Mobile Advertising

New Millennial Media Effort Tracks Ads to the Point of Sale

Auntie Anne’s Pretzels, the Coca-Cola Company, mobile ad network Millennial Media and Sparkfly have teamed up to test mobile advertising with tracking to the point of sale. Here's how it works:

  1. Millennial Media will serve a targeted ad with a deal
  2. Consumer clicks on the ad and is taken to a landing page with an offer to be redeemed at Auntie Anne’s (the landing page/offer has a unique code)
  3. Consumer clicks “Redeem Now” or saves the offer (offers involve food items and Coke beverages)
  4. In the Auntie Anne’s store consumer shows the 4-digit code to the person operating the register
  5. Cashier enters the code into the system and the results are reported back to Auntie Anne's and Coke

Sparkfly is integrated with multiple POS systems and enables the purchase/redemption to be reported accordingly. That gets combined with Millennial’s analytics and the client gets a "cradle to grave" view of what happened with the campaign.

Screen Shot 2012-07-26 at 7.40.49 AM

This methodolgy isn't new; offers with tracking codes have been used ocassionally in PC-based ad campaigns for some time (search, display). And tracking to the POS or check-in is going on now in mobile. But this trial may establish a model for others to emulate.

Millennial said in its press release that the campaign will run in Atlanta and will feature a range of different ads to test messaging and creative:

The mobile ad campaign will be running during the heart of Back-to-School shopping season. The mobile ad creative will test different combinations of Auntie Anne’s and Coke items for purchase at ten Atlanta-area Auntie Anne’s locations, and each ad unit will contain a unique redemption code from Sparkfly that enables the item-level tracking of individual consumer sales and the revenue impact of the promotion.

If this kind of methodology and approach becomes more standard in mobile campaigns it will not only give marketers a much better sense of "what works" they'll get more accurate data about conversions. Currently smartphone "conversions" are perceived to be much lower than tablets and PCs. That's generally because offline conversions aren't being tracked.

Widespread adoption of offline tracking might also usher in more CPA billing models as well. 

Marketers and Publishers Better Quickly Get Used to 7-Inch Tablets

The early success of Google's Nexus 7 tablet sales, on the heels of Kindle Fire's success in Q4 last year, establishes that the 7-inch tablet category is here to stay. Before Kindle Fire there were no successful Android tablets of any size. Kindle Fire's combination of rock-bottom pricing ($199) and Amazon content helped drive several million in unit sales. Now Google's new device is off to a blazing start.

The company just released its first TV commercial for the tablet (a very Apple-like spot). 

As I previously discussed, the new Google tablet (starting at $199) is vastly superior to Kindle Fire. It now puts enormous pressure on Amazon to pull a rabbit out of the hat with its "2.0" release. Yet Amazon wants to release "five or six" new mobile devices (mostly tablets) of various sizes.

Apple is rumored to be releasing a smaller, lower cost tablet later this year. This is a defensive move for to prevent the iPad from being under-cut by lower-priced, almost-as-good products. A 7-inch iPad (or larger iPod Touch), combined with the Nexus 7, will likely dampen Amazon mobile device sales unless quality is dramatically improved. 

Regardless, the rise of the 7-inch tablet category now creates additional options for consumers and additional complexity for advertisers and to some degree publishers. I suppose it's an argument for "responsive web design."

With Kindle Fire 2, Nexus 7 and the coming Apple 7-inch tablet (and the accompanying low price of these devices) we should see 7-inch tablets sell millions of units. Many people will now have smartphones, small tablets for travel and "on the go," and 10-inch tablets for home. PCs will largely be used for "work" or become secondary devices for most consumers. 

Indeed, the device market is moving much faster than publishers and marketers. Publisher content and ads generally don't look particularly good on the 7-inch form factor. Tiny mobile banners are barely noticeable and landing pages look awkward filling only part of the screen. In addition, right now there are only a few apps optimized for 7-inch tablets. Smartphone apps look OK but often appear stretched or out-of-proportion.

All this will have to change -- and relatively quickly.

