Ad Networks

Apple's iAd Cuts Prices but Sees Defections

There's a great deal of analysis and even schadenfreude going on over the news that Apple's iAd unit (formerly Quattro Wireless) "has cut rates by as much as 70 percent as some marquee clients are using rival services . . . signaling the company is struggling to parlay its technology leadership into success in the ad industry." 

According to Bloomberg: 

Apple has cut the minimum ad purchase from $1 million to $500,000, and it’s offering agencies deals for as low as $300,000 if they bring together multiple campaigns, the two people [familiar with the matter] said. 

What people fail to realize is that iAd is effectively a very high profile "proof of concept" for mobile display advertising. It lent enormous credibility to mobile advertising with brands and got them to bet six and seven figures on mobile, which they had not before. 

It also compelled rivals to develop richer ad formats. All of these things are good for mobile advertising in general.

I don't believe that Apple ever saw mobile advertising as a significant revenue stream for the company, however. It was more about supporting developers and enabling them to make money -- having control over a revenue stream for the iOS ecosystem. But that concern has substantially subsided. Apple's developers have access to multiple ad networks.

In the end it really doesn't matter whether Apple gets $300K or $500K up front. It just matters that advertisers are spending that money somewhere in mobile. 

Related iAd posts: 

App Downloads Show Complexity of Mobile Usage: It's Not All about Local

Many people (including some analysts) make simplistic assumptions about the mobile market: for example that mobile and local are all but synonymous. I'm obviously a big advocate of local but I see mobile usage as quite complex and defying easy conclusions about usage or the future direction of the market.

There are lots of functions and activities that people perform and do on mobile handsets that have nothing to do with their immediate surroundings or local. For example: games, news, entertainment, music, sports, social networking and so on.

A new set of Nielsen data about app downloads/usage in the past 30 days reflect that mobile is a platform that is complex and diverse in its usage. While local content and apps are well represented in the hierarcy a large number popular app categories have nothing to do with location.

Instead they probably reflect that people are using mobile as a "generic" Internet access tool. Games, the most popular category, is a phenomenon unto itself. 

http://blog.nielsen.com/nielsenwire/wp-content/uploads/2011/06/mobile-gaming-chart-1.gif

Most purchases occur in the physical world. So most mobile ads will either direct people to actual stores or, in the case of most future display campaigns, offer a dealer or store locator -- at a minimum. Mobile will be a huge branding medium, irrespective of any localization component. And there will be many awareness ads that have a location component as secondary or perfunctory matter. 

Moreover we get into an "accounting" problem in defining what is a "local" ad in mobile.

Is a Klondike Bar ad that contains a store locator buried two clicks down a "local ad"? What about mobile click-to-call ads for a florist network, which sends users to call center to place an order fulfilled locally? Is a mobile-video brand campaign for Hilton Hotels that can direct you to the nearest property if you initiate a search or lookup?

There's a lot of gray in determining what is a local ad. We might want to "require" localization in the ad creative before we consider mobile ads as "local." Just a thought.

But just as people often fail to recognize how local or offline purchase intent permeates a great many things that happen on the PC it's equally the case that non-local activity/interest is very much tied up in mobile activity. The chart above nicely illustrates that. 

Millennial: 'Place Call' the Top 'Post Click' Action on Network

Yesterday Millennial Media released its latest SMART report for May. It shows advertiser trends and marketing tactics on its network. There was a drill-down focus on automotive in the report (which I'm not going to focus on except in one respect). The data indicate the increasing nuance and sophistication of mobile marketing programs.

There are a wide range of goals/objectives that marketers are pursuing via mobile: local, social, demographic targeting and so on. These tactics and objectives defy easy assumptions about the trajectory of mobile advertising over the next several years.

Mobile is a branding and awareness medium, it's also a local ad medium and it will be used in tandem with other media. It's not going to be primarily one thing (e.g., LBS). There will be enormous diversity in the campaigns and tactics seen. Indeed, I've argued before that mobile is a better branding medium than online display. That assertion is supported by the data. 

Immediately below is the mix of targeting methodologies used by marketers on the Millennial network in May. The number of campaigns that were targeted in some way has remained relatively constant on Millennial's network for roughly the past year. But of that targeted advertising geo/local has grown and so has demographic targeting to some degree. 

 Screen shot 2011-07-01 at 7.26.29 AM

Compare the data for Q3 2010 (below). Geo-targeting was the primary targeting method employed by marketers in 42% of all targeted campaigns on Millennial's network. In May, 2011 that was smaller percentage of targeted ads but a higher percentage of them used local targeting (which can be state, city or zip).

