Ad Networks

Are Facebook Users Fleeing to Mobile to Escape Ads?

Facebook has again updated its S-1. There are a few reasons for this, including the awarding of additional stock to employees. However there's a very interesting discussion of mobile in the revised document (pointed out by TechCrunch). On page 14 of the document Facebook reiterates uncertainty around its ability to make money off mobile users:

We had 488 million MAUs who used Facebook mobile products in March 2012. While most of our mobile users also access Facebook through personal computers, we anticipate that the rate of growth in mobile usage will exceed the growth in usage through personal computers for the foreseeable future, in part due to our focus on developing mobile products to encourage mobile usage of Facebook.

We have historically not shown ads to users accessing Facebook through mobile apps or our mobile website. In March 2012, we began to include sponsored stories in users’ mobile News Feeds. However, 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. We believe this increased usage of Facebook on mobile devices has contributed to the recent trend of our daily active users (DAUs) increasing more rapidly than the increase in the number of ads delivered. If users 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, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected.

(emphasis added.)

The only mobile ad unit currently used by Facebook is Sponsored Stores, which put brand and advertiser messages in the user news feed. These units have proven to be successful on the PC but could become annoying to users on mobile devices. I have not yet seen any of these ads myself. 

One reason why mobile usage is growing so rapidly for Facebook is a result of general smartphone adoption among Americans. There are also things about the user experience in mobile that are superior to the PC: the ability to take and immediately upload pictures, for example. 

There may be another reason why usage is migrating to mobile: ad avoidance. People may be choosing the mobile version of Facebook over the PC site precisely because there are fewer ads; it's a "cleaner" experience. If my theory is correct then Facebook has a major problem on its hands. As Facebook puts more ads in mobile to make money it risks alienating users if the company is not very careful and thoughtful. 

Mobile ads on Facebook will have to add value, be compelling (offers) or highly relevant (local) in order to work. For this reason I expect Facebook to make a major mobile ad-network acquisition. This would be for the "infrastructure," the expertise and the inventory. It would be analogous to what Google did with AdMob.

Insurance, Banking Dominate Mobile Advertising in Financial Vertical

Millennial Media released an extensive report this morning, supported by research from comScore, on the mobile finance vertical. It contains in-depth audience profile and behavior information. It's also partly devoted to discussion of financial sector advertisers, their mobile campaigns and tactics.

The company found that finance-related mobile ads grew 34% from Q3 2010 to Q3 2011. Millennial reported that insurance was the leading sub-category, with 42% of display ads on its network. Those ads were mostly lead-gen or directed people to call centers (to close). 

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Banking was next, with an emphasis on branding/awareness. Interestingly Millennial said that "This was also the only Finance sub-category to focus on driving foot traffic into brick and mortar locations, such as ATMs/cash points and bank branches."

Financial services/credit cards followed those categories. These were national campaigns largely focused on a mix of awareness and direct response:

Spend in the Financial Services category varied throughout the year, as brands increased their mobile ad spend ahead of key seasonal events like the April US tax deadline. Credit Card brands heavily focused on campaigns designed to easily allow consumers to apply for new cards.

Survey: 45% of Those Who Saw Ads in Apps Clicked

Mobile advertising platform Tapjoy released survey data about mobile user attitudes and behaviors surrounding engagement with in-app advertising. The online survey had 2,000 US adult respondents who owned smartphones and/or tablets and used apps. The major finding was that users respond best to ads in apps that offer rewards of some kind. 

Respondents were grouped in age and psychographic categories and profiled accordingly. The survey discovered that adults in the 25-34 age group "are more likely to value the influence of advertisements, they generally recall seeing more ads while using mobile apps." In addition during each app session people in this group recalled a larger number of ads vs. the total population.

These individuals had more paid apps on their devices than other age groups. In addition, once they saw an ad "50% choose to click on it, compared to only 45% of typical app users." These numbers are huge: half of those who noticed an ad clicked on it.

Here are some of the other top-level findings: 

  • App users are more likely to remember brands that offer unique rewards
  • 58% of users tried an app after downloading it to earn a reward
  • Respondents estimate that half of the apps they use are ad-­supported; 64% of users reported having seen an advertisement within a mobile app.
  • 45% of these consumers reported clicking on one of the ads
  • 42% of users download an app because their friends and family suggested they do so
  • 24% of users will tell friends and family about [an app they like] and convince them to get it

Stepping back, none of this comes as a surprise. (There's also lots of discussion of virtual currency in the survey.) Mobile users tend to respond to ads more than PC users and in-app users perhaps more significantly than users of the mobile web. It also makes sense that ads containing some sort of incentive, deal/discount or call to action would see higher response than in the absence of those things.