The PC market, where the attention of most publishers and marketers is still largely concentrated, is not going to grow. And by Q1 of 2013 there will be millions more tablets in people's hands. In fact, I believe that there will be 100 million tablets in the US market much more quickly than anyone is predicting: by the end of 2014.

With sales driven by competitive prices many of these will be 7-inchers, which don't play well with ads and content designed for smaller smartphones and which can't render apps, content or ads created for 10-inch tablets.

Marketers Confused about Mobile, but Increasingly Building Sites and Apps

Despite all the promises of digital marketing, data and analytics most marketers remain confused about how to manage the increasing complexity of digital channels, devices and tactics -- let along integrate them coherently. In particular, two recent surveys from email marketing services provider StrongMail and IBM show that marketers and CMOs conceptually embrace mobile marketing but are generally stumped by tactics.

The IBM survey was conducted in 2012 and had a sample size of roughly 350 "marketing practitioners." The StrongMail survey was conducted in Q1 and had 802 respondents, described as "business leaders." Just under half (46%) of the StrongMail respondents technically qualify as small businesses, with fewer than 100 employees. The IBM survey was more representative of enterprises and had respondents from multiple countries.

Among StrongMail survey respondents, only 55% had an existing mobile presence or were engaged in any form of mobile marketing. And 57% said they'd been doing it for only a year or less. Although 43% of those without a mobile presence or strategy planned to implement one within the next year. 

What did they plan to do? In roughly equal numbers the StrongMail respondents planned to build mobile sites (30%) and mobile apps (26%), followed by SMS/MMS marketing (15%). Impressively, 70% of StrongMail survey respondents planned to increase their mobile budgets in the next 12 months. But there's a difference between "talk" and action. 

For those still not doing anything, the top three answers to the question "Why aren't you leveraging mobile marketing?" were the following:

  • We see value in mobile but haven't yet determined the right strategy: 37%
  • Lack of resources/staff: 22%
  • Lack of funding/budget: 12%

Confusion over strategy and tactics similarly plagues the marketers at the larger organizations surveyed by IBM. In answer to the question, "Which three of the following market factors will be the biggest challenge for your organization over the next 3 to 5 years?" they responded that the proliferation of channels and devices was the biggest challenge: 

Screen shot 2012-07-05 at 11.31.35 AM

Like the marketers in the StrongMail survey, the emphasis in the IBM survey was on mobile sites and apps. In response to the question, "Which of the following mobile marketing tactics is your company using or planning to use?" they said: 

Screen shot 2012-07-05 at 11.05.42 AM

In this case, however, mobile email, SMS and local ad targeting were also being (at least conceptually) embraced. In the StrongMail survey the top current marketing methods reported were the following:

  • Mobile websites: 70%
  • Mobile apps: 55%
  • QR codes: 49%
  • SMS/MMS: 40% 

Interestingly only 13% of the mostly small business respondents in the StrongMail survey said they were using "location-based mobile marketing." And among those not currently doing any mobile marketing, only 3% indicated they were planning to implement it. 

By contrast the larger companies represented in the IBM survey were more interested and bullish about location. This is almost the opposite of what you might expect. SMBs could be expected to be more interested in location-based mobile marketing while one would anticipate that enterprises would be more skeptical. But the opposite appears to be true, drawing inferences from the data in these two surveys. 

IAB: Global Mobile Ad Spend in 2011 Was $5.3B, Paid Search the Largest Chunk

This morning the IAB released estimates of mobile advertising spending in 2011 on a global basis. Previously the trade group said that US mobile advertising was worth $1.6 billion in 2011.

According to the IAB mobile search advertising made up the largest component of US and international mobile advertising -- much like PC ad spending. It constituted 62% of global mobile ad spending in 2011 according to the IAB. That compares with roughly 46% of total ad spending (if memory serves me) on the PC. Almost all this money goes to Google. 

Below is the IAB chart showing the breakdown by region and ad unit category. 