Picture 14

Automotive advertisers were much more local in their mobile marketing efforts (chart below), seeking to send people into dealerships or to generate phone calls. They were less interested than advertisers generally in getting people to Like them on Facebook ("mocial"). 

Screen shot 2011-07-01 at 7.31.16 AM

As a general matter Millennial said:

  • Store Locator grew 48% month-over-month and represented 22% of the Post-Click Campaign Action Mix on our network in May (above). Retail and Automotive brands heavily drove mobile users into retail outlets and dealerships by creating unique and engaging Moms, Dads and Grads promotions for their target audiences.
  • Mocial (Mobile Social Media) experienced growth of 36% month-over-month, with 23% of the Post-Click Campaign Action Mix in May (Chart C). Telecom, Entertainment and Retail advertisers increased their usage of Mocial as a Post-Click Campaign Action to acquire social media followers and gather feedback on movie releases and new product launches in May.

Below is the mix of advertiser goals and "landing pages" they sent clicks to. Screen shot 2011-07-01 at 7.27.02 AM

Compare Jumptap's data showing some similar things around targeting or post-click activity. Jumptap also shows consumer click metrics and the improved lift of local + demo targeting. 

Selective Zip-Level Targeting Produced 85% Lift

Mobile ad network Jumptap released its second MobileSTAT issue for June earlier today. It's very much like the Millennial Media SMART reports or the AdMob Metrics reports that began the trend. There are a range of interesting findings in the document; I excerpt and summarize some of that material below.

Among smartphone operating systems, Android leads the iPhone by a margin of 42% to 30% on the Jumptap network. This 12 point margin is consistent with the Nielsen-reported 11-point margin between the shares of the two operating systems in the broader US mobile market. 

Screen shot 2011-06-30 at 5.27.59 PM

Compare Nielsen's data released earlier today:

http://blog.nielsen.com/nielsenwire/wp-content/uploads/2011/06/mobile-OS-share2.png

A relatively unique piece of data in the report is the "content consumption" breakdown between apps and the mobile Web (below). There's no discussion of this graphic in the report so one would need to speculate on whether this is based on where Jumptap ad impressions were served or whether this is somehow a broader measure of consumption trends on mobile devices. 

Screen shot 2011-06-30 at 5.29.18 PM

According to a recent report from mobile analytics company Flurry, which some have disputed, mobile apps have overtaken the Web (PC and mobile) in time spent. Regardless of whether that's precisly accurate, plenty of data indicate users are spending increasing amounts of time with mobile apps. 

There's also considerable data in the report about CTRs on mobile ads. The first graph immediately below shows Jumptap's CTR by smartphone OS. The Apple iOS platform shows CTRs that are almost double those of Android and other platforms except the Palm webOS. 

Screen shot 2011-06-30 at 5.29.12 PM

Mobile ad exchange/mediator Smaato offers a similar chart (global, Q1 2011), which shows Windows Phones leading the CTR pack followed by Symbian and then Apple, et al.  

Operating System Click Through Rate Worldwide Q1 2011

Jumptap also said that people between 50 and 70 years old clicked on more ads than members of other age groups. This is an interesting and somewhat curious finding. I would be interested in seeing age-CTR segmentation data by handset type. I suspect that for smartphone owners it would skew younger. 

Screen shot 2011-06-30 at 5.30.39 PM

Mobile subscribers with incomes above $50K clicked on ads quite a bit more than those with incomes under that threshold. Again I would suspect that higher incomes correlate positively with smartphone ownership and that's going to factor in to this data.

Screen shot 2011-06-30 at 5.31.08 PM

There's now a fair amount of data from various sources about what time of the day/week mobile users are most active. In the Jumptap chart below ad clicks start to grow in mid-morning (with increased mobile activity generally) and peak at about 6pm. 

Screen shot 2011-06-30 at 5.31.26 PM

Local-Mobile network Verve Wireless also recently put out findings about consumer behavior on its network. The company said that nearly 60% of page views on its network occurred during the afternoon commute hours and in the evening (between 7-10pm).

Another very interesting data set released by Jumptap is based on a mobile ad campaign with "a major auto advertiser," which targeted selected, demographically qualified zip codes "that are more likely to purchase their brand." According to Jumptap these zip-based ads showed terrific lift "over ads broadly targeted in almost every campaign" -- as much as 85%. 

Screen shot 2011-06-30 at 5.30.15 PM

The final bit of data I'm including from the report shows the "post-click activity" or objectives of advertisers. Sixty seven percent of users clicked from an ad to a mobile Web-based landing page (or site), while 18% clicked to call and 15% downloaded something (probably an app).

