One example is New York ad company Tapad, which claims its “Device Graph” uses 2 billion data points to find people on whatever screen they’re using. This means, for example, that a shoe company can identify a potential customer and hit them with a succession of ads — one on their work computer, another on their phone as they walk home and yet another as they look at a tablet on their couch.

In a recent interview, CEO Are Traasdahl said about 100 clients are using Tapad’s technology, including Dell and major electronics and finance firms. The appeal, he says, is that ad campaigns are more efficient if marketers know that an ad viewer on a computer and a smartphone is the same person.

Tapad’s technology may provide a boon to marketers but it also raises some obvious questions. First, how do we know it works? Mobile marketing is tricky in the first place because smartphones and tablets generate fewer cookies (the bits of computer code that indicate you’ve visited a given website); for example, Apple limits cookie collection by its Safari iPhone browser and by third party apps. This makes it difficult for brands to use so-called “retargeting” (showing an ad to someone based on what they done in the past) on a mobile device; identifying that same person across multiple devices would seem even more difficult.

According to Traasdahl, Tapad uses a sliding scale to guess whether a computer and phone user is the same person. Like all advertising, he says, there is an inherent degree of uncertainty. But he adds that, for brands, the proof is the pudding — they can look at whether multidevice targeting produced a lift in response or sales.

There is also the question of just how Tapad is tracking people. Like other companies in the mobile marketing space, such as Google Ventures-backed Adelphic, Tapad is tight-lipped about its techniques. Traasdahl did, however, say the company uses data sources like publishers’ log-in information, Wi-Fi locations and zip codes as some of the sources for its billions of data points. This is an example of what a recent MIT Technology Review article described as “reverse-engineering” our online identities.

Finally, in addition to the technology dimensions, there is the creepy factor. While companies like Tapad may provide more efficient advertising, some are going to bristle at its efforts to track them wherever they go. Tapad, like others in the advertising industry, protects “PII” — personally identifiable information — which means the “identity” that marketers see is just a random number, not your name or address. Still, there is growing concern in the media about tracking (see this week’s “Technology Turns to Tracking People Offline” in the New York Times) and in Congress where there are regular mutterings about Do Not Track legislation.

For now, the likes of Tapad and its investors (who include FirstMark Capital and Avalon) are counting on a light regulatory hand as they fine tune the online marketing machine.

(Image by Alexey Fursov via Shutterstock)

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Consumer privacy in the mobile advertising era
• Hyperlocal: opportunities for publishers and developers
• Opportunities and challenges for mobile deals

Both operators coincidentally launched location-based marketing services today, respectively called Verizon Selects and AT&T Alerts. Verizon’s program is just a pilot, targeting a portion of its customer base, but both operators stressed their programs are opt-in only and neither would sell nor distribute any personally identifiable information to outside companies.

That may assuage many customers who want their privacy protected. But these programs — particularly Verizon’s since it tracks the way consumers use their mobile phones — will give many customers the creeps. Last year a huge controversy broke out about over U.S. carriers’ use of Carrier IQ, a company that anonymously, but secretly, gathered phone usage information from handsets. Sprint, AT&T, T-Mobile and even Apple claimed to use the info only for diagnostic purposes, but the resulting backlash forced most carriers to excise the software from their handsets.

Verizon was the only major carrier whose hands were clean of the Carrier IQ scandal, but ironically the information Verizon Selects is using to target offers is the exact type of data that Carrier IQ collected. This time, however, Verizon and AT&T are asking permission, which may just be the critical difference in the eyes of the consumer.

The Yankee Group conducted a survey in the wake of the carrier IQ controversy, finding that a majority of U.S. mobile subscribers wouldn’t mind if their carriers logged information from their phones, but only if they were transparent about doing so and if that tracking provided some legitimate value such as being used to more quickly fix problems with their phones.

That seems to be the bet that AT&T and Verizon are taking now. Customers who inherently mistrust their operators may never sign up for these programs, but many might see value in them.

AT&T Alerts is available to all of its customers, and is designed to be both location and time sensitive. If you’re approaching a Gap, for example, AT&T ships you text message out of the blue with a link to a coupon for jeans. You can register for the service on the Alerts web page or opt in by texting “join” to the “ATTALERTS” short code, though it’s not available yet for the iPhone 5.