Screen shot 2012-06-06 at 8.04.08 AM

We had previously forecast that combined North American and European mobile advertising revenue would be worth just over $5 billion in 2012. Assuming these IAB numbers are based on some sort of actual empirical evidence and not simply vague estimates the combined North American and European mobile ad markets were worth $2.3 billion last year. Our estimate for 2011 was $3.1 billion, about $800 million too optimistic. 

Still not bad. 

I suspect by this time next year we'll see some impressive revenue growth, making our 2012 numbers pretty close to actuals. Again, Google is the biggest single beneficiary of all this mobile spending on a global basis.

Mobile CPMs Just a Fraction of PC Display Costs

Former Wall Street analyst Mary Meeker just did one of her famous data dumps at the D10 conference. The 100+ slide deck is a discussion of "Internet trends." However I just want to focus on three slides.

The first shows that mobile Internet traffic in India just this month has surpassed PC Internet traffic. This is a trend that will replicate itself in markets all over the globe as time goes on. It will take longer for this to happen in developed countries than developing markets but it will happen. 

Marketers are going to be shocked by this as in market after market the PC Internet will become subordinate to mobile.  

Screen shot 2012-05-30 at 12.04.07 PM

The second slide shows that CPM rates in mobile are much less than on the PC. This is bad news for everyone except advertisers as more users migrate to mobile devices for much of their Internet usage. 

Screen shot 2012-05-30 at 12.03.53 PM

However compare our recent ad network test, which showed that the local networks (xAd, LSN) were able to command a much higher CPM. 

This shows us that premium or highly targeted mobile inventory will be able to deliver PC-like, or potentially higher, CPMs. 

The final Meeker slide I wanted to discuss is one of those familiar monetization vs. time spent slides. Flurry Analytics has a good one as well. Meeker points out a potentially $20 billion digital advertising opportunity over time, as PC usage migrates and ad spending catches up to consumer usage. 

Screen shot 2012-05-30 at 12.04.16 PM

The "X variable" is time, however. The logic is sound but the timeframe is less certain.

It took many years for the PC Internet to start to equalize time spent and digital ad spend. Mobile is evolving faster than the PC Internet but it may well be several years before mobile advertising begins to approach user engagement/time spent levels. 

Clearly what's going on right now is that advertisers are not valuing mobile impressions as much as PC impressions. In fact mobile impressions are much more valuable than PC impressions -- for both awareness and direct response.

As mobile becomes the primary Internet access vehicle for many more people marketers will be compelled to wake up, and competition should intensify for mobile ad impressions, especially well targeted impressions. In the interim it's a buying opportunity for smart marketers who right now can get high quality eye balls at a fraction of the cost of the PC Internet. 

How Will Facebook Monetize Mobile?

This morning Facebook is trading below its $38 offering price. This reflects investor skepticism about the long-term outlook for the company. Indeed, there are many challenges ahead for Facebook -- one of which is mobile monetization.

This weekend the company bought yet another mobile site, Karma. Karma provides a streamlined way to deliver physical gifts to people through their smartphones, using the Facebook infrastructure. While this latest acquisition is undoubtedly about getting access to the team it is also about the business model and new ways to generate revenue from mobile devices. 

I have argued one reason (clearly not the only one) that increasing numbers of people use smartphones to access Facebook is avoiding the clutter of the PC site and ads in particular. While Facebook has started to show Sponsored Stories in mobile users' newsfeeds it cannot simply duplicate the ad environment online in its mobile apps. Too many ads would alienate users. 

So how does Facebook make money off mobile usage in a way that doesn't make users abandon its apps? Here are a few ideas:

  • Local/contextual ads on apps: contextually and locally relevant display ads (if well targeted) could generate meaningful revenue because of the sheer scale of Facebook's mobile usage. But Facebook needs to be judicious in its use of these ads. 
  • Offers: coupons in display ads or in the news feed could be quite successful as well. Mobile offers have been in place for some time but it's a free service. Facebook might create a special area or "wallet" for mobile offers that resides within the app but doesn't interrupt usage
  • Mobile loyalty: This notion is tied to offers as well. For SMBs Facebook could create a subscription based program where loyalty incentives are distributed online and in mobile: "After three visits, XYZ is free." This would represent formalizing tools and capabilities that are now free
  • Facebook credits: Turning Facebook credits into a real (loyalty) currency that can be used for e-commerce online or perhaps in the offline world at stores and restaurants. (More likely it would be earn offline points and use them online.)
  • Facebook Wallet: Facebook could try and become a full-blown payments platform like PayPal or Google Wallet. This is more ambitious but it could be accelerated though purchase of a payments startup
  • Build an ad network: I believe Facebook will buy a mobile ad network -- its own version AdMob --  to enable monetization via third party sites and apps. All users signed in through Facebook Connect could be targeted as on the PC. I think this "FaceSense" will also come to the PC. 
  • E-commerce transaction fees: Karma is an e-commerce app. And there's a great deal of potential for Facebook to get into e-commerce more directly. However, past e-commerce experiments by third parties on Facebook have largely been unsuccessful (except for Zynga). 

Some or many of these ideas could come to pass. Regardless, Facebook will need a range of approaches and revenue streams in place to truly deliver the kind of mobile revenue performance that investors will want and will become imperative as more users access Facebook primarily via mobile devices.

Marchex: Directories Deliver Highest % of New Customers, Mobile Display Lowest

Last year survey data were released that asserted "47% of mobile app users . . . click/tap on mobile ads more often by mistake than they do on purpose." In the subsequent write-ups that often turned into the broader claim that "half of all mobile ad clicks are unintended." 

With all the touchscreen smartphones out there a high level of accidental clicks isn't hard to imagine.

Now comes a kind of parallel but stronger finding from Marchex that argues 76% of all calls coming from mobile display ads are bad calls: pocket dials or otherwise accidental. The data aren't based on survey information but an analysis of more than 200,000 calls on the company's network. These calls were part of advertising campaigns to company runs for clients. 

Marchex also analyzed the percentage of new and existing customer calls by channel. Below is a chart the company generated to illustrate these findings: 

Screen shot 2012-05-21 at 9.41.17 AM

Online and mobile directory sites generated the highest percentage of new leads/customers. Marchex added that directory sites work best for advertisers with physical stores or business locations (perhaps an obvious point). Mobile display, according to the report, generated the lowest percentage of new customers and had the highest percentage of non-qualified calls, as previously indicated.

Search engines had the lowest percentage of spam but the highest percentage of existing customer calls. This suggests people repeatedly use mobile search to find phone numbers for businesses they already know.

Marchex's report also best practices advice for (national-local) marketers. One of the recommendations is that marketers look more deeply at whether calls have generated desired outcomes (e.g. sales) to determine their true ROI, and not simply rely on the top-level data: 

  1. Give consumers a variety of connection options to suit their intent, such as app downloads, QR codes, form fills and click to call
  2. Test different consumer flows for mobile calls, such as the ability to call from an ad or call from a landing page
  3. Take advantage of the fragmented media landscape with placements across a range of mobile webpages, search engines and applications
  4. Test and analyze the performance of ad campaigns across different calls to action, formats and media
  5. If possible, analyze the types of calls you are getting from ad campaigns and connect with the call center to determine whether those calls convert to sales.

Monica Ho of xAd confirmed that when call buttons are in top-level display ad creative the number of accidental calls is high. However she said that calls coming from mobile landing pages are "98-99% valid and of very high quality."

Study: Localization Best Way to Make Mobile Ads Relevant to Users

The IAB has released a fascinating report on mobile shopping and user attitudes. The study wasn't a simply survey. Instead the research involved 260 US adults who agreed to participate in a two-week "mobile diary" project. It thus got an in-depth look at their behavior. Below are some of the findings that I found most interesting and noteworthy.

One finding that illustrates simple assumptions about mobile behavior cannot be made was the fact that most "mobile commerce" activity happened at home:

  • At home: 47%
  • Out and about: 29%
  • At work: 10%

Specifically the study also found that most product searching happened at home and not "out and about." Store location searching did happen mostly on the go. But these findings suggest that behavior many marketers assume is happening on the go is actually taking place at home. 