Screen shot 2011-06-30 at 5.31.38 PM

Because we don't now when it says "click to Web" whether these are just PC sites on a mobile browser or HTML5 optimized landing pages we can't evaluable how sophisticated these advertisers are. As a general matter however I would speculate that we'll see a movement away from "click to Web" as marketers try and maximize the effectiveness of their mobile campaigns. 

Verve: Local Mobile Spend Grew 82% YoY

Verve Wireless is a San Diego CA-based mobile ad network consisting of approximately 1200 local media sites (mostly newspapers). The company's network features both small business and national-local advertisers; and it has created and released the first of what will apparently be quarterly reports focused on local-mobile advertising and consumer behavior.

Verve is calling the quarterly report the "Local Mobile Index" (LMI). The ad inventory measured is all mobile display. Verve says the data presented in its inaugural report are a mix of "Omniture, comScore and Verve reporting." The data can be compared to what Millennial Media is doing with its SMART reports but at a purely local level.

As with all such network-based data the Verve report must be seen as a reflection of what's happening on the company's own network primarily. However it's large enough that these data are going to be directionally reflective of larger trends in the local-mobile market.

Top ad verticals

Top five local-mobile ad verticals on the Verve network (Q1 2011):

  • Autos
  • Real estate
  • Entertainment
  • Banking 
  • Health care

Compare Millennial Media's top 10 verticals by ad spend for Q1:

  1. Retail & Restaurants
  2. Telecommunications
  3. Portals & Directories
  4. Finance
  5. Automotive
  6. Entertainment
  7. Dating
  8. Education
  9. Travel
  10. CPG

Spending growth

According to Verve the local ad spend grew 82% year over year (Q1 2010 to Q1 2011) for the identical inventory in its network. This growth rate is in line or somewhat higher than general mobile spending growth. For example, here are eMarketer's mobile ad growth projections:

In the table immediately above, eMarketer said that mobile display grew 122% in 2010 but will slow to 65% annual growth in 2011. I believe it's too soon to argue that mobile ad growth will slow, however, and believe these figures are somewhat conservative. 

Dayparting

About 56% of page views on Verve's network occurred during the afternoon commute hours and in the evening (between 7-10pm). The chart below reflects mobile usage throughout the week.

Screen shot 2011-06-27 at 4.14.04 AM

These data seem to contradict other mobile data that show weekends as a time of heavy mobile activity. However this might be explained by the fact that most of Verve's sites are newspaper sites and that consumption of these sites may decline on the weekend. 

Ad performance

Verve said that in-app ads outperformed mobile web ads "by a factor of nearly 3x (2.67)" during Q1 2011. This is not a surprise given higher levels of consumer engagement with apps vs. the mobile web.

In addition, according to Verve, "rich media campaigns out performed standard banner programs, as measured by consumer engagement, by a factor of 7:1." However some rich media ads that launched video from the banner "performed worse than those without video or had video embedded in a landing page (1.61% video banners vs. 2.67% video embedded), which may indicate some reticence on the part of consumers to go straight into video without an intermediate step." 

Top cities

Perhaps the most interesting data from Verve's report is the list of top DMAs by ad revenue. Here they are and they feature some surprises: 

  1. St. Louis
  2. Houston
  3. New York 
  4. San Francisco  
  5. Portland
  6. Denver
  7. Memphis
  8. Seattle
  9. Dallas
  10. Cleveland-Akron

Texas is the top state by ad revenue in Verve's network. 

Here's a situation where the data from Verve's network may diverge significantly from larger trends in the market. It's very unlikely, for example, that St. Louis is the top overall DMA for mobile ad revenue in the US. What's more plausible is that the sales reps in that market have had great success selling mobile to their advertisers (Verve does some national ad sales). 

iPhone vs. Android

The iPhone represented nearly half of all traffic on Verve's network. However the company said that Android users were more engaged. Verve doesn't elaborate on the meaning of this statement in its report but says that "Android achieved 52% better engagement results during the quarter." 

Screen shot 2011-06-27 at 4.35.09 AM

It's also interesting that BlackBerry had nearly as much share as Android on Verve's network. This is probably a reflect of the legacy of numerous RIM devices in the market.

There hasn't been much good local-mobile ad spending data in the market prior to this. So it will be great to see these quarterly reports and assess how the market is doing based on "facts on the ground." Most of the forecasts (though not all) about local-mobile released to date have been based on very high-level data and often incorrect assumptions about the market.

