It’s a freight train, and it’s coming fast. A recent comic strip from Adexchanger sums up quite well the growth in mobile, and how it’s affecting publishers and advertisers alike.
With behavior and layout different in mobile, publishers have been required to rethink their overall product, and in turn, their ad products. The current landscape, with some exceptions discussed later, still holds to the traditional banner model. Many ruin user experience by requiring multiple page views to consume short pieces of content, trying to increase the lifetime value of users through clunky mechanisms. This simply doesn’t cut it anymore.
Mobile “Shmobile” Market Share
In the latest mobile ad revenue report from eMarketer, Google has a stronghold with an estimated 53 percent market share for 2013. According to Q3 earnings, roughly 40 percent of traffic to YouTube was occurred on mobile devices versus 6 percent two years prior. Stronger CPMs for pre-roll advertising is helping to contribute to their strength in the marketplace. Though, the 2013 figure is partially due to a change Google made in February to it’s AdWords business that disallows advertisers from targeting desktop/mobile separately, thus forcing ad dollars onto mobile. This change somewhat skews the true leaders in the space.
Google may be able to leverage their hold of the desktop to benefit them on the mobile side, but if they do not innovate the ad products they currently offer, they will lose market share to folks that are. And while Google ads run on numerous sites/mobile sites, trying to spark mobile innovation across properties in which they do not control stymies efforts.
What is recognizable in the eMarketer numbers is the tremendous growth in Facebook’s mobile revenue. In Q2 2013, Facebook’s mobile revenue accounted for 41 percent of total revenue. What makes this even more incredible is that 2012 was the first year Facebook had any mobile offering. When looking at quality versus quantity, Facebook is by far the leader in the space. Their scale allows them to truly go above and beyond the banner in a way Google cannot. For example, Facebook will soon be testing autoplay video ads in their newsfeed and they will soon look to monetize Instagram.
What’s interesting in the eMarketer numbers is the declining growth attributed to “Other.” There are fewer players in the space that own the market and when looking at Millennial Media’s share (considered a big boy), they only take home 0.72 percent of the market. Unfortunately, these companies share the same lack of control with regard to ad products on third-party sites that we see with Google.
What Mobile Market Share Doesn’t Address
While these numbers look at the leaders in the mobile ad space, they don’t touch on the issues and concerns plaguing publishers and advertisers.
Complicating things even further are the misaligned goals between publisher and advertiser. Publishers are trying to grow audiences in the hopes of monetizing; once they reach critical mass, advertisers want out of the box (intrusive) custom integrations that drive users away. On the desktop side of the business, these integrations are more palpable to users, due to larger screens and callousness towards ads. With mobile though, the limited real estate hinders these ad products and in addition, user expectations are different.
So what can publishers and advertisers do today to get ahead of the mobile freight train?
- Native Content Marketing/Recommendation: Many publishers are implementing content recommendation products to earn revenue on users exiting their sites. While eCPMs are still low, the fact that publishers can include multiple units on one mobile page allows for higher RPMs. This caters to all advertisers even while the definition of an advertiser has broadened. Look at this space and you’ll see that a majority of buyers on these platforms are actual publishers.
- Conversational Media: Brands are increasingly finding unique ways to reach customers. In addition to engaging conversations on social media, brands are also using blog activation companies, rep firms and PR companies to tap into smaller, more engaged user bases. These campaigns ask hundreds of small bloggers to engage with advertiser products and write about them.
- Branded Content/Product Placement: Brands are also propositioning large publishers to create advertiser friendly content, sold as such with incremental spend on getting views on the content. Lastly, brands are creating the content themselves and injecting their products in a context that make sense to their audience (food products and cooking shows), and sometimes even when the context doesn’t fit (energy drinks and extreme sports). These types of deals are typically designated to larger publishers, but grab them if you can.
- Social Video: In an effort to get views on branded video content, advertisers are paying on a cost-per-view (CPV) basis to get distribution. This wave has hit the desktop space but is still relatively new in the mobile space. These CPVs are lucrative and while you may not be the company creating this content for advertisers, you sure can help get distribution.
- Mobile Video Pre-Roll: Mobile pre-roll CPMs can pay $7-$10 from ad networks, and can be as high as $20 for in-app pre-roll. Direct sold pre-rolls are even north of these numbers. The point here is that video production is quite expensive and original content creation may not be an option for smaller publishers. These publishers can look at content syndication products to offer video content (smaller payouts). Also, take into consideration mobile behavior. Offer short, “snackable” video for mobile, with slightly longer form on tablets. Shorten the content experience in hopes that more content is consumed in any given user session (more ads too).
Other Ad Formats:
- Sponsorships command high CPMs but are tough to sell. They’re usually designated for the leaders within specific categories and typically sold by direct sales teams or direct rep firms.
- Full page interstitials: advertisers should love these units, as they essentially own 100% of the users’ screen for a short time period (better than a road block). They perform well, pay well and are sold programmatically.
- In-content units tend to perform quite well, pay decent CPMs and are sold programmatically.
The Real World
Two real-world examples of publishers employing strategies like the above are ESPN and Buzzfeed. Now, there are other reasons contributing to the success of each in mobile; ESPN has scale and an essential monopoly in the sports space, and Buzzfeed was way ahead of the curve with regards to the native advertising space and is a true leader in virality. What they highlight as examples of publishers though is their success despite their polar opposition in strategy. Simply, what works for one publisher may not work for another.
ESPN constantly sells full page and 300×250 interstitials. You can see their video section focuses on shorter snackable pieces and every post will include a video, as well. Lastly, they sell sponsorships around certain sections/sports, typically giving an advertiser 100 percent share of voice along with logo integration.
Buzzfeed sells native content to advertisers and ties their deals to a context, i.e., 15 Amazing Superpowers That Shelter Pets Have, sponsored by The Shelter Pet Project (essentially cat memes). There is heavy emphasis on other advertiser groups and you can see many of their sponsored stories are from publishers.
Lastly, Buzzfeed concentrates their editorial strategy on lists; snackable content fit for the shortening attention spans of their audience.
Most publishers will not meet the criteria of the above examples (where most publishers fall); their answer is somewhere in between.
Having dedicated sales teams will always help (or mask short-comings), but publishers who do not have these resources available to them should look for products they can implement through third parties. The key here is to know your audience. Compartmentalize your audience based on medium of consumption. Offer separate experiences based on the user and optimize to those ad products that maximize ROI.
In the new mobile reality, publishers and advertisers are being forced to engage users in different fashions. Some strategies will work and others will not. While a young market allows for innovation, it also comes with risk, so move swiftly, try everything and stick with what works for your users.
Editor’s note: updated to add information released in Google’s Q3 2013 earnings call.
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