We've written previously about how many -- indeed a majority -- of mobile ads suffer from bland or perfunctory ad creative and copy and are merely shrunk-down versions of PC campaigns rather than created specifically for mobile audiences. When mobile ads are well conceived they can be enormously effective. 

Study Illustrates Problems with Offline Mobile Conversion Tracking

Earlier this week Marin Software released some very interesting aggregated data on mobile search trends. The report sees dramatic growth for mobile paid-search. It projects that smartphones and tablets will combine to generate 25% of all Google’s paid-search clicks and 23% of paid-search spending in the US by the end of this year.

Among the other data the report assembles are click-through (CTR), cost-per-click (CPC) and conversion rates in mobile. It compares them to comparable metrics in desktop paid search. The numbers are averages based on client campaigns.

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Smartphones show higher CTRs and lower CPCs than PC search campaigns. But they also show lower conversion rates and thus higher per-conversion costs than either tablets or PCs. 

The smartphone conversion data appear lower likely because most conversions are happening offline and they're not being accurately tracked. Marin says as much in its recommendations for marketers about offline conversion tracking:

Mobile searches often result in conversions that happen via a call or a physical store. Unfortunately, most marketers lack the ability to glue these clicks together into a unified conversion funnel. Marketers should look to estimate their mobile-influenced revenue through the use of popular mobile ad formats such as click-to-call and store-locator. By combining the typical conversion rate for in-store and phone-based transactions with the average revenue per transaction, marketers can estimate a revenue per click for mobile devices, and adjust their mobile CPCs and budget accordingly.

Whether paid search or display ads, marketers need to track calls and have landing pages where "secondary actions" like store locator or map lookups can be tracked to see whether consumers are acting on the ads. If the tracking isn't set up properly then you're going to see fewer conversions or no conversions and the ROI data will be distorted. 

The conversions are there, they're just not visibile in many cases. 

Millennial: About 50% of 2011 Advertiser Spend Was for "Awareness" Goals

Earlier this morning ad network Millennial Media released a 2011 year-in-review report that highlights top trends and data from last year. The company is planning to go public in 2012 and seeking to raise just over $100 million. In an updated filing it reported 2011 revenues of $103 million.

The top categories by ad spend in 2011 were the following:

  1. FINANCE
  2. RETAIL & RESTAURANTS
  3. ENTERTAINMENT
  4. TELECOMMUNICATIONS
  5. AUTOMOTIVE
  6. PORTALS & DIRECTORIES
  7. CPG/FMCG
  8. EDUCATION
  9. TRAVEL
  10. TECHNOLOGY

Although technology was at the bottom of the "top" category it saw the highest year over year growth from 2010 to 2011, nearly 700%. 

Millennial also explained what the top "campaign goals" were for its advertisers in 2011 (chart below). The top category, "sustained in-market presence," is not a single objective but has multiple meanings: "Campaigns with the goal of Sustained-In-Market Presence drove consumers to download applications and to play branded games to promote their products and services, while increasing their brand awareness and loyalty."

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If we look at the above chart as "awareness" vs. "direct response," what we can infer that roughly 50% of the ad spend was for brand or awareness advertising.

Android was the dominant OS generating impressions on Millennial's network in 2011. Apple devices were dominant in 2010 by comparsion. 

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However compare ad network and Millennial competitor InMobi which had a different split, showing that Apple had overtaken Android on its network in North America:

The February 2012 report unveils that iOS’ lead over Android has increased, with iOS holding at 35% and Android now at 31%. This is further supported by the fact that the top three handsets in February 2012 are all Apple devices, which now make up 23% share of total handset impressions.

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Poof: Flurry Analytics Becomes an In-App Ad Mediator

Flurry Analytics has become an in-app ad meditator with new platform AppSpot. It's seeking to use its analytics data to enable advertisers to target specific audiences across apps. And Flurry hopes to generate more revenue for publishers as a mediation layer, with premium targeting. Flurry is also doing ad serving and says it will represent publisher inventory with its own sales force:

AppSpot is powered by Flurry's Big Data, which has audience insights gathered from more than 500 million app users. Flurry's Big Data drives better ad relevance, more accurate demographics and the ability to segment audiences into the interest categories that advertisers want . . .

Why pay for adserving and network mediation when Flurry can deliver the capabilities, scale and reliability you want for free? Reduce your operating costs and pay us only when you use premium targeting to earn additional revenue. A lightweight SDK makes integration easy.

Flurry is giving away the ad serving and mediation -- the company says it works with all the major mobile ad networks -- it will make money on premium ad targeting, using its data. It will allow "geographic and language targeting" for free and will charge an additional $0.10 CPM for "analytics event targeting" and $0.50 for "age and gender targeting." 