Millennial: More than Half of Smartphones Now Androids

Millennial Media's device index, "Mobile Mix," is now out for May. Here are some bullets from the report:

  • Smartphones now represent 67% of the impressions on Millennial's network (vs. 36% of US handsets in market per Nielsen)
  • The iPhone remained the top individual device for the 20th straight month. Apple was also the leading OEM on the network. 
  • Android was the leading smartphone OS, with 53% of smartphone impressions
  • Windows Phone grew 92% month-over-month in terms of impressions
  • Among "connected devices" showing up on Millennial's network, 70% are "gaming devices" (e.g., iPod Touch, Sony PSP), 29% are tablets
  • BlackBerry OS experienced modest 6% growth and represented a relatively stable 17% of smartphone impressions on Millennial's network

The chart immediately below reflects the top 20 phones for May. BlackBerry is hanging on but this list is mostly about Android.

 Screen shot 2011-06-15 at 4.10.26 AM

Sixty-seven percent of mobile devices on the Millennial network were smartphones in May (vs 64% in March). In the category 53% are Android devices, up from 48% in March.

Screen shot 2011-06-15 at 4.11.09 AM

Apple had a 27% share of smartphone impressions but generated 45% of the revenue vs. 43% for Android devices, which had a 53% share of impressions. It would be interesting to have more insight into why the iPhone is generating more ad revenue relative to its impression share vs. Android. 

Screen shot 2011-06-15 at 4.11.55 AM

Study: Mobile Display 'More than Doubled' in Past Two Years

ComScore did an analysis of mobile display advertising in April and said that "the number of advertisers using mobile display ad campaigns has more than doubled in the past two years." The measurement firm said that "689 advertisers used mobile display advertising campaigns to reach consumers [in April], up 128 percent from two years prior."

I would take all this as "directional" more than as a completely accurate reflection of the number of mobile display advertisers. It reflects significant growth in US mobile display, although we should see growth accelerate as more advertisers move into mobile and it becomes easier to buy online and mobile display together. 

Below is the category breakdown of those advertisers in April according to comScore: 

Screen shot 2011-06-08 at 7.26.48 AM

For comparison, here's what Millennial Media has said are the top ad categories on its network (Q1 2011): 

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

Millennial: 21% of Mobile Users Made a Purchase in Past 30 Days

There's already a great deal of data in the market that show consumers use smartphones throughout the "purchase funnel." Several studies have also affirmed that well over 50% of smartphone owners are searching or conducting product-related research in stores at the point of sale. Most advertisers, however, have yet to respond to this rapidly evolving behavior with the kind of commitment it deserves.

By the same token increasing numbers of advertisers now do take mobile much more seriously and are starting to devote meaningful budget allocations to the platform. Helping to advance the argument for mobile is Millennial Media, with new research combining data from its own network with custom comScore research that takes a look at mobile consumers and the retail vertical.

Screen shot 2011-06-07 at 7.54.48 AM

Of course the study is self-serving. But the findings are consistent -- even "conservative" in some cases -- with other third party studies. Some of the findings (mostly collected in 2010) were teased in the most recent Millennial SMART report. 

Millennial said that in Q1 2011 the market segment it calls "retail & restaurants" was the top-spending advertiser category in the US market: 

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

On Millennial's network that category saw 1342% growth from Q1 2010 to Q1 2011. According to comScore data, the number of US-based retailers doing mobile advertising went from 3045 retailers in 2009 to 6445 in 2010 -- in other words, it doubled. 

Beyond this, much of the Millennial-comScore report is devoted to consumer data and behavior. The finds reflect that the majority of US consumers accessing retail content on mobile devices (typically smartphones) are between 18 and 35 years old and generally more affluent than average mobile users.

Screen shot 2011-06-07 at 7.55.37 AM

Millennial reported that "the number of consumers who accessed some type of retail content on their mobile device in a given month jumped 74% year-over-over to 13 million (as of June 2010)." Of that group:

  • 6.5 million people accessed retail content "up to three times per month"
  • 4.2 million at least once a week
  • 2.2 million consumers almost every day 

My view is that these figures probably under-count the number of mobile consumers accessing what might be described as "retail content" on their phones. By analogy, the comScore estimate (as of Q2 2010) of smartphone ownership is 22%; but the most recent Nielsen estimates put the number of smarpthone owners at 36% of all mobile subscribers in the US. Accordingly, the figures in the Millennial document are probably "conservative."

There were additional findings about "m-commerce" and products purchased via mobile devices. The comScore data reflect that "21% of survey respondents said they had made a retail purchase using their mobile phone via a mobile browser or a mobile application in the past 30 days." The graphic below shows the hierarchy of those product categories according to comScore and Millennial. 

Screen shot 2011-06-07 at 7.55.11 AM
It's interesting to compare the above mobile purchase categories to the content categories (below) accessed by mobile users. The red/brown bar is "mobile retail users." 

Screen shot 2011-06-07 at 8.01.02 AM
In the end the data in the report affirm that mobile is a critical channel for retailers and brands. The "why" of mobile is certainly behind us; what lies ahead are all the tactical and more subtle questions about best practices and integration of mobile into larger digital and brand advertising campaigns.

