A look at the challenges and potential opportunities.
Behavioral targeting adds value to the return on advertising by identifying relevant users for advertisers and making the spend more effective. Due to the complexity of mobile devices, mobile ad targeting is not as advanced as online advertising. Finding ad inventory to reach users with specific behavioral characteristics can be a major challenge. And the more complex the criteria, the more limited and costly the inventory becomes.
Gartner predicts that mobile ads will generate around $3.3 billion worldwide in 2011, doubling the $1.6 billion the industry took in during 2010. "As the adoption of smartphones and media tablets extends to more consumers, the audience for mobile advertising will increase and become easier to segment and target, driving the growth of mobile advertising spend for brands and advertisers," comments Andrew Frank, research vice president at Gartner. "We expect that targeting and contextualization, especially in social sites and applications, will carry on improving throughout the forecast period and beyond."
Why Is Behavioral Targeting Important?
Behavioral targeting is important so advertisers can reach the target audience interested in their offer and most likely to convert. The cost of targeted advertising is more expensive but by reaching the most relevant audience, the ad spend is also more effective. Reaching just the relevant audience is also a better user experience as users are now being inundated with ads in which they have no interest causing them to "zone" out advertising.
Mobile advertising is in a similar place that online advertising was five years ago before ad networks, ad exchanges, and ad platforms evolved to incorporate behavioral targeting. The business that delivers targeting beyond the basics will capture the largest market share of mobile advertising as advertisers are demanding a relevant audience. A Pubmatic study released in March, 2011, showed:
Audience Targeting continues to grow: 97 percent of advertisers will leverage anonymous audience targeting in 2011, and 47 percent will have more than half of their online advertising budgets dedicated to campaigns that include audience targeting with user level attributes.
Why Is Mobile Ad Targeting so Difficult
Online behavioral targeting is possible by setting a cookie on users' computers, thus identifying attributes about that computer user. By default Apple's iOS rejects third-party cookies, making it difficult to track the user on any iOS device. In contrast, Google's Android supports cookies and the ability to interface with browsers.
Google's AdMob currently has a 52 percent reach in mobile advertising with somewhat a monopoly on user data but mobile ad networks and platforms are making headway. Graham Mosley, VP, platform solutions of Mocean Mobile, reports that they reach about 60 percent of smartphones globally and many networks have more than 70 percent global reach. Depending on the network, through Mocean Mobile, marketers can reach more than 50 percent of smartphone users in the United States.
"Many clients are relying on standard targeting parameters such as device, carrier, and hyper-local geo (lat/long). Some publishers' ad servers can leverage private data sets, but cookie and privacy challenges hinder the growth of cross-publisher audience based buys at this point," comments Graham. When ad networks gain mass access, behavioral targeting will be more precise than online behavioral targeting as identifying a users' device ID is more personal. But, it opens another can of worms in consumer privacy particularly due to the lack of the user having the ability to "opt-out."
However, neither Google nor Apple is offering effective behavioral targeting at this point. Rachel Pasqua summed up the dilemma of brand marketers: "Digital fingerprinting is exciting given its ability to track behavioral and demographic data across multiple devices for single users. The targeting it supports far surpasses cookies, and consumer awareness (i.e., propensity to opt out) is still quite low. But any brand that uses this technology now without full disclosure to their customers is risking a huge backlash down the road," she writes in a recent blog post, "Time to Fix Mobile Targeting." Many users believe behavioral targeting is an invasion of privacy, and the Federal Trade Commission continues to get bombarded by advocates who want to curtail the collection of behavioral data.)
A Gallup poll, published in December 2010, found that 61 percent of Internet users said that tracking is not justified even if the practice makes it possible to offer web sites for free and 37 percent of respondents said they would opt out of all online ad targeting if they could.
What's on the Horizon - Spacial and Temporal Relevance
What if you could identify the mobile user with the intent to buy that is in a location where they can actually make a purchase? Retailers salivate over this kind of information. AdNext is incorporating spacial and temporal relevance in ads by predicting a user's next place to visit. AdNext clients collect the user place visit history, which through Wi-Fi fingerprints the user as she visits one place in the commercial complex and another. The client then sends this information to the AdNext server, which sends the relevant ad to the user after building a prediction model from the visit history. By processing more and more data the model becomes better able to predict correlations of behaviors. As complicated as this sounds, it is happening at the COEX Mall, the largest commercial complex in South Korea.
Behavioral targeting for mobile advertisers will continue to evolve just like it did with online advertising. When it does, more advertising dollars will pour into mobile taking advantage of its portable characteristics. In the meantime mass mobile ad networks continue to evolve while niche mobile ad networks thrive, providing access to highly targeted audiences like smartphone app game enthusiasts. The race is on for advertisers to find the best behavioral targeting solution. Have you found any solutions yet? Leave your comments below. By the way, thanks for the tweets.
Rob Weber co-founded NativeX in 2000, growing Nativex to be a leader in app user acquisition and monetization. For 42 consecutive quarters the company continues to be profitable and has grown to over 120 employees. For more than a decade, Rob worked to create solutions to increase distribution, drive revenue, and heighten engagement for app developers, such as DeNA, Gree, Kabam, PocketGems, and many other indie and public developers. Under Rob's leadership, W3i recently launched a mobile offer exchange that includes partnerships with leading offer providers.
Rob's business philosophy is to provide a collaborative environment developing solutions that provide value to app developers, advertisers, agencies, and ad networks.
In addition, Rob shares his passion for apps, digital media, and entrepreneurship by serving on the board of several tech companies. Rob recently presented at MobileBeat, GamesBeat, GDC, GDC Online, APPNATION, iPhone/iPad App DevCon, and also judged Start-Up Weekends.
Rob is an angel investor in a number of game, social media, music, video, and mobile app start-ups.
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