Verizon Selects is a lot more expansive, covering much more media than SMS – even direct snail mail — and unlike AT&T Alerts, it provides a direct link between the third-party advertiser and the customer. Here’s how Verizon explains it in its News Center blog:

Simply put, Verizon Selects will use location, web browsing and mobile application usage data, as well as other information including customer demographic and interest data, to create specific insights. Verizon Selects analyzes this information about customers to see whether they fit into certain audiences Verizon or third party marketers are trying to reach. Depending on the results, participating customers will receive marketing messages or offers that may be of more interest to them than what they see or receive today. These messages could be delivered in various ways such as email, text, postal mail or online or mobile advertising.

We are asking customers to opt-in to Verizon Selects because of the types of information being used and because the capabilities provided to third-party marketers gives them the ability to reach customers directly. It’s important to remember that Verizon DOES NOT share information that identifies customers personally outside of Verizon.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The future of mobile: a segment analysis by GigaOM Pro
• Consumer privacy in the mobile advertising era
• A look back at mobile in Q1

The announcement comes about three weeks after the company said it had closed a $27.5 million funding round and was eyeing an IPO.

Jumptap named former Criteo and Yahoo executive Frank Weishaupt to the newly-created role of chief operating officer and John Hadl, a longtime mobile advertising executive, to the company’s board.

After 10 years at Yahoo, most recently as vice president of advertising marketplaces, Weishaupt left in 2011 to join Paris-based retargeting firm Criteo. He comes to Jumptap directly from Criteo, where he was SVP of sales and publisher marketplace.

Founder of BrandinHand, a mobile media agency with clients including P&G, Amex and General Mills, Hadl is well-respected voice in mobile advertising. He is currently a venture partner at US Venture Partners and, according to his bio, was an early advisor to now-public Jumptap competitor Millennial Media, AdMob, which was acquired by Google, and Quattro Wireless, which was acquired by Apple.

When I spoke with Jumptap CEO George Bell earlier this month, he said the mobile advertising company could go public within a year.

Jumptap’s latest financing round — which included existing investors General Catalyst Partners, Redpoint Ventures, Summerhill Ventures, Valhalla Partners, and WPP, as well as new investors Keating Capital and a large institutional investor — brought the company’s total amount raised since launching in 2004 to $121.5 million.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A look back at mobile in Q1
• Report: The In-App Advertising Landscape
• Report: New Metrics for the Mobile Ad Market

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• NewNet Q4: Platform mania and social commerce shakeout
• The future of mobile: a segment analysis by GigaOM Pro
• Mobile payments: forecasts, technologies and opportunities

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Opportunities and challenges for mobile deals
• Hyperlocal: opportunities for publishers and developers
• NewNet Q4: Platform mania and social commerce shakeout

In its IPO filing Facebook mentions the word “mobile” 123 times, which, given the term’s buzz-worthy status, is hardly surprising. But in most cases Facebook doesn’t use the word “mobile” in positive ways. In fact, it identifies the proliferation of traffic to its mobile app and website as the biggest risks that its advertising-driven business model faces. The S-1 filing is one big official warning to potential investors: Facebook’s future growth is being driven by user behavior that it has so far failed to monetize.

Of Facebook’s 845 million monthly active users (MAUs), 425 million accessed Facebook in December alone through a smartphone or feature phone app or through its mobile-optimized website. In 2011, 85 percent of Facebook’s $3.7 billion in revenues came from advertising, but none of it came from its mobile platforms, over which it doesn’t serve up display ads. Despite that huge gap, Facebook is doing nothing to discourage the shift in use to handsets and tablets:

We anticipate that the rate of growth in mobile users will continue to exceed the growth rate of our overall MAUs for the foreseeable future, in part due to our focus on developing mobile products to encourage mobile usage of Facebook. Although the substantial majority of our mobile users also access and engage with Facebook on personal computers where we display advertising, our users could decide to increasingly access our products primarily through mobile devices. We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven. Accordingly, if users continue to increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, our revenue and financial results may be negatively affected.