There's no discussion of how precise the location targeting is and whether it goes below a city level. In-app location targeting would hypothetically be able to go to the lat-long level, but the fact that it's "free" suggests that location isn't going to be consistently precise. 

Last year Flurry estimated that if all in-app impressions were monetized at a hypothetical $2.50 CPM, mobile ad revenue would be worth considerably more than online display advertising. The scenario was intended to illustrate the huge volume of in-app ad inventory. 

More recently Flurry calculated that mobile advertising saw the largest gap between consumer time spent and ad dollars of any medium:

Other mobile ad mediators include Smaato, Mobclix (Velti), Nexage and AdMarvel (Opera) among others. The terminology becomes muddy sometimes in the discussion of ad networks, ad mediators, DSPs/SSPs and mobile ad exchanges. The simple difference is that a network has direct relationships with advertisers and/or publishers, while others bring more "liquidity" to the market or help "optimize" ad performance and boost inventory fill rates. 

SingTel Buys Amobee for $321 Million

Singapore Telecommunications Ltd. (SingTel) announced earlier today that it will buy Amobee for $321 million. Amobee, which is based in Silicon Valley, will remain intact and headquartered there. The acquisition is a bid to become a global player in mobile advertising and generate new sources of revenue, at a time when traditional telco (even wireless) carrier revenues are flattening and even stagnating.

Rather than a mobile "ad network," Amobee is a mobile advertising marketplace not unlike Velti.

SingTel and Amobee partner to create the world's largest digital advertising company

SingTel has an office in Silicon Valley and has been making investments in US companies for some time. 

Along with the acquisition, SingTel announced that the company would be reorganized into three groups, focused on consumers, "digital life" and communications technology. SingTel has mobile customers in 25 countries. It also has 36 offices in 19 countries throughout Asia Pacific, Europe and the United States. The company claims over 400 million subscribers globally. 

Facebook, Twitter and the Potential Dilution of Mobile Advertising

If Facebook has its way "advertising" will be a thing of the past. Facebook wants brands to tell engaging "stories" instead, and turn all us passive "fans" into passionate brand advocates. Facebook wants brand and marketer content to be as good or better than any content or messages that your friends or family might generate. The content is the ad campaign and vice versa. 

At Facebook's FMC event in New York today the company introduced its highly anticipated "premium ads," which include mobile distribution. Mobile ads will not be separate from ads/content on the PC site; they will be an extension of the same campaign. There won't be a separate media buy or separate targeting (at least now).

New "premium ads" and existing "sponsored stories" will be distributed in Facebook's mobile apps as well as through its site on mobile browsers. These pieces of content or "ad units" will simply show up in users' mobile news feeds based on Likes and friend Likes, etc. 

One of the company's ambitions is to remove complexity from advertising on Facebook. A Ben and Jerry's marketing executive is quoted in a promotional video saying, "We really don't have to worry about separate media." Accordingly the same brand post/story will thus appear in the "organic" feed, as a mobile ad or as a conventional Facebook Ad on the right rail. 

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Also earlier this week, Twitter revealed it's very similar plan for mobile advertising.

Promoted Tweets will now show up in users' feeds in mobile. Initially only those advertisers you follow will be allowed to promote tweets in your feed. However, over time, the program will expand to allow all advertisers to reach non-followers as well. 

These two parallel programs may help one another and speed adoption (or at least testing) of mobile marketing by brands (and to a lesser degree small businesses). The widely discussed danger for both, however, is that mobile consumer-users might potentially feel spammed by brands and advertisers that are inept or too aggressive. This danger is greater for Facebook than Twitter.

Another potential issue is how all these new mobile impressions will impact mobile ad pricing. There's already an imbalance of supply and demand: too many mobile impressions chasing too few advertisers today. More competition generally equals lower prices for buyers. AdAge discusses that question in an article published on Monday.

The suggestion in the article is that like online, where social networks flooded the market with cheap display impressions, there's a similar potential risk in mobile. Prices are already coming down because there's too much supply: "That ad kitty will stretch even thinner when Facebook starts selling mobile advertising against its more than 425 million monthly active mobile users," speculated AdAge.

Facebook and Twitter ads are unique to those platforms, however. In effect these new mobile ads won't simply be fungible new impressions, interchangeable with those of a dozen other mobile networks. Facebook and Twitter compete more directly with each other than with Jumptap or Millennial or InMobi.

