and team to support brands as their needs shift from desktop to mobile initiatives. Along those lines, the structure of mobile advertising will also continue to evolve. Advertisers must make sure to stay up-to-date on the changes that will ultimately affect how clients and companies allocate marketing dollars moving forward.