Why the critics are wrong about mobile advertising

Victor Malachard, Adfonic — Sun, 02 Dec 2012 20:00:15 +0000

There’s no disputing we’re hurtling towards a true multi-screen society, and mobile is invariably cited as a problem child in this channel family. The standard argument goes that advertisers won’t invest as heavily in mobile as they do online because mobile ads are simply not as effective. After all, people don’t see mobile ads, or click them accidentally, and just overall don’t work anyway, right?

Wrong. It’s time to be realistic about mobile advertising. The biggest companies in the world are in fact jostling for mobile leadership – and why wouldn’t they, as their audiences continue to shift in the millions to access content on mobile?

Still mobile is not simply an offshoot of online advertising where online ad experiences are simply shrunk for the smaller screen, nor is it an entirely new channel. It is still digital, but offers a new, ubiquitous way of consuming content on a smaller touchscreen device, that presents its own unique set of challenges and opportunities for advertisers. Here’s a look at the typical critiques of mobile, and what the reality is or will be.

They don’t pay enough

Let’s look at the first criticism: that mobile advertising is not lucrative enough when compared to online, because advertisers will not pay the same prices for mobile taps as they will for online clicks, nor will they allocate such sizeable portions of their budget to mobile.

This comparison between the large and small screen lacks fundamental logic. Online is roughly 10 years ahead of mobile in its evolution as an advertising channel and is now considered a tried and tested line item on advertisers’ marketing budgets. Naturally, where there is more maturity there is less risk, and where there is less risk, prices will be higher.

Online advertising was once equally nascent, with Google only able to command a few cents for its CPC-based search advertising model. As the market has matured, prices have risen drastically, and the same will happen with mobile. We are already seeing new, engaging mobile rich media ad formats commanding CPMs up to ten times the average for static mobile ad banners. This will only continue.

They fail to engage

Another choice hit is the fat finger theory: namely that the entirety of mobile hits are really accidental. Admittedly there is some accidental clicking on mobile ads. But let’s also admit this happens with online too. More importantly though, if fat fingers really did account for most clicks, we would see pitiful post-click conversions and app downloads. Consider, then, that the mobile app ecosystem has been built on an ad-funded model. If mobile advertising didn’t work, we wouldn’t have witnessed the same explosion in the availability and popularity of apps.

And what about the effect of limited screen estate? It’s true that mobile devices are almost by definition smaller than other screens (although 10-inch tablets contend with laptops for screen resolution). But they more than make up for it with great interfaces that are custom-made for consumer interaction – far more so than a typical online ad. Touch them, pinch them, swipe or shake them, find out where you are with them: the most effective ads exploit this rich user interface to incorporate elements that people interact with, turning passive advertising into active engagement. In fact these rich media ad formats are capable of generating double the average clickthrough rates of static mobile ad banners.

Their metrics are inaccurate

Finally, it’s claimed that it’s impossible to target audiences with the same accuracy on mobile as online. Again, there is some truth here, in that third-party cookies, which underpin the success of online advertising, don’t work in the same way on mobile.

The mobile industry has worked hard at finding ways around this issue, and one solution that might unite advertising channels is Real-time Bidding, or RTB. In this model, buyers use big demographic and behavioral data to decide whether or not to bid for each ad impression based on previous behavior. The real beauty of RTB is that this data can be shared across any and all digital channels. So it will work as well on mobile as it does online, or indeed any other digital channel – for example, our app-enabled TV sets that will continue to become mainstream. (Note: my company, Adfonic, specializes in real-time bidding, as do many other companies such as Google’s Doubleclick AdEx, AppNexus exchange, 24/7 Real Media RTB For Publishers, among many others).

Mobile may be the best of the bunch

So far from being the problem child, as mobile continues to grow up, it just may well be the pride of the family. Because the one thing it really is better at than any other medium, is being ubiquitous. When people pop their phones in their pockets, they take your advertising with them. Everywhere. So if we need a way to join the dots of channels and screens then mobile, with its versatility and portability, plugged into big demographic data, really could be it.

Suddenly, instead of talking about channels, we’re talking funnels, in which the more we know about people, the more we as mobile advertisers can move from awareness and interest through to desire and action. And instead of devices we’re talking demographics, in which advertisers buy audiences.

Steve Jobs famously said: “You’ve got to start with the customer experience and work back toward the technology.” Mobile advertising, based on intuitive devices, moving with people, flexing and adapting to their behavior, will soon start with the customer experience. We just needed the technology to get there.

Victor Malachard is co-Founder and CEO of Adfonic, which operates a real-time bidding platform for mobile. Following him on Twitter @VictorMalachard.

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Apple’s iPad tops 3 billion downloads

Darrell Etherington — Wed, 04 Jan 2012 16:54:05 +0000

Apple’s iPad is far and away the high-water mark when it comes to tablet applications, and a new report Wednesday says it just passed an impressive milestone. Users of Apple’s 9.7-inch touchscreen device are said to have downloaded approximately 3 billion apps since the product’s launch in 2010, according to ABI Research.

The study found the iPad represented 19 percent of total App Store downloads since the device’s launch, and the iPad reached the 3 billion mark around six months faster than the iPhone, which took two years to register that many app downloads. The iPad outperformed its internal competition, but it obliterated external challengers: ABIresearch says Android tablet devices have only seen around 400 million downloads to date.

ABI associate Lim Shiyang belives that Android’s significant deficit when it comes to dedicated tablet app downloads is at least in part attributable to OS fragmentation. According to Shiyang:

Many Android tablets in the market are still using older versions of Android, which disadvantages users from enjoying the better effects of apps produced from more advanced software development kits.

More choice and better quality overall also contribute to Apple’s advantage, ABI says, pointing out that during the third quarter of 2011, there were 120,000 apps published specifically for the iPad platform. Compare that to 400,000 total titles available on the Android Market for both smartphone and tablet devices, according to figures released Wednesday.