However it's quite possible that brands could choose to invest in Twitter and Facebook and divert resources (money, time, attention) away from other mobile display networks. Might that compel the other networks to lower prices to compete? Apple lowered prices considerably in response to competitive pressure on iAd from AdMob and others.

While the entry of Twitter and Facebook into mobile could push prices down for other ad networks, that outcome is not guaranteed of course. But we should know soon enough.  

Report: Mobile Time Spent More than TV Globally

Ad network InMobi today released what it’s calling the "first wave” of a mobile media consumption study spanning 18 countries and 20,000 consumer-respondents. The results, generated in Q4 of 2011, were not broken down by region or country however.

Accordingly they should be seen as global averages and are relatively less meaningful. However they have symoblic value in highlighting the rise of mobile.

InMobi says that time spent with mobile now trumps TV: 

  • Mobile: 27% of media time 
  • TV: 22% of media time
  • PC-online: 32% of media time

Again, these figures are global. So in any individual country the data may look very different. Indeed, data from Flurry Analytics and other sources contradict the findings above for the US market, with TV capturing almost twice the amount of media time spent as mobile. 

Screen shot 2012-02-28 at 7.48.51 AM

In addition, according to Flurry (drawing upon third party data as well), time spent with mobile apps now trumps PC-online. That contradicts the InMobi finding above in the context of the US market once again. 

Screen shot 2012-02-28 at 7.49.12 AM

What's clear is that users are spending more time with mobile and the mobile Internet. The InMobi findings are thus directionally accurate across countries/regions. 

InMobi also reported that “66% of mobile users are just as comfortable with mobile advertising as they are with TV or online advertising.” That may well be in many instances. However a recent UK and US survey from YouGov found something quite different.

Consumers were much less tolerant of ads on mobile phones than in other media: 

[The] Digital Advertising Attitudes Report warns that consumer openness to advertising is lowest on mobile phones versus any other device such as PC, laptop or tablet. The vast majority of Brits (64%) and Americans (67%) would find it most unacceptable to receive unwanted advertising on their mobile phone/smartphone over other electronic devices.

There is a further warning that mobile display advertising is not the way to go. Less than one in six (11%) Brits and 15% of Americans who have surfed the internet on their mobile phone have ever clicked on a mobile banner advert and only one in every 100 Brits who surf on their mobiles and 1 in 50 Americans click on banner adverts frequently. The vast majority of those who surf the internet on their mobiles (79% in the UK and 72% in the US) find banner advertisements on their mobiles or smartphones irritating. . . 

IAB Reveals New Mobile Ad Formats, Bumps into MMA Ad Standards

A couple of weeks ago the MMA annouced 6 standardized mobile ad formats intended to reduce friction around mobile ad creation and media buying. The formats were directed toward smartphones and tablets alike. They didn't address the SMS/MMS market or rich media. 

These MMA ad unit standards were the by-product of widespread industry input and comment. Below are the "final," recommended formats: 

Screen shot 2012-02-09 at 10.17.56 AM

I asked when these units were announced whether it was premature to try and standardize ad formats for mobile. Ironically, today, competing trade organization the IAB released its own preliminary mobile ad unit standards. Guess what: they're not identical to those generated by the MMA -- though I have not sought to carefully identify areas of conflict and overlap. 

Below is the IAB mobile ad units list, which will be subject to comment and then presumably "codified" among in the IAB Standard Advertising Unit Portfolio.  

Screen shot 2012-02-27 at 1.48.04 PM

What we have now are like House and Senate versions of the same bill, which need to be reconciled in a conference committee. That is, unless the IAB is making a powerplay and ignoring the MMA's previously announced standards. 

The two competing sets of standards will be self-defeating as "standards" unless the two trade groups come together and hammer out their differences. Current MMA CEO Greg Stuart was the previous head of the IAB. 

Mobile Payments News: ISIS, InMobi-Opera and PayPal Carrier Payment Network

ISIS, the as-yet-unlaunched US mobile payments inititative from T-Mobile, AT&T and Verizon has added new partners to its stable of credit card issuers and banks (BarclayCard, Capital One, and Chase), according to CNET. ISIS has been described as "Hulu for mobile payments."

I have been openly skeptical of the carriers' ability to mount a successful mobile payments intiatitive. But ISIS may turn out to be the tortise to Google Wallet's hare. The latter has been met with carrier resistence (which may be anticompetitive), security problems and limited consumer availability.

Google has been ahead of the market somewhat. But there are now also rumors that Google is internally disappointed with its Wallet initaitive and may be putting less effort into it. If so, it would be premature to "give up" on Google Wallet. 