Millennial: Local Targeting Continues to Grow

Millennial Media released its latest SMART report on mobile marketing trends and data. In the issue, Millennial focuses on growth in the retail vertical (compiled by comScore for Millennial) as well as its traditional range of metrics (e.g., campaign objectives, landing page composition).

In particular, the report says that "local market targeting grew 22% and represented 56% of all campaigns that used targeted reach." While targeting is growing, the majority of Millennial's advertisers appear to still be most interested in broad reach and driving awareness.  

Local can mean different things on Millennial's network: targeting by state, city, zip. However the company also said, "advertisers in the Automotive and Restaurant verticals leveraged Local Market targeting to drive foot traffic into their brick-and-mortar locations through targeted regional promotions." 

Screen shot 2011-06-03 at 6.59.38 AM

Millennial says that retail "content consumption" by consumers on mobile devices is growing in aggregate volume and frequency:

  • The total number of consumers who accessed some type of retail content on their mobile device in a given month jumped 74% year-over-over to 13 million (as of June 2010)
  • Of the 13 million, over 6.5 million accessed retail content on their mobile device one to three times per month, 4.2 million at least once a week, and 2.2 million consumers accessed some form of retail content on their mobile device almost every day

 Screen shot 2011-06-03 at 7.06.30 AM

Below is the hierarchical mix of retail advertisers on Millennial's network: department stores followed by computer/electronics retailers (e.g., Best Buy) and home & garden retailers (e.g., HomeDepot). 

Screen shot 2011-06-03 at 7.07.10 AM

Google Wallet: Some Preliminary Thoughts

It's very difficult to quickly and comprehensively analyze all the implications of Google Wallet. There are many.

I "live blogged" the press conference at Search Engine Land. For both consumers and merchants/retailers the proposition is pretty compelling: offer and loyalty card integration, single-tap payments and so on.

So far it appears that only the Nexus S phone will be capable of accessing and using Google Wallet, although there was some ambiguity around that issue. The merchants that are formally participating at launch the following: 

Screen shot 2011-05-26 at 10.34.04 AM

However any merchant that has the MasterCard "pay pass" system enabled can participate. Google has provided a merchant locator by zip.

Offers and loyalty will be a big part of this, which is where the marketing/advertising tie-in happens. The integration of Wallet with Offers and loyalty cards will be the big differentiator for retailers and marketers as well as consumers vs. other NFC payments systems. This is where Google has a big advantage over competitors including Apple, Amazon, PayPal and wireless carriers. 

Theoretically at least some of those competitors could participate in Wallet because Google says it's open ecosystem -- in the way that Android is: controlled by Google but anyone can participate. How will this affect other mobile payments initiatives, other payments startups and so on? 

That question is hard to answer at the moment. If there's fast adoption of Google's system (a la Android) many competitive efforts will be toast. But that very much remains to be seen. Because even consumers eager to participate in Google Wallet will need to buy the Nexus S right now. 

Once other NFC-enabled handsets become available, adoption should dramatically accelerate. 

See related: Square’s “Mobile Wallet” Service Sets Stage for Pay-By-Voice, Maybe

Millennial: Android Top Smartphone OS, Apple Regains Revenue Lead

Millennial Media has put out its latest "mobile mix" device report, which discusses operating systems and handsets on its network. The data are not an absolute reflection of market share but reliably indicate directional trends.

As Millennial reported in March the VZW iPhone has provided a big boost for the iPhone in the US (rumors indicate it will be coming to T-mobile and Sprint in late summer). That helped the iPhone regain momentum. In addition, iOS (including iPod Touch and iPads) has returned to the top of the Millennial's list in terms of revenue generation. 

Immediately below is the December 2010 chart showing the OS revenue mix on Millennial's network: 

Screen shot 2011-05-19 at 6.26.40 AM

Android devices collectively were responsible for 55% of the ad revenue generated in December. The positions have reversed and now iOS (boosted by the iPad) is generating 50% of the revenue on Millennial's network. BlackBerry has also grown considerably, it's worth noting. 

 Screen shot 2011-05-19 at 6.24.44 AM

These data don't mean that Android has stalled by any means. The company said that Android remains the dominant smartphone OS: 

  • Android maintained its position as the leading Smartphone OS on our network for the fifth consecutive month, and increased impression share by 10% month-over-month. Android now has a 53% share.
  • Overall iOS impressions have increased 47% since January. In the same time, Android impressions have grown 19%.

So while Android is leading the smartphone category, the iPod Touch and iPad give Apple advantages over Android. It's unlikely that any of the forthcoming Android tablets will significantly challenge the iPad unless/until a much better software user experience emerges -- though Android tablets have the potential to be very successful in the sub-10" segment. 

