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Winning the Last Inch

  |  July 9, 2012   |  Comments   |  

The future of mobile advertising is not looking like advertising. Here's why.

Many digital marketers have come to recognize that the future of digital lies with mobile. According to a recent study by Flurry, consumers now spend more time on their mobile devices than on their desktop computers.

In fact, mobile is second only to TV. If you focus on the coveted 18-25 demographics, then mobile plays an even more prominent role. Younger generations of digital consumers still watch television programs, but they overwhelmingly choose to do so on their powerful and portable smartphones and tablets, at whatever times suit them instead of going by a prescribed schedule.

Judging by the way things are trending, mobile is shaping up to be the decisive marketing battleground for the hearts and minds of consumers over the next decade. It only takes the movement of a finger or thumb - about an inch in distance - for consumers to shift from "clicking" to "closing" an ad. Likewise, competing Google mobile search ads and results are often just another finger away. Therefore, the success of future digital marketing will depend a lot on how well marketers vie for this "last inch."

Mobile Banner Advertising - Thriving yet Struggling

Mobile ads are currently selling like hot cakes due to marketers' rush to catch up to consumer media consumption habits. The myriad rich media variations of mobile banner ads are a quick way to get started in mobile, but I find them to still be the same type of interruption marketing that most users find annoying and doomed desktop banner ads to become commodities traded on ad exchanges.

In the mountains of shining mobile advertising spend growth data you will find rather troubling ROI data and anecdotal stories. The drop in average global click rate from 2+ percent to 0.5 percent over the last two years, even with improved demographic and location targeting, reflects this paradoxical reality. The cynics hint at even more dismal click rates if we don't all have such chubby fingers.

I want the mobile ad industry to thrive. But to be truthful, I also rarely click on mobile ads, even ones for products targeted perfectly at me. It just feels like such a hassle and detour from whatever I am doing and that it will take many clicks to get back to my tasks. In the case of good ad executions, I try to make a mental note to check out the brand or product later, but the reality is I forget them more often than not.

I believe that mobile marketing budgets will continue to grow, but I predict the percentage going to "traditional" mobile advertisements will decrease compared with more engaging and effective forms of mobile marketing vehicles that approach advertising from a fundamentally different angle.

The Future of Mobile Advertising: Not Looking Like Advertising

If advertising content at the bottom of users' mobile screens is deemed intrusive, how can marketers more effectively use the platform as an advertising channel? It will be presumptuous for me to claim to have definitive answers but I will point to three examples that are gaining traction and showing great promise. Not surprisingly, all of them are better integrated with the product and main user experience and provide more utility. Whereas banners seem apologetic to be on the users' screens, these formats come across with more confidence and purpose.

1. Facebook mobile sponsored stories

Freshness: HIGH

A week ago, the world got its first look at how well in-stream Sponsored Stories on Facebook Mobile might perform. According to early trial results referenced in the TechCrunch article by Josh Constine, these Sponsored Stories performed 11x better than Facebook's desktop ads.

I believe this format will continue to outperform mobile banner ads because it is 1. organic/less-intrusive looking, and we're already conditioned to seeing branded pages' stories in our timeline (admittedly this positive sentiment can change later if Facebook allows advertisers to run a lot of these stories; but I think Facebook's culture will not allow this kind of commercial abuse to run rampant), 2. socially-validated (like it or not, the herd mentality moves people to look at content), and 3. powered by Facebook's Open Graph, which is a competitive advantage that no other ad targeting technology can match.

When further integrated in the future with Facebook Local Offers and In-App Payments (for apps and other goods), this ad-impression-to-commerce solution will be a serious force to be reckoned with. Josh Constine does a decent job outlining the case for this new format, so do check out his article and watch this space.

2. Google mobile search with integrated voice calls and maps

Freshness: HIGH

Also last week, Google publicly released findings from a T-Mobile trial campaign claiming that it "regularly saw CTR as high as 13 percent." Google claims this is 100 percent higher than its current search ads. The last time I heard about a 13 percent CTR, people still used Infoseek.

The integration of search results with native phone functions, such as "Click to Call" and "Get Directions" from Google Maps, drove these impressive results. Google already dominates desktop web marketing because search ads are arguably useful content that helps the users find exactly what they need. Tighter integration with common mobile tasks such as calling and locating businesses further increases the relevancy of these search ads and enhances their usefulness to users. By taking users a step closer to completing their key tasks as well to the advertisers' shops, these win-win ads will be strong performers in the years to come.

3. In-App/In-Game mobile rewards

Freshness: MEDIUM

Gamification is now a hot marketing topic. I believe Kiip, a two-year-old mobile rewards network, is offering one of the more interesting solutions for digital marketers to tap into the amount of time people spend on playing casual mobile games. Using Kiip's platform, marketers can offer their branded rewards to gamers (and soon non-game app users) during moments of "achievement." The idea makes full use of human attentiveness and dopamine during these moments for positive brand association - "Congratulations on completing your 1,000th drawing on DrawSomething. You must be thirsty after drawing for so many hours. Enjoy a free Pepsi on us!" The brand and product is featured front and center in the mobile game, and it's all about the users' glory. Don't you feel like a mini-celebrity already?

In most cases, instead of accepting the reward yourself, you can choose to give it to a friend. Who can turn down such a flexible reward system (and brilliant viral marketing mechanism)? According to Brian Wong (founder and CEO of Kiip), the engagement rate for rewards (getting users to provide their email address to claim the reward) is 35 to 40 percent.

Thirty-five percent? Wow. Respect.

With so many users engrossed with their mobile apps these days, Kiip has figured out a smart way to merge its customers' (advertisers') products with the content (games/apps), and offer a relatively easy and scalable way to build positive brand awareness and preference. Along with in-stream branded stories that aid social discovery and mobile search ads, it suggests that the future of good mobile advertising (and perhaps all advertising) is not in the ad space (media) and better targeting, but rather in integrating with the users' core mobile experience.

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ABOUT THE AUTHOR

Andy  Chang

Andy started his digital marketing career as an interactive designer in 1996. Later he spent 10 years with MRM Worldwide in various roles and countries including web producer in Los Angeles, Asia Pacific data and analytics account director in Hong Kong, and director of operations in Shanghai. He was most recently general manager of MRM's Hong Kong office. In 2010 he founded I-Influence to help marketers more effectively leverage social media to grow their online influence, and to increase brand loyalty and advocacy. As CEO of I-Influence, he leads an innovative team in developing marketing technologies at the convergence of social media, customer analytics, CRM, and mobile. A native of Taiwan, Andy has lived half of his life in the U.S. and the other half in Asia.

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