In two related mobile payents developments, PayPal (through its Zong acquisition) is launching what it calls PayPal Carrier Payment Network; and InMobi and Opera have joined for digital goods payments. The PayPal effort is designed to build on top of the Zong-carrier infrastructure (eBay acquired Zong last year) and expand carrier billing to encompass more types of transactions and larger dollar amounts:

Historically, carrier payment has been utilized primarily by online game developers and publishers to provide a fast and easy way for users to purchase goods directly in-app or in-game. While convenient for consumers, this method of payment has inherent challenges for other digital goods merchants – such as digital books, music, dating and content – to adopt as a primary payment method. Among the challenges is the cost of doing business – sometimes upwards of 40 percent – since transactions are processed through the carrier, merchants must share part of their revenue.

Similary InMobi and Opera announced that the latter will integrate InMobi's payments platform to enable virtual goods payments and purchases through Opera:

InMobi SmartPay will enable Opera users to pay seamlessly for digital goods in key markets around the globe, when they make purchases with some of the leading publishers that partner with InMobi. The two companies are committed to providing choice to consumers, mobile content developers and app developers, by building viable third-party monetization solutions in the mobile browsing and computing space.

Most US consumers have no experience with mobile payments and still need be educated about their benefits. However, large numbers of smartphone owners will eventually adopt mobile payments over time. Four tenents of success will be: simplicity, ubiquity, rewards and security.

The convenience of not having to sign credit card slips will be a welcome imrovement in the retail and restaurant worlds. The abandonment of signature requirements for transactions under $25 in many places has created demand and some experience with a simplified transaction experience. Merchants have incentives to adopt mobile payments as well for greater efficiency at the point of sale and, if don't correctly, greater security too. 

Almost all of these mobile payments systems and platforms back onto a credit card. However, it's still early to pick winners and losers. As I indicate above, Google could wind up a loser and ISIS a winner -- though that's a bit counter-intuitive (given the challenges carriers face in execution generally). There are still others (e.g., Apple) that could enter the race at any point.

Related posts:

Opera Transforms Itself into an Advertising Company

Opera has had great success with its Opera Mini and Opera Mobile browsers. Indeed, Opera has the greatest market share of any single browser provider in mobile. But as the world migrates from feature phones and RIM devices to smartphones Opera risks being displaced by Safari, Chrome and maybe Explorer.

In a diversification move, two years ago Opera bought ad network/mediator AdMarvel (for $8 million in cash plus $15 million more in potential earn-out fees). Today the company announced that it was doubling down on mobile advertising, buying ad networks Mobile Theory and 4th Screen Advertising. AdMarvel addressed publishers while the Mobile Theory and 4th Screen acquisitions cater to advertisers and the demand side.

According to the press release: 

[The two acquisitions] significantly expand its offering to advertisers and mobile publishers that engage consumers via the mobile web and applications, across all mobile platforms. Opera offers complete advertising solutions for mass-market feature phone and smartphone platforms, including iOS, Android, Blackberry, Java and Symbian.

Additionally, these acquisitions will enable Opera to better monetize the traffic that flows through Opera Mini and Opera Mobile browsers. With the world’s most popular mobile browser, Opera serves more than 160 million monthly active users that generate more than 100 billion page views, and consume more than 16 Petabytes of mobile data services a month, as of December 2011.

Mobile Theory is a leading premium mobile advertising network focused on the U.S. mobile advertising market, based in San Francisco, with offices in New York City, Chicago, Los Angeles and Seattle. 4th Screen Advertising is a leading premium mobile advertising network focused on serving the European mobile advertising markets, based in London.

Opera CEO Lars Boilesen said that AdMarvel has enabled Opera to "generate well over $200 million in revenue for our publishers globally" since the acquisition. Boilesen added that with the two new acquisitions, "Opera is uniquely positioned to deliver end-to-end mobile advertising solutions to brands, agencies, publishers and mobile operators across the globe." 

It also represents a fundamental shift in Opera's center of gravity. And from an ad-network perspective it's part of a larger, long-term trend toward industry consolidation. Yet it seems that just as one mobile ad network is acquired two more spring up.

MMA Brings Standardization to Mobile Formats, but Will It Harm Ad Creative?

After a 30-day comment period the Mobile Marketing Association (MMA) has announced a new "mobile ad package" that seeks to standardize mobile advertising around six ad unit types and formats. According to the MMA's press release there were "60-plus ad unit sizes" previously. The standardized mobile units are intended to simplify ad creation and buying across smartphones, feature phones and tablets.