As the S-1 points out, most Facebook members use mobile to supplement their PC activity, not replace it, so the company does ultimately put its ads in front of their eyes. But that won’t always be the case. As my colleague Mathew Ingram pointed out on Wednesday, Facebook and its ambitious CEO Mark Zuckerberg want to rewire the structure of society, making its social network a common medium for meaningful connections among all the world’s peoples and institutions. It is a grand vision, but it also depends on establishing connections to billions of devices that aren’t PCs.

One telling figure in the filing is Facebook’s estimates of its penetration in India, which it pegs at between 20 and 30 percent. India is the world’s second-largest market, but very few of its 1 billion-plus people have a PC or the means to access one. There are 700 to 800 million potential Indian customers for Facebook, and for most of them the social network will be a mobile-only platform.

In the developed world, PC penetration is much higher, but younger generations are increasingly relying on their handsets as their primary means to access the Internet. PC sales are falling off as well, replaced by tablets — another platform Facebook doesn’t utilize for display ads.

A problem with an easy solution

Facebook’s problem has an easy fix: It can simply start putting ads in its mobile apps and website. According to inneractive, the mobile advertising market is booming with ad spending, up 464 percent since February of last year and with a huge 983 percent boost in North American ad spend alone. Berg Insight predicts that mobile will account for 15 percent of all global online ad sales by 2016, making it a $22.5 billion market. Facebook itself in its S-1 estimates that the global mobile ad market in 2010 was $1.5 billion, a market it easily could have tapped into.

My guess is that Facebook just doesn’t want to put apps into its mobile products — at least not yet. There is limited real estate on a handset screen, and Facebook probably doesn’t want to clutter up its slick interfaces with display ads, especially while it is still formulating its mobile strategy. The company is also trying to develop more-innocuous ways of advertising on the small screen. In its S-1 it mentions the possibility of inserting “sponsored stories” in its members’ news feeds.

Though it didn’t mention it in its filing, Facebook may also be investigating nonadvertising means of monetizing mobile traffic. While the social network has free rein in the PC browser, its actions in mobile are limited by the capabilities of the devices its mobile apps reside on, as well as the whims of the vendors who make those devices and the carriers who sell them. Though no operator or OS maker would be insane enough to block the world’s most popular social network, that codependence may require Facebook to partner more closely with key players in the wireless industry, and that, in turn, could lead to revenue opportunities.

France Telecom’s Orange is already working closely with Facebook to sell phones optimized for its social networking features in many of its developed and developing markets. In some countries, Orange is selling plans that include unlimited Facebook access while metering all other data use. The carrier and Facebook haven’t revealed any financial details of the deal, but I would not be surprised if some of those revenues were making their way back to Menlo Park.

Either way, Facebook’s filing makes it clear that it has to do something to monetize its mobile traffic soon. The company will soon be public, and while it will likely be controlled by Zuckerberg and those loyal to him, investors will question why Facebook is devoting so much effort and so many resources to building a mobile business it makes absolutely no money from.

Image courtesy of Flickr user lrargerich

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Facebook’s IPO filing: ideas and implications
• NewNet Q4: Platform mania and social commerce shakeout
• NewNet Q4: Platform mania and social commerce shakeout

But now Kiip (see disclosure below) is going after bigger brand advertisers with a new feature called Swarm, which engages millions of users in multi-player tournaments with the top winners walking away with big prizes. Players in a game can already get a small individual reward for hitting a milestone or achievement in a game running Kiip. But now a brand advertiser can offer bigger-ticket rewards to the top players who participate in a Swarm contest over a set number of days. Advertisers can easily set up their own Swarms and decide how to reward users for top scores or other specific in-game achievements.

Walt Disney Studios is the first brand advertiser to sign on and will offer a range of prizes for people who participate in its Swarm running on the game Megajump from Dec. 23-26. The winner who gets the highest score during the Swarm will win a 3D TV + Surround Sound System, while other prize winners will get tickets to a 3-D showing of John Carter, a new Disney movie launching in March. Other winners can also get Disney DVD packs, and a $10 credit for snacks in theaters.

