Is further consolidation or specialization in store for mobile ad networks?
As mobile advertising moves from an experimental buy to a dedicated budget line item, ad networks serving the space have also matured. Third Screen Media, Ringleader Digital, Ad Mob, Millennial Media, and others have jockeyed to meet the needs of advertisers and publishers.
It hasn't always been easy, given the ongoing transformation of handsets and network infrastructure. The iPhone, for one, has been a game changer. The device can handle standard Web formatting, raising the question of whether publishers require distinct ad network relationships. Is a broad-reaching ad network, such as Platform-A better equipped to bundle and sell ad inventory for mobile alongside other networks? Or do pure-play ad networks such as Millennial Media or Ad Mob have an edge with their singular focus?
An early wave of consolidation beginning in 2006 suggested the many mobile ad networks might be absorbed into large media and advertising conglomerates. AOL acquired Third Screen Media, which is now part of Platform-A, and Nokia acquired Enpocket and is building out a global ad network. In a somewhat smaller deal, Microsoft acquired European ad network ScreenTonic. Then, the acquisition trail grew cold.
Some believe it could get hot again. Greg Sterling, analyst with Sterling Market Intelligence, said he expects to see some big plays happen.
"While Third Screen Media has already been bought, and Enpocket has already been bought...the question isn't which ones will be bought, but which ones won't be bought," he said.
Sterling is far from alone, though not all networks will prevail in the long term.
"Today we see a lot of little startups that specialize in mobile," said Karsten Weide, an analyst at research firm IDC. "A lot of the mature advertising networks on the desktop Internet -- what if these guys decide to get into this business too? Wouldn't they crush the little guys? We don't know. So far it's a very tough environment to be in, and it's so early."
By acquiring Third Screen Media, AOL's Platform-A gained an established mobile ad network with a roster of publishers along with the ability to sell packages across platforms. The same is true for traditional ad networks that built their own mobile ad channels, for instance 24/7 Real Media.
"Strategically, online networks feel the need to be involved in mobile," said Matthew Jones, director of mobile strategy and operations at Gannett Digital.
Google already has a footprint in mobile. The search giant began offering mobile image ads in April. "Google already offers local spot TV, spot radio, spot newspaper ads. It would be a natural extension for them to offer mobile if that becomes a viable delivery channel," said Augustine Fou, SVP of digital delivery strategy at MRM Worldwide. He also believes the big ad networks will move into the space.
Meanwhile, mobile specialists continue to innovate. Advertisers are able to target iPhone users specifically on AdMob's network, just as any other handset or carrier network can be targeted. The benefit is that advertisers are able to take advantage of iPhone's interactive functions such as GPS, mapping, click-to-call, and video.
Whether they continue as a pure play, or become acquired by a traditional ad network, mobile ad networks are starting to prove themselves in the evolving marketplace. "Some of the ad networks are going to rise to the top, and some are not going to be successful. The ones that know how to work with publishers, deliver campaigns, are the ones that are going to really shine," said Jeffrey Litvack, global director of new media markets at AP Digital.
Publishers and advertisers say they've derived benefits from the specialists as well as the big network players. Advertisers say they make decisions where to buy based on the type of campaign.
Velti, a mobile marketing technology provider, bridges traditional and mobile-specific network. Still, it tends to buy more from traditional ad networks said Paul Cheng, VP of corporate development and strategy. Velti, he said, specializes in after-the-click marketing and advertising and the interaction and dialog with consumers. "Consequently, our definition of mobile advertising and marketing is quite different than one-off impressions and landing pages that mobile ad networks offer today," he said.
Velti prefers multi-platform buys over ones focused on mobile such as WAP banner ads. "WAP banner ads don't generally offer that much more specialized a product in terms of feature and functionality than traditional online networks," said Cheng. "In fact, they often offer less information than traditional ad networks, given the limitations of WAP and the capabilities there -- what they do offer is some specialized targeting and demographic information that is harder to get from online networks, so they fit a niche."
By contrast, Ansible, a mobile marketing agency set up by Interpublic and Velti last year, makes more buys with mobile-specific ad networks. "They [mobile ad networks] have been the most aggressive in canvassing the market, providing the education, and trying to make the buying and managing mobile manageable," said Chris Lorenzoni, mobile media director at Anisible.
Mobile ad networks offer value to Ansible not necessarily achieved by traditional ad networks handling mobile. Some of these specialized offerings include targeting of specific handsets such as smart phones and iPhones, or specific carriers.
"This is important if you are trying to drive the user to a site [or] application that will only work on a specific phone, or with a certain carrier...if we wanted to drive consumers to a mobile site that had video, we would target accordingly and avoid bad consumer experiences," said Lorenzoni.
Ansible is using targeting to efficiently drive traffic to a WAP site it built for a technology client. "By targeting only smart phones layered within content buckets that our target is more likely to be reading, we have seen some great interactions from the clicks that have come from the buys," Lorenzoni said.
Each client and each campaign must be considered individually, and both Velti and Ansible do that when they evaluate whether to go to a traditional or mobile-specific network. Publishers have similar considerations.
"Mobile is a distinct channel and needs to be treated as such," said Louis Gump, VP of The Weather Channel Mobile. "That's the only way to be consumer friendly." He said it's not just a matter of shrinking a site to fit a smaller screen, but considering the needs of on-the-go consumers. That context, in turn, has implications for advertising.
Whether a standalone network or part of a multi-platform offering, the ability to sell across platforms will be important as the mobile Web develops. But ad network relationships aren't likely to replace mobile publishers' direct sales anytime soon. Gannett, which sold its first mobile ad campaigns in 2001, and has long been on the Third Screen Media network, sells across print, online, mobile, and out-of home. "We believe we have solutions that cut across many platforms at once, rather than platform-by platform basis," said Jones.
Gannett sells most of its own inventory, and hands the remnant to Platform-A. "We're always going to have more success directly selling for ourselves," he said. It allows Gannet to sell inventory across platforms.
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