The standardization decision came after input from companies such as AT&T, Google, InMobi, Microsoft, JumpTap, Millennial Media, CBS Interactive, the Interactive Advertising Bureau, The 4A’s, Newspaper Association of America and others. The MMA also says that rigorous data analysis went into deciding which six types of units to approve:

To create the Universal Mobile Ad Package v.2.0, the MMA, with support from ImServices Group, analyzed hundreds of billions of mobile ad impressions delivered across the global mobile advertising marketplace in 2Q 2011. The data – sorted by smart phone and feature phone, networks and publishers, and including mobile Web and app – helped determine the six unit sizes that serve as the standard Mobile Universal Ad Package v.2.0.

The MMA added that mobile video and rich media are not covered or included in the new standardized formats and previous guidelines around SMS and MMS marketing remain in effect. Below are the newly announced standardized ad-unit formats:

 Screen shot 2012-02-09 at 10.17.56 AM

While the trade group has certainly been thoughtful and inclusive in its approach -- and standardization will indeed speed mobile ad adoption -- the standardization of online ad creative was later blamed for later stifling ad creativity. That in turn prompted the Online Publishers Association in 2009 to develop a number of new, larger non-standard formats to reinvigorate PC display advertising and provide a "larger creative canvas for agencies, advertisers and publishers."

Jumptap Maps Kindle Fire Hotspots

Out with its December "MobileSTAT" mix of network data, Jumptap confirms what others before it (most notably Millennial Media) have said about Kindle Fire -- that it's the most successful Android tablet out of the gate:

In the first two weeks after the Fire’s mid-November launch, Amazon’s tablet outpaced all of the other iPad competitors in traffic including the Motorola Zoom and Samsung Galaxy Tab. Kindle Fire traffic grew 270% in November.

Here are the top Kindle cities in the US, as reflected in ad requests on Jumptap's network:

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Google’s Andy Rubin reported in Q4 last year that roughly 6 million Android tablets were in market. However there's not much evidence of actual usage. For example, see the following data from WiFi ad network JiWire (which also confirms Kindle Fire's surge):

The rumor is that Google will be producing a 7-inch tablet to compete with Kindle Fire and potentially undercutting it on price. 

Finally, a few other pieces of data from the MobileSTAT report. Android handsets now have more than 2X share of other operating systems on its network (Android 52.7%, iOS 22.1%). Compare Millennial's numbers (Android 50% vs. iOS 30%).

Among ad-targeting methods, location/geo is by far more widely used than other forms. While 79% of advertisers on Jumptap's network use at least one form of targeting, 64% use only one. Jumptap anticipates that will increase however over the coming year. 

Millennial Media Files S-1, Likely to Hit $90M in 2011 Revenue

No surprise here: Millennial Media has made good on its prior statements that it may seek an IPO. The company filed its S-1 in anticipation of that event this afternoon. Paralleling the growth of mobile advertising, Millennial reported $69 million in revenue in 2011 -- up from $29 million in 2010.

Correction: FY revenue for 2010 was $47.8M and $69 million is through September 2011.  (I wrote too quickly and didn't look carefully enough.) The company is not profitable but its losses have been steadily declining.

The total amount being sought in the public offering is $75 million. 

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Citing IDC estimates, Millennial characterizes itself as "the second largest mobile display advertising platform in the United States, with a 16.7% market share." The IDC numbers may be way off, but if they're accurate and $69 million is in fact 16.7% of the total value of mobile display ads in the US today . . . that total market value (not counting search) would be roughly $415 million.

Update: Given that $69 million is 9 months of revenue . . . the company's full year revenue is likely to be in excess of $90 million. Using the IDC figures (which again may be wrong) and extrapolating to the full value of the market, the total value of US mobile display would be closer to $550 million. That's somewhat more consistent with our sense of the market's growth. 

Millennial Seeing 'Hundreds of Millions' of Kindle Fire Ad Impressions

Millennial Media is out this morning with its latest "Mobile Mix" devices report. The report reflects the distribution of devices and corresponding operating systems on Millennial's network. Over time the percentage of smartphones on Millennial's network has grown dramatically and now stands at 70%. By contrast smartphone penetration in the US is about 44% according to the latest Nielsen figures. The other 30% of devices on the Millennial network are feature phones (14%) and so-called "connected devices" (16%): iPod Touches, Kindles, iPads and other tablets.

Connected devices are the main focus of Millennial's newsletter this time, in particular the Kindle Fire. Millennial confirms the popularity and apparently significant sales of the Kindle Fire, saying that the company is seeing a "monthly run rate of hundreds of millions of impressions":

Since its release in mid-November, the Kindle Fire has made an impact on the connected device market right out of the gate with early signs of strong consumer adoption.

On the Millennial Media platform, impressions from the Kindle Fire have grown at an average daily rate of 19% since its launch several weeks ago. We’re not just seeing millions of impressions, we’re seeing a monthly run rate of hundreds of millions of impressions.