“We were missing the opportunity to tackle bigger brands. If you think of United, Paramount, Disney or Nissan, that doesn’t really work for real rewards,” said Kiip CEO Brian Wong. “But we realized when people are playing games, there’s hundreds of thousands of people playing along with you. What if I turn that massive audience into a competition?”

With this new feature, Kiip is also pulling back the curtain on which games are running Kiip’s campaigns. Now, users will be able to check out Kiip Spotlight to see what games are in Kiip’s network and what kind of rewards are offered.

Swarm could drive more engagement around a brand at specific times while still offering users the promise of real rewards. Brands have previously been able to launch campaigns with their own apps, but this will allow brands to leverage popular games and create quick tournaments that don’t require a big investment. If certain Swarms prove popular, they could also help app publishers drive more downloads of their apps too.

Disclosure: True Ventures is an investor in Kiip and the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Readers weigh in: future prospects for Twitter
• Opportunities and challenges for mobile deals
• QR codes may be struggling, but they’re nowhere near dead

It’s a little complicated but here’s how it works: free app developers still turn to Fiksu to find the cheapest way to drive traffic to their apps. Fiksu optimizes user acquisition by selecting the most effective way at any given moment to reach users across a number of ad networks, real-time bidding systems, and incentivized download networks. But now, instead of using banner ads to divert those users directly to an app store, Fiksu will now offer them a chance to get free paid apps by going to FreeMyApps.com.

Users who go there will be presented with the option of downloading a free app and then earning credits, which they can apply toward the download of a paid app. It can take a two or more free downloads to earn a paid app. Users must download the app from the App Store and interact with it for 30 seconds or more to earn their credit. They are prompted to create a provisional profile, which then allows Fiksu to confirm whether they have downloaded and used an app. When they build up enough credit, they can “buy” apps like Angry Birds or Cut the Rope for free.

The free app developer still pays Fiksu to drive traffic and that money now gets split between Fiksu, which covers its costs, and the paid app developer, who then pays the 30 percent cut to Apple and keeps the rest. When it all goes well, the free app developer gets new users, who are now enticed to download their app because there’s the promise of getting something for free. And paid app developers now have a new way to market their apps, as long as they’re willing to subsidize them through Fiksu. The service works only on iOS for now.

Micah Adler, Fiksu’s CEO and founder, said there are number of ways for free app developers to drive traffic including services like Tapjoy, which recently went direct to consumer with its own free app portal. But there are few viable options for paid app developers, who don’t want to make their apps free, he said.

“For many paid developers, they don’t want to go with a free-to-play version but they’re forced to because they don’t have a good marketing channel. Our goal is to reverse the trend and give people a viable alternative and reason to stay as a paid app,” Adler said.

There are some challenges with this model. It will depend on getting enough free app developers to join this program, which is separate from Fiksu’s existing program. And those developers must be convinced that the downloads they get are worth the cost. The problem is some research shows that most people who download an app through an incentive abandon it. Adler said that the fact that users can pick out the app they want to download can help them engage more with the app. And because Fiksu confirms that a user actually used the app, it’s more likely that a consumer will stay with it instead of apps from other distribution models, which rely on just a download only. He said in the future, FreeMyApps will offer more personalization tools to help users find more relevant apps to download. The model also relies on users leaving an app to go to this portal, which may not be attractive to users who want to stay inside their app.

Though we already have a number of services aimed at helping users find apps, it still seems to be a growing opportunity, especially in a world with more than 1 million available apps. I think Fiksu has an intriguing tool for paid developers, who are reluctant to give up charging for their apps but struggle to keep up in a world dominated by free apps. It will have to prove its model over time but it’s another option for developers.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Bluetooth to Feel Blue as Personal Area Network Battles Loom
• Podcast: Mobile winners and losers in 2012 and what to expect in 2013
• Analyzing the wearable computing market

But a new study suggests that apps downloaded through incentives are largely abandoned or uninstalled, providing little long-term benefit to the app developers who use these app distribution campaigns. According to a Harris online survey on behalf of mobile ad provider Pontiflex, only 3 percent of apps downloaded through incentivized install campaigns are used frequently.