Screen shot 2012-05-17 at 8.33.03 AM

In a majority of cases "mobile commerce" (shopping) activity was stimulated by the presence of other media. This fact is relatively well known but still needs to be pointed out. Too many marketers think about mobile in a vacuum. Specifically 46% of these users were watching TV or on their computers when they used their smartphones to look up information. 

Screen shot 2012-05-17 at 8.46.52 AM

What stimulated their mobile commerce (shopping) activity? The largest group said that mobile was the "easiest way" to accomplish the particular task. In other words, it was easier for them to do a mobile lookup than it was to go on a PC. Beyond this, mobile advertising was a major "stimulant" of subsequent research or mobile shopping behavior.
Screen shot 2012-05-17 at 8.33.22 AM

One of the most interesting findings, which is an outlier compared to other data in the market, is the overwhelmingly favorable perception of mobile ads, which were viewed by 70% of these study participants as "a personal invitation." That's an incredibly positive finding for mobile advertising. 

Screen shot 2012-05-17 at 8.15.30 AM

Another very interesting finding is that mobile users who click on ads are mostly not immediately interested in buying. They want to learn more about a product or service. Many also want to see related products or services (presumably to see what their options are). 

All this suggests that mobile (display) advertising exists somewhere between pure awareness and direct response. Most people -- at least in this sample -- are not prepared to buy immediately in response to mobile display ads. Search is a different matter because of the directed nature of the consumer behavior vs. display. 

Screen shot 2012-05-17 at 8.15.51 AM

Finally the study indicates that the best way to make mobile ads relevant to users is to localize and personalize them. Personalization is OK, according to the study, with permission (hard to execute for marketers). But localization can more easily be done without capturing personal or behavioral data. 

Screen shot 2012-05-17 at 8.16.17 AM

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.

Mobile Search Clicks Higher, Prices Generally Lower than Online Ads

During the past two or three weeks a trio of reports came out about paid search trends, with considerable information about mobile. Agencies Marin Software, IgnitionOne and Performics each put out "Q1" reports. What they uniformly show is that mobile keeps gaining and that CTRs are better than for comparable ads online.

Performics says it's not seeing any cannibalization by mobile of PC search, which it says is still growing. The agency says people are simply searching more: PC at their desks, smartphones on the go and iPads at night on the couch. And none of this reflects or counts in-app search as an alternative to the mobile browser. 

First from Marin (top) and IgnitionOne (second) the following two graphics offer a comparison of paid search clicks on the PC, tablets and smartphones. Marin and IgnitionOne are very consistent with each other (based on aggregated client data):

Screen shot 2012-05-03 at 9.13.04 AMScreen shot 2012-05-03 at 9.12.47 AM

Given that there are scores of clients and hundreds of campaigns reflected in the two charts above we can take these metrics as definitive (for now) regarding the relative CTRs on each of these device platforms.

Performics argues that the present is a buying opportunity in mobile search (and display) because prices are lower than for PC campaigns, even as performance is superior to the PC. The graphic below shows the relative cost of paid search clicks for smartphones and tablets indexed against comparable PC campaign costs. 

Screen shot 2012-05-03 at 9.21.11 AM

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. 

Google: Android Users Conducting 2.65 Mobile Searches per Day

One of the keys to estimating mobile ad revenue is making valid assumptions about consumer-user behavior. Mobile search advertising (mostly benefiting Google right now) is currently the single largest mobile ad revenue category in the US market. The key drivers of mobile search revenue are CPC pricing, advertiser volume and user query volume.

In data revealed during the the Google-Oracle litigation, Google (in Q1 2010) projected mobile ad revenues based on an assumption of 1.1 mobile searches per day per user, or roughly 30 searches per month. However additional data released suggest that Android users are actually conducting 2.65 mobile search queries per day, or more than 60 mobile searches per month. 

Estimate how many times EACH MONTH you search Google on your mobile phone? 