Screen shot 2011-05-19 at 6.24.29 AM

Finally, Millennial said that for the first time all the phones in its top 20 were smartphones, amounting to 68% of all the devices reflected on its network. According to Nielsen smartphones represent 36% of all US handsets.

In December 2010 smartphones represented 60% of all devices on the Millennial network.

 Screen shot 2011-05-19 at 7.03.55 AM

 Here's what that same list looked like in December: 

Screen shot 2011-05-19 at 6.27.07 AM

inMobi: In-App Ads Outpace Mobile Web Ads Growth

Mobile ad network inMobi released new findings based on data gathered from its global mobile ad network. Among other things, the company reports the comparative market shares of mobile operating systems and handsets on its network.

In addition inMobi said that in-app ads grew faster in April than mobile web advertising: "Commenting on the study, James Lamberti, VP Global Research & Marketing at InMobi, says: "Following the global smartphone revolution, 'in-application' advertising continues to outpace mobile web ad growth."

Below are inMobi's market share charts, with the US market represented in the second chart. 

Screen shot 2011-05-17 at 6.48.09 AM

Nearly 10% growth in iPhone share in the US was driven by the introduction of the Verizon iPhone. Other data from IDC, comScore, Nielsen and others have confirmed a similar lift for the Apple handset. Here are comScore's March smartphone data for comparison purposes:

Screen shot 2011-05-17 at 6.53.49 AM

What's the principal difference between the comScore data and inMobi's numbers? ComScore's data are derived from consumer surveys, while inMobi's is based on ads and impressions served on actual handsets.

Jumptap's $25M Round Signals New Gains

This morning Jumptap announced a new $25 million round of funding, bringing its total money raised to roughly $90 million. Participants in the round were AllianceBernstein, General Catalyst, Summerhill Ventures, Valhalla Partners and agency holding company WPP. 

Though one of the largest independent mobile ad networks the perception was that JumpTap had lost momentum, resulting in a management shakeup last year. However the funding would appear to confirm new momentum. 

The company now claims reach of 83 million consumers, 10,000 sites/apps in its network and 10 billion ad requests in April. JumpTap accommodates the full range of ad units. The company also operates intentionally in several countries. 

Below is IDC's estimate (Q4 2011) of the distribution of mobile ad revenues. No doubt this is inaccurate today but directionally it shows the relative shares of revenue in the US market. JumpTap is the smallest of the "big" players. Nokia and AOL are non-entities right now. 4INFO is a conspicuous absence in the chart below. 

Screen shot 2011-05-05 at 6.55.17 AM

JumpTap began as a search-based network and white-label provider of mobile search to carriers. When Google, Microsoft and Yahoo took over the mobile search business JumpTap shifted and became a mobile display network. 

The company was growing and then seemed to falter. CEO Dan Olschwang was outsetd last year and replaced by General Catalyst's George Bell, which seemed to indicate the network was in trouble.

However the metrics and new funding indicate the JumpTap is back on track. JumpTap will likely get acquired rather than go public; the question is for how much?

AdMob was bought by Google for $750 million (in stock), while Apple acquired Quattro for between $250 and $275 million. Online ad network ValueClick recently bought Greystripe for $75 million.

JumpTap also holds what appear to be several key mobile advertising patents.

Related posts: 

Google: Mobile Search Will Pass PC Sooner Than People Think

There's an extensive article in the New York Times about Google and mobile search. The article is mostly a feature about the evolution of Google's approach to mobile. It also discusses voice search and Goggles but there's little hard data or new numbers. 

The $1 billion mobile ad run rate is mentioned as are several previously released data points. Here are a few of the stats and observations from the article:

  • Google says mobile searches are growing as quickly as Web searches were at the same stage in the company’s early days, and they are up sixfold in the last two years. 
  • Mobile searches spike during the lunch hour and evenings, when people are away from their computers. 
  • Search for Wal-Mart on a computer and Google suspects you are probably looking for the e-commerce site or job openings. Search on a phone and Google assumes you are looking for the nearest store. Other search tools were built specifically for phones.

We've estimated, using comScore and Google's own public data that between 1.9 and 2.4 billion monthly queries on Google are coming from mobile. Google has said 33% of mobile queries have local intent. That would mean that between roughly 600 million and almost 800 million monthly queries are local-mobile.

But here's the "money quote" from the NY Times' piece: “Mobile search is definitely going to surpass desktop search,” said Scott B. Huffman, who works on mobile search at Google and leads its search evaluation team. “The lines will pass, and I think they’ll pass before anyone thought they would.”