The Kindle Fire’s impression growth on our platform has slightly outpaced that of the iPad when the iPad launched in early 2010. Though the Kindle Fire has been introduced into a more mature tablet market than the market which greeted the original iPad, the integration of Amazon’s robust digital entertainment library and the $199 price point may also have helped drive this early use by consumers. (emphasis added.)

The question raised in the excerpt above is whether "the $199 price point may [ ] have helped drive this early use by consumers." It's pretty clear the answer is "yes." The Amazon brand has certainly been critical, but it's mainly the $199 price that is responsible for the device's huge sales. The iPad created the new market for tablets and Kindle unlocked demand among those who we're more price sensitive and resisted buying "no-name" lower-priced Android tablets. 

Among the smartphones on Millennial's network, 50% are Android based handsets. However, save the Nook and Kindle Fire, Google/Android tablets have had almost no success for reasons of price and quality.

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Retrevo presented some interesting survey data yesterday showing consumer tablet demand is greatest for the iPad, followed by the Kindle Fire and then the B&N Nook. Retrevo shows that there is a market for Android tablets -- the Kindle Fire has already confirmed that -- provided the price is right and at least $100 less than the iPad. 

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Putting aside quality for a moment -- Android Honeycomb was a major disappointment from a UX perspective -- price is the major variable that consumers are responding to in Kindle Fire (but with the confidence of the Amazon brand behind it). The problem is that it's almost impossible for most tablet OEMs to get prices low enough to make any margin on them and be price-competitive.

If they match the iPad pricing they're perceived as imitators (e.g., Motorola Xoom, Samsung Galaxy Tab). But mobile carrier subsidies, which bring down the prices of smartphones, have not worked so far stimulate Android tablet demand -- mainly because consumers don't want another two-year carrier contract and the associated data fees. They're buying WiFi tablets instead. 

Android-based tablets that have been priced at or below $200 in the past have been made by companies that are unfamiliar to consumers and received poor quality ratings from experts and consumer reviewers alike. Even though Kindle Fire has had its share of problems and disappointed many reviewers, consumers know and like Amazon.

It was also shown that Amazon was taking a loss on the sale of every Kindle Fire, to establish a beachhead in the tablet market and because the company figured it could make up the loss and much more on content sales. 

There are rumors that Apple will introduce a 7" tablet next year to compete with the Kindle Fire, just as Amazon will go "up market" and deliver a 10" tablet.

Google, for its part, has suggested that it will respond to lagging Android tablet sales by bringing its own "higest quality" tablet to market next year. We'll see whether this is with an OEM partner or Google-branded (i.e., Chrome or Nexus tablet). Google is clearly another company -- one of the very few -- that could offer the combination of brand-instilled consumer confidence and subsidized pricing.  

Report: Facebook Mobile Ads Coming Before IPO

I've argued in the past that Facebook would be compelled to monetize mobile once it went public. I envisioned that monetization taking the form of more-or-less straight ahead display ads that were targeted in some way. I also recently performed a very loose calculation of what Facebook's global mobile ad inventory might be worth (at a $2.50 CPM) and determined it could be up to $2.5 billion.

What Bloomberg reported yesterday, however, was that Facebook was considering launching mobile ads that were more integrated into the Facebook feed:

Facebook Inc. plans its first push into mobile advertising by the end of March, giving the company a fresh source of revenue ahead of a possible initial public offering . . . An idea being considered is putting Facebook’s Sponsored Stories ads, which feature friends’ interactions with brands, within the mobile News Feed, said the people, who declined to be identified because the plans aren’t public.

Sponsored Stories in the mobile news feed would be like "promoted Tweets" on Twitter in some respects. Sponsored stories allow advertisers to show Likes from people in your network (brands, products, stores) in the ad copy. They reportedly dramatically improve CTRs. Below is an example from Facebook online: 

Earlier this week Nielsen reported that Facebook has the greatest "active reach" of any app across the Android OS (after the Android market). Facebook's most recent official mobile-user number is 350 million globally, out of more than 800 million total users.

My guess is that Facebook will be experimenting with various mobile advertising units/types before it launches anything officially. It already has a quasi-advertising vehicle in mobile "check-in offers." However Facebook itself currently doesn't make any money off these deals. Eventually that will probably change. 

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Network xAd Raises $9M, Will Challenge AT&T for Local-Mobile Ad Crown

Local-mobile ad network xAd has announced a new $9 million round of funding. The money comes from Emergence Capital Partners, SoftBank Capital and Palisades Ventures and Silicon Valley Bank. Roughly a year ago xAd raised about $4 million from Emergence Capital.