Screen shot 2012-04-26 at 9.29.18 AM
Source: Opus Research (4/12 n=1,522 US adult mobile users)

However this mobile search volume is inconsistent with what user surveys reveal about query volume. For example our most recent survey indicates that a majority of mobile users don't search Google on their handsets. This sample included non smartphone users so the numbers are more skewed than if this sample was smartphone users exclusively.

Other surveys report that most smartphone owners conduct fewer than 20 mobile searches per month, though a meaningful minority are power users and do more than 20 or 30 mobile queries on a monthly basis. In our survey above, 81% said they performed fewer than 20 searches per month and most performed fewer than 10.

Accordingly there's a disconnect between Google's apparently actual 2010 behavioral data about Android user mobile search volumes and what users report on surveys about their mobile search activities. 

InMobi: iOS Leading Android on Network

Each of the ad networks presents somewhat different data on the question of who's got more market share iOS or Android. Nielsen reported that recent sales of iPhones have been "closing the gap" between Apple's handset and the "Android army." However networks Millennial Media and JumpTap show Android impressions being roughly 2:1 what iOS impressions are on their networks.

This morning inMobi released new data (for February and Q1) showing that the iPhone has a greater share of impressions on its network vs. Android. According to inMobi, "iOS has maintained its dominant market position over Android in North America since January this year, with iOS total share of impressions for the quarter at 37%, against Android at 34%."

Screen shot 2012-04-23 at 9.03.05 AM

The top three devices on inMobi's network in North America are: 

  • iPhone -- 19.7%
  • iPod Touch -- 12.2%
  • iPad -- 4.9%

The network also reported that on a global basis, Nokia still had the largest percentage of ad impressions (35%), "although its OS share of impressions decreased slightly over the last quarter."

IAB: US Mobile Ad Revenues $1.6 Billion in 2011

The IAB is out today with its full year 2011 digital advertising report. There are a number of interesting things in the report, among them the mobile ad revenue estimates. According to the IAB mobile advertising in the US was worth $1.6 billion in 2011.

Of all the ad formats mobile showed the greatest growth, as one might expect. Below is a comparison of digital ad categories. Search increased its share of digital revenues and was by far the largest single category.

Screen shot 2012-04-18 at 2.28.29 PM

We haven't revised our mobile ad forecast for a couple of years, but it was very close to the IAB figures. I'm pretty happy with that. 

Screen shot 2011-10-04 at 8.41.30 AM

Most Mobile Ads Are Poorly Conceived, Executed

As I click on mobile ads in apps and around the mobile Web I notice that most mobile ad creative is simply lousy. Banners are difficult to read, the messaging and ad copy aren't compelling or innovative and landing pages are all-too-often not mobile friendly. There's a perfunctory quality to the whole effort in many of these instances. 

One of the reasons why search forms a bigger slice of the mobile revenue pie right now is because search doesn't have to work as hard to make the transition to mobile, whereas display has to be completely reinvented. The lackluster nature of most of the mobile ads I'm noticing makes those ads almost completely ineffective. 

Below are several examples drawn from the NY Times app this weekend. First an ad from optical retailer Site for Sore Eyes. The banner is tough to read and the call to action is washed out. But worst of all, the landing page is not optimized for mobile. It's all but impossible to read the text on the page, likely causing a user to click away.

Screen shot 2012-04-02 at 6.33.08 AM

There are similar problems with the following Lord & Taylor ad. The banner asks you to "text" to "stay in the  know." What the heck does "stay in the know" mean? How about something a bit more concrete about the benefits of getting on their list.

Beyond this, while you're looking at the ad on your phone, you're unlikely to text at that moment. So you need to remember to do it later, which you probably won't because the benefits haven't been made clear.

Finally, as with the ad above, the landing page is difficult to read. It's probably a page from the retailer's PC website. The images are too small and you can't see the text or prices at all. And people aren't going to "pinch and zoom" too see them. 