Of the remaining 97 percent, 62 percent of users never use an incentivized app again after downloading it including 37 percent who uninstalled an app after receiving a reward and 25 percent, who only used an app once to redeem the incentive. Another 17 percent also said they hardly ever use an app after downloading via an incentive while 18 percent said they occasionally use the app.

Now, the numbers could be questioned because of the sponsor of the survey Pontiflex, which has its own app distribution tool called Pontiflex AppLeads. But it nonetheless raises some interesting questions about the long-term value of incentivized install campaigns. They can be still be good for providing a download boost. And they  can also be a good revenue source for developers and publishers who run these ad campaigns in their apps. But for developers who are trying to not only gain downloads but monetize them after the fact, the survey data suggests that can be a tough process.

It shouldn’t be surprising. Dangling virtual currency in exchange for downloading an app can entice a lot of people but doesn’t mean they will use the app. And in many cases, it seems like people have little interest in apps beyond redeeming their reward. This is important for developers because if the abandonment rate is extremely high, there’s a decreased chance of getting users to pay for in-app purchases or monetize them through mobile ad impressions.

The survey also found that only 7 percent of smartphone users and 15 percent of tablet users who download free apps said that they prefer video ads that take over your screen and force you to watch a video. And about one third of users — 35 percent of smartphone and 34 percent of tablet owners — expressed concerns that mobile video ads will increase their data costs. This might be troubling for rich media ads, which have fetched higher impression rates but may not be as attractive to end users.

Again, this is helpful for Pontiflex, which offers simple sign-up ads that let people choose which companies they want to communicate with. But it raises questions about what consumers want in their mobile ads. Obviously, most people would like to avoid ads. But they may not be as enamored with big videos and animation after they get used to the novelty, at least if you believe Pontiflex. There’s still room for many ideas in mobile monetization and marketing but it’s still early and it’s unclear what model will work best longterm with mobile users.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• GigaOM Research highs and lows from CES 2013
• How HR can make the case for workforce analytics
• The 2013 task management tools market

That’s because while the idea of contactless payments is intriguing, there is increasingly an awareness that tapping a phone to pay for an item will not sell itself. To reach widespread adoption, NFC needs to provide real value for both consumers and merchants. As Brad Greene, the Senior Business Leader at Visa, said at GigaOM’s Mobilize conference, the key is not in payments but the features layered on top that will convince consumers and merchants. And that’s most likely to come from discounts, daily deals and loyalty reward programs that can be activated through NFC technologies. For a longer look at my views on this, check out my GigaOM Pro report (subscription required).

Beyond mobile payments: Isis and Google Wallet

If people use their phones to pay for items, check in to stores for coupons and grab deals from NFC-embedded posters and use them as loyalty cards, it could provide critical data to retailers, helping them craft offers for users, tweak inducements, track sales and change their product lineups. That’s what can get retailers excited enough to make the investment in new point-of-sale terminals often needed to support NFC transactions.

This is increasingly what the two big U.S.-based NFC platforms are focusing on. Isis, the joint venture with Verizon, AT&T and T-Mobile, was launched last year as a mobile payments system that could rival the credit card networks. But this spring, the carriers shifted gears. Instead of focusing on getting a slice of the payments, they opened up their platform to other credit card companies and banks and began talking more about the opportunity in delivering targeted offers to consumers. Isis has called it an acceleration of its original plan; it’s still expecting to generate revenues from payments, but its cut of payments won’t be as significant as when it was going to run its own network.

Google also unveiled its Google Wallet in May and said right off the bat that it wasn’t taking a cut of the payments transactions, perhaps as a signal to partners that it wasn’t going to compete for a share of payments revenue. Instead, it was focusing on combining Google Wallet with Google Offers to help advertisers and retailers reach customers with personalized offers that could be redeemed through their phone.

In both cases, consumers will be able to find discounts that are redeemable through an NFC payment. That will help retailers strengthen their relationships with their consumers by providing them with more customer data and allowing consumers to embed their loyalty cards into these digital wallets. NFC then becomes more of an exchange of discounts and deals rather than a simple cash replacement. For a longer look at this topic, check out my GigaOM Pro report (subscription required).

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• NFC will be driven by marketing and loyalty, not payments
• Opportunities and challenges for mobile deals
• Defining the mobile wallet: what it is, why it matters