Going Mobile? Food for Thought for Ad Networks

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Could it be? 2011 might finally be the year that advertisers overcome their trepidation regarding mobile advertising. And they should, thanks to the opportunities that this most personal-of-devices offers to execute both branding and response campaigns. But even with today's "superphones" capable of video, local, and more, there are still significant barriers to executing a mobile strategy.

A Forrester Research report this year predicted that marketers will finally allocate real dollars into mobile, with an estimated $1 billion in spend for mobile display and search advertising by year-end. Overall, Forrester expects that marketers will become proficient at leveraging mobile marketing channels to generate leads and drive sales.

So do you want the good news or the bad news?

Executing against buyer needs still poses significant challenges in a mobile environment:

1. Measurement, especially across ad networks, is very difficult. Cookies are different in apps and in mobile browsers. On the iOS devices, third-party cookies are blocked by default. While some mobile ad networks store the phone's unique identifier (UID), the best practice for privacy is to hash this identifier - which is great - except it prevents using it across ad networks and other buys.
2. Scale is lacking to run more interesting ad units like those using video or geo-location. While an image or text ad can run at scale in mobile, more complex ads that use the phone's features are difficult to execute across versions of phone operating systems since the devices themselves may not support the ad. Imagine the simple case where your ad allows the user to take a photo - at a minimum you should only show the ad on devices with a camera.
3. Advertisers need a lot of hand-holding. Other than native mobile advertisers, most advertisers and agencies will not be ready to execute against mobile objectives. Whether this is due to the lack of landing pages optimized for mobile, the lack of measurement systems oriented to mobile (e.g., view-through conversion metrics that rely on cookies), or just a general uneasiness, the players in the space need to be ready to go the extra mile to get the buyers involved.

Ad networks that can help overcome these challenges stand to benefit from a cross-channel sales appeal that can deepen advertiser and agency relationships and enable more exciting customer engagements.

But all isn't lost in mobile for ad networks. There are also a number of opportunities that exist right now and can be leveraged by smart media professionals:

1. The cost-per-install model of advertising is a great way to optimize. Since the mobile ecosystem includes a large number of app developers and media companies who can instantly take advantage of consumer willingness to pay $5 for an app, there's a lot of margin to go around for advertising.
   
   Until Apple shut down the incentivized app model, this was a booming business. But even without incentives, mobile has a built-in set of advertising customers with an easy-to-understand conversion metric.
2. Mobile inventory is drastically undersold, mostly because advertisers aren't able to pull in their off-the-shelf creatives and measurement systems and because there's a lack of liquidity (e.g., RTB) in the application advertising space. While this is holding back dollars for sellers, it's also a great opportunity for the scrappy ad nets to reach the mobile audience with great returns.
3. Rich media on mobile is becoming a reality through vendors like Medialets and consumers actually enjoy the interactive nature of the ads. By taking advantage of the special abilities of mobile devices (cameras, accelerometer, etc.), mobile-rich media ads can really deliver brand value.

Overall, the opportunities in mobile advertising will outweigh the challenges for the most innovative ad networks. And while 2011 might actually be "the year of mobile," in the coming years, a proper understanding of the media and ability to execute technologically will be a requirement for anyone in the display advertising ecosystem.