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A Client's View of Mobile Advertising

  |  July 23, 2012   |  Comments   |  

Advertisers must ask what is the value of an impression on mobile sites or within mobile apps?

Slicing fruits is so difficult. I can keep up with slicing one apple being thrown, and perhaps a pineapple and orange flung simultaneously in front of me. But I struggle with slicing three to four fruits while avoiding the random bomb. Gosh, it's Game Over with 50 watermelons and I get a box that appears in the center of the screen.

Now how are slots related to a fruit slicing ninja game? I'm skipping this because I want to be a master fruit ninja! Haiya!

As developers and content publishers gear up to reach the increasing number of mobile users worldwide, it is inevitable that advertising is mentioned as the sine qua non to mitigate rising operating and investment costs to create the necessary distribution scale so as to secure market share in the highly competitive consumer mobile services industry.

Interestingly, the push for mobile advertising is greatest from technology firms hoping to offer easy-to-use platforms to monetize mobile assets. In particular, mobile ad networks and exchanges are positioned as cost-effective tools for digital media buyers to reach a wide swathe of mobile sites (and applications) vis-a-vis the usual conventional approach of buying direct into a large publisher or application service provider. As the scale and depth of ad networks (and exchanges) increase, media buyers are encouraged to invest in demand-side platforms (DSP) with real-time bidding (RTB) tools to improve their ROI.

Similarly, supply-side tools to manage the yield of advertising real estate are starting to creep into larger sized mobile publishers and application developers. The pricing transparency and standardization of advertising units effectively commoditize the media buying process.

Trade-Off

As the pace of innovation in digital rich media advertising continues unabated, the pace of digital users (in particular mobile) who accept advertising as a natural trade-off for "freemium" content and services remains mixed. Indeed, it is perhaps easier to find digital consumers of free content and services who hate to be interrupted by advertising when their intention is to engage with the application or mobile site.

This explains comparatively low click-through rates (CTR)  relative to the size of ad inventory available for advertisers. An often-used solution to increase the CTR is increased targeting and segmentation to raise the probability of engagement - serving ad units that match the target characteristics of the individual mobile user.

For example, the targeting methodology of mobile ad networks and exchanges could take advantage of the location of the mobile handset (because it is connected to the mobile Internet network) and deliver "optimized" contextual call-to-action messages that relate to a reasonably defined geographical perimeter of the user. Invariably, the argument is that targeted mobile users who clicked such ad units will enter a purchase funnel, leading to higher engagement and increased conversion.

These are just a sample of the many data sets needed to optimize the effectiveness of an advertising unit. I am not surprised if this sounds daunting to marketing professionals on the client side. The degree of analytical work to create sensitivity analysis to test different pricing strategies to achieve the highest possible ROI for its mobile ad spend is perhaps beyond the capabilities of small to mid-sized marketing departments. Not surprisingly, much is dependent on ad networks and exchanges to improve the clients' ROI, with larger advertisers mitigating this "analytical gap" through their media agencies.

Judge by Performance

However, I would argue that advertisers could still make a high-level analysis to estimate the value of mobile advertising inventories. Specifically, advertisers must ask what is the value of an impression on mobile sites or within mobile apps? This value presumably links performance metrics unique to the advertiser, and should not be based on inventory scarcity attributed to pricing determined by DSP and RTB tools. More importantly, the cost of scarcity, influenced by targeting parameters such as users' location, limited demographic profiles, and usage histories must demonstrate the value of this segmented traffic vis-a-vis undifferentiated ones. Inevitably, the client must be convinced that their mobile ad spend delivers a compelling correlation to performance. To this end, the performance metric defined by the client is the conclusive barometer of success for such mobile advertising initiatives.

Collaboration and Disintermediation

As the mobile sector progressively matures to the same degree as the PC-based Internet environment we associate today, the value of a commoditized standard ad unit on a mobile website or app/service will be challenged by alternative formats that bypass ad networks and exchanges. One such format will engender mobile publishers and developers offering contextual segments of their proposition to advertisers. In particular, "freemium" games are ideal for such prescribed contextual advertising as the visceral gaming experience is determined by digital elements that can be "sponsored" by advertisers. Indeed, mobile publishers and application developers will be rewarded by building the scale and reputation to attract advertisers directly. In this way, the value of such contextual mobile advertising is determined by the creative collaboration between the client with the publishers and developers.

Indeed, it will not surprise me that the fruits I am supposed to slice in Fruit Ninja will come from a shopping bag from the nearest fruit grocer or supermarket. The name of the fruit grocer will occupy significant mind-share after consecutive rounds of slicing digital fruits flung in front of me (rather than playing slots!). To me, それは素晴らしい事です (that's something)!

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ABOUT THE AUTHOR

Darren Yan

With more than 16 years of experience in mobile, digital media/advertising, and e-commerce, Darren has successfully developed and launched pioneering mobile Internet initiatives such as subscription-based mobile news services, location-based advertising, behavioral targeting using consumer analytics in Singapore Press Holdings, SingTel, Cisco Systems, and DBS.

At InterContinental Hotels Group (IHG), Darren will serve as the regional subject matter expert on mobile and drive overall utilization of mobile to increase revenue and engagement in Asia, Middle East and Africa (AMEA). His mandate includes developing, implementing, and managing mobile marketing strategies to generate greater brand awareness and revenue through owned, paid, and earned media.

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