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Is That a Billboard In Your Pocket? The ROI Conundrum of Mobile Advertising

Written on
Oct 9, 2012 
Author
Richard L. Tso  |

Okay, pretty much everyone I know these days navigates through his daily life with one eye glued to a mobile device and another to a screen of some sort. I kid you not. Take a look around the next time you’re on the subway or sitting in an airport lounge and I’ll bet you will see very few people engaged in an actual conversation coupled with eye-to-eye contact.

Media companies are saying that visits from mobile phones and tablets have more than doubled in the last 12 months and now compose 20 to 30 percent of overall traffic across the Internet. According to the OpenX Blog and recent infographic, over the last five years, total number of print ads has decreased by 50 percent, while mobile advertising spend has increased 148 percent.

Mobile is certainly not going away soon. According to the IAB, in 2010 mobile only accounted for 2.1 percent of Internet advertising and this is expected to rise to 15.2 percent in 2016. One macro-trend coming out of New York Advertising Week is how mobile is still a relatively uncharted realm for advertisers, and those brands or technology platforms who find the right concoction will be the victors, to be rewarded with riches beyond their wildest dreams.

The introduction last week of new mobile rich media ad standards (IAB’s MRAID) and the recent trend towards liquidity through real-time bidding like Facebook Exchange (FBX), really pave the way for ads on mobile devices. In case you didn’t know, MRAID is short for “Mobile Rich Media Interface Definitions” and is a project to define a common API for mobile rich media ads that will run in mobile apps. Designed to work with HTML5 and JavaScript, ad developers will use this common language to communicate ads actions like expand, resize, get access to device functionalities like the accelerometer, as well as send commands back to the apps they are being served into.

Amidst all this mobile ad hype, one question needs to be addressed first and foremost: Is there really is any ROI in mobile ads? Currently the effective CPMs are right around $0.75 on the mobile Internet, compared to $3.50 on the desktop Internet. Of course, this means that volume needs to be increased exponentially to make up for the difference in ad delivery platform. But how is this achieved?

Several firms are exploring how to reach consumers on mobile by focusing their attention on creating branded mobile content over mobile ads. In the case of Gawker Media and Atlantic Media, both are selling small ads on a few mobile properties, but each have sites where the only monetization is coming through posts that are brand-sponsored.

In order to bridge this revenue gap, the new mobile ad market and the rise in the use of ad exchanges require a more sophisticated approach for advertisers and agencies. There is a need for enhanced analytics and modeling capabilities to get the holistic view into consumer behavior and decision-making, one that improves the performance of both ad buyers and sellers – and the market.

One company called Nexage just introduced what they call “a next generation analytics capability that goes beyond today’s higher-level observations, to enhance both buyers and sellers’ ability to see and control their business and to create the most intelligent market in the industry.” Nexage’s analytics platform crunches data about 500 million auctions a day and then runs predictive algorithms on the back-end to identify trends that can be leveraged in future ad buys.

So the future of mobile advertising is much more complex than most of us realize. Many buy into the hype after only taking a superficial glance at the industry. Yes, it holds a lot of potential, but refinement is needed in order for it to be truly disruptive. Today, the market is in need of an elegant solution that:

  • Addresses the low average CPM of mobile without taking a short-signed approach of forcing scale through brute force.
  • Provides platform-agnostic mobile ad delivery and distribution from one portal.
  • Integrates the transparency and efficiency of ad exchanges to focus spend.
  • Harnesses social for better targeting through personal connections.

The company or companies able to directly address these needs will be the true winners in my book. Whew, is that too much to ask?





Richard L. Tso is a reporter for Adotas and an avid writer covering the intersection of technology and advertising, fashion and music. With over 12 years of experience in the Advertising, Marketing and Public Relations industries, Richard has held executive positions at global agencies and technology companies and is founder of the interactive communications firm Pseudosound Consulting LLC. A classical cellist and painter, he believes that sometimes sound carries more weight than words. He is a graduate of Stanford University.

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