VCLK-Greystripe Buy ($75M) Signals More Mobile M&A Ahead

As reported last week (I was out for a short vacation) ValueClick is buying "brand-focused" mobile ad network Greystripe for an estimated $75 million. None of this has been confirmed or announced (though it's apparently an accurate report). TechCrunch says Greystripe's gross revenues will be between $25 and $30 million this year. (See below for update.)

Here's Greystripe's description of itself: 

Greystripe is the largest brand-focused mobile advertising network in the US by reach. Greystripe delivers the highest engagement and most sophisticated targeting for brand marketers, the maximum revenue for publishers and app developers, and the best ad experience for users. Greystripe’s proprietary advertising platform serves billions of rich media impressions to over 30 million users of touch-driven devices through more than 3,500 application titles and mobile websites across all major mobile platforms.

Recently Greystripe released research that found roughly a quarter of iPhone and Android owners will be in the market for a new or used car in the next year and 78% of them will use their smartphones as part of the car-buying process. This research illustrates the importance of mobile as both an awareness and direct marketing medium for car-makers -- and by extension brands in general. 

Last week WHERE (which operates a local ad network) was acquired by eBay. Although not a pure network, this is another indication that more consolidation is on the way in mobile. 

Major independents that remain in the market include inMobi, 4Info, which recently became a "full service" mobile ads platform, Millennial Media (right now headed toward an IPO) and Jumptap. Others include Mojiva and Medialets, as well as mediators such as Smaato.

Independent Local-mobile ad network xAD is also a definite acquisition target. Because xAD hasn't done a great deal of PR for itself most people are unaware of its reach, high CPMs and overall quality. It's definitely a prize waiting to be snatched up. 

Recently DataXu established the first "mobile DSP." This PC-mobile crossover will become standard in the near-term -- and ValueClick-Greystripe is an indication. To a lesser degree so is the eBay-WHERE acquisition.

Below is comScore's "Ad Focus" rankings that show the top 50 PC ad networks: 

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Each of the PC networks will be compelled to add mobile reach/distribution either through a partnership or acquisition within the next 12-24 months.

Update: According to Citi's Mark Mahaney, "Greystripe will be run as a wholly-owned subsidiary within ValueClick Media." He says that Greystripe is "expected to add $24-$26MM in revenue and $2-$3MM in EBITDA." 

WHERE Wisely Takes the Money

As you've no doubt seen by now WHERE.com was acquired by eBay for an estimated $135 million. WHERE had 2010 revenues of $17 million and projected revenue for 2011 was $40 million.

WHERE has a bunch of assets: great domain, strong mobile app, mobile ad network (120K-130K advertisers), deals functionality and a strong team. The company was reportedly offered a bunch of VC money but chose to take eBay's buyout offer instead. 

They were right to do it. While it's possible that WHERE could have built a great deal more revenue and usage, the company also faced massive challenges from larger players such as Google, Facebook, Yelp and Foursquare. It also faced challenges from newer entrants (flavor of the month). 

In addition WHERE.com, the PC site, is a huge opportunity that the company has not been able to develop successfully -- so far. Let's see if eBay can do it. 

WHERE's ascendancy might be peaking now and a year or two from now the company might not be in the same position of strength. It's possible that WHERE could have grown much bigger if it were to remain independent but I'm not so sure. 

Accordingly I think it was smart to take the money and run. 

AT&T's Doesn't Feel Sting of VZW iPhone

The iPhone had been driving strong wireless growth at AT&T for the past several quarters. So when the Verizon iPhone hit many financial analysts assumed there would be widespread defections and a corresponding slowing of wireless growth. Not so according to Q1 2011 AT&T revenues released this morning.

The AT&T saw a 39% increase in Q1 profit. Revenues rose to $31.2 billion in the first quarter, up $700 million vs. a year ago. Here are some additional earnings highlights:

  • 10.2 percent growth in wireless revenues, with an 8.6 percent increase in wireless service revenues 
  • Best-ever first-quarter increase in total wireless subscribers, up 2.0 million to reach 97.5 million subscribers in service, with gains in every category
  • Best-ever first-quarter smartphone sales of more than 5.5 million
  • iPhone activations increased nearly 1 million year over year to 3.6 million, with 23 percent of subscribers new to AT&T; iPhone subscriber churn unchanged year over year
  • Best-ever first-quarter connected device net adds of 1.3 million
  • 23.9 percent growth in wireless data revenues, up almost $1 billion versus the year-earlier quarter

As indicated by the numbers the iPhone remains popular at AT&T. The company reported that 3.6 million iPhones were activated in Q1 with almost 25% of those activations coming from new customers. That compared with 2.7 million iPhones activated a year earlier. 