Screen shot 2012-04-02 at 6.34.41 AM

Those were two weak ads, the following one from Bank of America is not perfect but much more effective. Even though the banner text is small and hard to read the specific (and local) nature of the message motivates you to click through. The landing pages are mobile-friendly and geo-targeted (for greater relevance). There's also video, which is effective.

Screen shot 2012-04-02 at 6.32.06 AM

It's amazing to see so many weak mobile display campaigns. It seems like the agencies or personnel involved just aren't thinking very clearly about the user experience, despite the fact that they all probably own smartphones themselves and are equally "consmers" of mobile advertising. 

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.

http://searchengineland.com/figz/wp-content/seloads/2012/03/Screen-shot-2012-03-26-at-5.06.52-AM-600x263.png

http://searchengineland.com/figz/wp-content/seloads/2012/03/Screen-shot-2012-03-26-at-5.10.22-AM-600x238.png

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."

Screen shot 2012-03-15 at 9.49.04 AM
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. 

Screen shot 2012-03-15 at 11.31.05 AM

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.

Screen shot 2012-03-15 at 11.40.35 AM

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. 

USappInventory vs USonlineDisplayAdSpend resized 600

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

http://blog.flurry.com/Portals/41620/images/MobileAdSpend_vs_TimeSpent-resized-600.png

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. 

Study: Consumers Open to Ads on Tablets, Least Interested in Mobile Ads

Today the Pew Internet Project put out some research arguing pretty unequivocally that consumers don't want to be tracked or targeted even if it might mean that the ads and content they see are more "relevant" or aligned with their interests. A survey released at the end of last month by Upstream and YouGov (US and UK respondents) also contains a warning of sorts to publishers and developers about advertising overload.

In this survey consumers expressed frustration over the volume ads and promotions they were receiving. Two-thirds said they received too many ads, while slightly less than a quarter of respondents said they saw the "right amount" of advertising. 

Screen shot 2012-03-09 at 8.48.33 AM

Consumers found ads on their phones to be the "most unacceptable" vs. other media channels or devices. This is consistent with lots of survey data that show consumers are ambivalent or hostile to mobile advertising. However mobile ads typically outperform PC advertising, which is a paradox: people don't want it yet they respond to it. 

Q: Which ONE of the following electronic devices would you find it MOST unacceptable to receive unwanted advertising on?

Screen shot 2012-03-09 at 8.49.23 AM

Interestingly these survey respondents were much less hostile to ads on their tablets. In fact, they more were accepting of ads on their tablets than they were ads on their PCs. However when a version of the question was asked in a more positive way, PC or laptop where the top choices. 

Q: How you would prefer to receive an offer or promotion through an electronic device that you use / own?

Screen shot 2012-03-09 at 8.49.50 AM

In terms of positive features that consumers said would make them respond to advertising, the top answers were:

  1. Clearly tailored to my personal interests
  2. Specific to my location
  3. Contextually relevant to something I'd just been doing 

Q: Which, if any, of the following would make you MORE likely to respond positively to marketing messages?

Screen shot 2012-03-09 at 8.50.20 AM

In terms of ad units or types, email was the most favorably received among several categories that included SMS, paid search, display, QR codes and augmented reality. By implication email advertising was the least intrusive of the types presented to these respondents.

Q: Which, if any, of the following types of message would you be likely to respond positively to if you received these adverts or promotions?

Screen shot 2012-03-09 at 8.50.53 AM

In the Pew survey consumers were willing to sacrifice ad and content relevance to avoid tracking and targeting. Put another way, they declined the idea of improved relevance through tracking and personalization. In the YouGov survey respondents said they would be most inclined to respond to ads "clearly tailored to their personal interests" and that were specific to their locations.

The two surveys taken together reflect that consumers want advertising and content that is relevant but doesn't rely on data mining. In mobile -- where consumers were least interested in ads -- there's a higher burden of relevance than on the PC. But that can be achieved in ways that don't require behavioral targeting or data mining but rely on location and context. 

Marketers and publishers must be careful to respect user desires for privacy as they try and fulfill the demand for relevant and "tailored" information. This is a bit of a tightrope to walk. However the industry must walk it. 

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.