The company supports search, display and pay-per-call advertising. It also owns the Go2 mobile directory properties.

xAd says it's the "largest mobile-local advertising network in the U.S." Recently AT&T has laid claim to that crown saying it serves a billion mobile ad impressions monthly. AT&T offers mobile display ads, while xAd has text-based search ads as well. In May xAd announced that it had served more than 2 billion ads. 

In November, xAd reported 10 billion monthly ad impressions and 90 million monthly local-search requests. 

While ad networks such as Jumptap, Millennial, InMobi and AdMob all offer geotargeted ad inventory (to varying degrees of geo), xAd and AT&T specialize in locally relevant advertising. AT&T contends its ads deliver a much higher CPM than "remnant" ad networks. Previously xAd said that it can deliver a $30 CPM to publishers (not all inventory). 

In addition to xAd and AT&T, there are other local-mobile ad networks (mostly display):

  • LSN Mobile
  • Verve Wireless
  • Where.com
  • Marchex (PPCall) 
  • Chitika
  • CityGrid
  • Navteq
  • JiWire

xAd both aggregates third party (e.g., yellow pages) advertiser inventory and sells directly to national and local businesses. In September xAd said that it had 1.2 million advertisers in its network, which represented "about 30% to 40% of [total] local mobile search traffic and reach" in the US.

Millennial Media: Local Targeting Grows on Percentage Basis

The latest Millennial Media SMART report shows growth of location targeting among retailers and brands. Among other data presented in the October report, Millennial said that retailers and telecom advertisers (e.g., AT&T, Verizon) used store locators on landing pages to drive people into local outlets: 

Store Locator experienced growth of 5% month-over-month, with 23% of the Post-Click Campaign Action Mix in October (Chart C). Retail and Telecom advertisers increased their usage of Store Locator as a Post-Click Campaign Action to drive customers to stores for fall sales or to buy new mobile devices.

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The use of the store locator on a mobile landing page will be the primary way that brand and national advertisers "localize" for the foreseeable future. This is in contrast to the use of dynamic creative that inserts locations into the ad copy itself. Google mobile search results will be (and are already) an exception.

According to Millennial, "local market targeting" was the dominant component (66%) of the company's "Targeted Audience Mix" (40% of its overall campaigns). However, very interestingly, the use of targeting on Millennial's network has actually declined from six months ago.

In April 48% of campaigns were targeted (vs. 40% in October). Of those, 56% of impressions served by Millennial were directed toward local markets. 

Screen shot 2011-12-09 at 6.28.56 AM

In absolute terms, then, the amount of locally targeted impressions being served by Millennial in April and October was almost identical. So while there's growth on a percentage basis, which is significant, overall local targeting in real terms remained flat. 

The fact that fewer campaigns on Millennial are targeted overall makes me wonder whether that money, especially locally oriented ad dollars, are fleeing to other networks.

Report: Local-Mobile Ads Dramatically Outperform Online

Local mobile ad network xAd has released its first quarterly report on local mobile user behavior and ads. I've done a general write-up at Search Engine Land. The company collected the data from its 10 billion monthly ad impressions and 90 million monthly local-search requests. The data in the report were captured between July and September.

A couple of highlights: 

  • 75% of smartphone owners conduct local searches (other data reflect up to 95%) 
  • 62% of local-mobile users conduct at least two local searches per month, while 32% of users do at least five local lookups per month

 The top local search categories according to xAd data:

  1. Restaurants
  2. Gas stations
  3. Shopping
  4. Auto repair/dealers/rentals
  5. Fast food
  6. Cafes/coffee shops
  7. Travel & lodging
  8. Health & medical
  9. Bars & clubs
  10. Finance & legal

Most interesting to me was the discussion of ad performance and "secondary actions." CTRs on ads in apps were 8% vs. 5% for ads appearing in the browser.

 

When you consider that average online display ad CTRs are 0.09% you see that this performance is dramatically better. Indeed, InsightExpress and Dynamic Logic have both documented how mobile display outperforms online across all metrics. 

In addition to browser vs. apps differences, xAd documents ad performance variations between iOS and Android. While CTR rates on the iPhone and Android are roughly comparable, "secondary actions" are greater on iOS: calls, map/directions lookups and review drill downs. Interestingly calls are happen more frequently in a browser context. But they're also the most popular "post-search" secondary action (62%) across the board, followed by maps and directions lookups (35%).

Previously xAd reported that its CPMs average $30. Other specialized US-based local-mobile ad networks include CityGrid, AT&Ti, Verve Wireless, Navteq, JiWire, LSN Mobile, Chitika, Marchex and Where.com.