Rougly 40% of the 5.5 million smartphone sales (AT&T's third best quarter for smartphone sales) were made up of non-iPhone devices. The carrier now has 97.5 million wireless subscribers. 

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See also: AT&T Interactive Planning Local-Mobile SDK

InMobi: Android Passes iPhone, Nokia Falling

Ad network InMobi released its latest Mobile Insights Report: Global Edition March 2011. Based on 31.9 billion monthly impressions generated by 220 million consumers, the latest report shows phones running the Android OS overtaking Apple's iPhone. This is consistent with most other data in the market.

The report continues to show Nokia as the global smartphone leader but, like other sources, indicates a decline in its overall share. Strikingly, InMobi says "Nokia lost -3.9 share points in just 90 days, while Samsung (+1.6 share pts), Apple (+1.9 share pts) and HTC (+2.8 share pts) gained share." 

Another striking data point: "35% of all mobile ad impressions now occur on smartphones."

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In North America, as with the Millennial data just released this morning, the Verizon iPhone has helped Apple but that has not been enought to slow Android's momentum. But for quarter, according to InMobi, Apple's growth outpaced Android's in North America. RIM also grew. 

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Globally Android, iOS and RIM grew while others declined according to the report. Below, compare the most recent IDC numbers (global estimates for year-end 2011) and those from comScore (US) representing the most recent quarter. 
Screen shot 2011-03-29 at 9.48.50 AM

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The IDC numbers for Android above are quite aggressive vs. what InMobi show. IDC's numbers are projections based on existing sales and additional assumptions about future consumer purchase behavior. ComScore's data are based on consumer surveys. 

NAVTEQ Local-Mobile Ad Performance Good, but not Best in Market

NAVTEQ put out a press release yesterday announcing results of "its first hyper-local ad campaign targeting millions of users of the Poynt application." Poynt is a search app. The NAVTEQ ads tested were location and/or contextually relevant to user queries.

Here are the results: 

The maiden campaign featured hyper-local ads for national gas station and restaurant brands throughout the United States. All four campaigns performed three to five times better than the industry average* click-through rate (CTR) of .49 with an average CTR of 2.68% across campaigns. Post-click user engagement ranged from 4.49% to as high as 11.25%, depending on advertiser. 

The 2.7% CTR and engagement numbers are better than average, but still not as strong as those reported by several others offering local-mobile advertising or location-based ads on mobile devices. Off the top of my head I know that TeleNav, xAD, Placecast and JiWire have local-mobile ad performance data that exceed the reported NAVTEQ metrics.

TeleNav previously said that ads on its navigation software saw nearly 4% CTRs and 24% conversions (in terms of users driving to store locations after seeing an ad): 

[Ads] resulted in a click thru rate of 3.8 percent, which is significantly greater than traditional mobile and online display ads. Moreover, the data indicates that the conversion rate of users who drive to the business location after clicking on an ad presented in TeleNav's local search results is nearly 24 percent. 

Local-mobile ad network xAD told me that it sees average local search CTRs of 5% to 8%, with some campaigns exhibiting higher response rates. Google also previously reported that after a local-mobile lookup 61% of users called a business and 59% visited a location in person.

The larger point is that directional searches on the go are highly commercial in nature with action likely to be taken by the individuals conducting them. 

Marchex Buys Jingle Networks for $62 Million in Cash and Stock

Marchex has acquired Jingle Networks, which operates the 800-Free-411 consumer service and a mobile ad network. The acquisition is valued at $62.5 million and is a mix of cash and stock. Jingle had previously raised roughly $70 million since it was founded in 2004 in multiple rounds from investors. 

The acquisition will boost the Marchex Call Advertising Network and (finally) provides Jingle with an exit. Jingle launched with terrific fanfare and seemed like a great option for mobile callers seeking to avoid growing 411 fees. However, the growth of smartphones has taken a toll (so to speak) on directory assistance call volumes and they continuing to erode albeit at a relatively stable pace. 

Compared to traditional carriers, Jingle had a more interesting and diversified model than traditional 411. (Google shuttered its Jingle competitor, 800-GOOG-411 last year.) The best of the free 411 services was Microsoft's, Bing-411, which continues to operate. 

Marchex says that the addition of Jingle's calls and mobile network to its own will deliver "annualized reach of more than 500 million phone calls across digital media." The company says that Jingle's revenues will be $26 million in 2011. Call-based advertising will now constitute "75% of [Marchex's] revenues on an annualized basis by the end of 2011."

Marchex says that the overall market for calls is worth $179 billion annually and includes both online and offline media. These are ads "intended to generate calls." The company also says that some of the campaigns on its call network generate 10X response and conversions from consumers vs. clicks. 

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