October 25, 2007
Hold The Phone! - Third Screen Media
October 2007
Mobile Advertising Technology Providers
In the first four installments of Third Screen Media’s byline series for The Messenger, we reviewed the mobile advertising ecosystem and three of the four working parts that are crucial to the market’s efficiency and success. First, we spoke with Matt Jones, director of mobile strategy and operations for Gannett Digital, to discuss the opportunities and challenges that face publishers in the mobile world. Then, we learned about the carriers and their unique position in the ecosystem through a Q&A with Richard Williams, the executive director of digital media operations for Verizon. And in the latest byline, we provided our perspective on technology providers and their essential function as the enabler of this ecosystem. In this final installment of the series, we’ll shift our focus over to the agencies—those making the decisions to bring advertising campaigns to the mobile platform.
Consumer’s media consumption habits have become more sophisticated as time shifting, media meshing, and now technology have place the consumer in control and made targeting an increasingly fragmented audience a media buying nightmare. Mobile promises to solve some problems through it’s ever present “always-on” characteristic that reaches an on-the-go audience, but simultaneously there are new complexities to adding mobile to the media mix.
Buying and evaluating mobile ad opportunities has been the media planner’s biggest complaint. The mobile Internet has grown to over 10% )30MM) of the US cell phone carrying population. That’s a considerable sized audience, and a reason that advertisers have moved beyond the test-and-learn phase with big brands now dedicating 7 figure advertising budgets to mobile advertising efforts.
Identifying those 30Million users has proven far more difficult than in the early days of the wired web. Due to the proliferation of mobile devices, the mobile audience is far more fragmented than the simple ‘early adopter’ characteristic that was prevalent in the Internet’s halcyon days. Already familiar with the information available in a networked world, the audiences that are adopting a mobile lifestyle are not just IT guys and gadget geeks; mobile moms, business executives, recent college graduates, and ethnic minorities are among just some of the audiences that compose the mobile universe today. Each of these diverse and fragmented groups have embraced mobile in different ways.
Understanding how and what advertising opportunities to purchase has made life difficult on the mobile media planner. Nielsen’s announced purchase of Telephia last month is testimony that advertisers are seeking more data on mobile audience behavior and characteristics. Agencies continue to struggle to find data that is granular enough to evaluate campaign plans. Most advertisers still locate mobile opportunities through word-of-mouth and vendor outreach.
The mobile advertising network has become the cornerstone of mobile marketing plans. Consolidated networks of several mobile publishers are sold as single package programs that allow advertisers to test several sites, creative opportunities, and targeting multiple audience segments. With the efficiency of scale, the mobile ad network reduces risk to the advertisers and optimizes performance while making life easier on the media planner who is spared the need to negotiate with dozens of small mobile sites and evaluate opportunities.
The other complaint Agencies have surrounds pricing. Many buyers are surprised at the higher than expected CPM’s in mobile advertising. After coming to terms with the cost of an average $15 to $30 CPM for a mobile campaign, media buyers are even more surprised when they are informed that their desired positions are either no longer available, or they must wait 3 months for availability. It is a simple issue of limited supply and high demand in a fragmented market; the most sought positions on limited premium mobile content continue to sell-out at high rates.
Also leading to the higher than expected CPM’s, the mobile advertising industry boasts click-through rates typically between 2%-3%; ten times greater than the average click-through rates of the traditional Internet. Industry analysts have long stated that these CTR’s would begin to drop as publishers create more content, and audiences grow. Industry insiders have yet to see this phenomenon in reality. CTR’s have remained steady for several years.
Evidence of mobile advertising’s momentum can be seen through Discovery Communications’ commitment to 12-14 new mobile campaigns, in addition to the two already in place for DEADLIEST CATCH and the Discovery Health Channel. Early adopters, such as The U.S. Navy, Burger King, Toyota and Quaker State have paved the way for brands that are now spending in the millions for repeat mobile advertising campaigns. PHD, the advertising agency behind Discovery’s mobile campaigns, as well as MindShare, the agency behind Unilever’s “I Can’t Believe It’s Not Butter’s” highly successful mobile campaign that put Italian heartthrob Fabio onto mobile phones across the country, recognized the mediums effectiveness and was rewarded with impressive click-through performance for their forays into mobile.
Measurement and analysis is a central piece of any advertising plan, and it’s something clients demand to see. High click response rates are fantastic weathervanes, but tracking ROI on cell phones for most products is a challenge. Can Unilever actually prove that display advertising with Fabio on a phone sold more butter? The industry is making leaps and bounds through development of brand measurements using Internet standards. By attaching mobile ad effectiveness studies to campaigns, advertisers are proving that mobile not only cuts through the clutter and get noticed, the ads also increase purchase intent.
In addition to convincing their clients that mobile advertising is effective, the advertisers must accept new responsibility as well. A call for protocol and standards is being heeded by the MMA, who published Mobile Advertising Guidelines in June 2007 for public review. The MMA has not only worked tirelessly with ad agencies to ensure the delivery of advertisements that are highly relevant and deliberately unobtrusive, but also with the carriers, for whom the consumer is king and who are advocates of a positive subscriber experience. The MMA and ad agencies are working to ensure mobile advertisements do not hinder or interfere negatively with the customer’s third screen experience. So far, this has been achieved, due in large part to a collaborative ecosystem.
The next few years will present a huge test for the ecosystem, especially for advertising agencies. Clients are already beginning to add new campaigns at a rapid pace and calling for the next new thing. Advertisers will need to tap their creativity to find novel, innovative advertisements for the small screen and new devices and services. In addition, advertisers will have to comply by fairly strict guidelines that aim to protect the consumer’s experience on the mobile phone, the consumer’s most personal device. Regulations and success for the industry largely depends on the continued efforts of the critical parts of the mobile advertising ecosystem as they work together to provide the best experience for themselves and the consumers.
Looking to the future, the results and now attainable analytics from mobile advertising are beginning to speak for themselves and the remarkable industry growth in only the past two years demonstrates the increased willingness to accept the medium as a necessary ingredient for every comprehensive advertising campaign.
As we conclude Third Screen Media’s byline series on the mobile advertising ecosystem for The Messenger, we hope you enjoyed reading about the publishers, carriers, technology providers and advertising agencies as much as we enjoyed writing about them. There are fresh and innovative campaigns created everyday as the mobile advertising industry continues to mature and generates results for all parties involved. The future of the mobile Web will be exciting and holds many challenges for the ecosystem to overcome as mobile advertising ensures continued content development, without putting costs on the consumer.
We’ll see you again in two months, when we tackle another issue facing our unique and growing industry.
