ADOTAS — Ah, the New Year. It’s a time of reflection and prediction: reflecting on how mobile advertising has progressed and evolved, and predicting what is in store for 2014.
Let’s start by looking at 2013. It will be known as the year that the dust settled on some of the fundamental issues in mobile advertising: programmatic (in), the cookie (on its way out), and brand spend (coming on strong).
The way the dust settled tells us quite a lot about how the market will develop in 2014 and beyond. The mobile advertising market has been evolving predictably, if faster than many expected. (eMarketer, for example, has upwardly their adjusted forecasts 4 times since September 2011.) And when I say “predictable,” I don’t mean it is dull – far from it. What I mean is that mobile advertising has broadly followed the blueprint of other high-volume transaction markets: including online, and – to a lesser degree – energy, financial trading, etc.
2014 marks the year where we will accelerate from these important building blocks. We will embrace our media background, get our geek on to fully champion technology and big data, and finish the transition from mobile as a good marketing term to mobile as a strategic channel.
And now the specifics:
1. Programmatic is the new backbone. Programmatic will support upwards of 30% of total mobile ad spend in 2014. Some forecasts are even more aggressive. Programmatic will serve as the basic backbone of mobile advertising (and for all of digital advertising for that matter). Publishers will take advantage of programmatic for both their direct (via Direct Deal and Programmatic Guaranteed) and indirect channels (via exchanges). Agencies and buyers will also continue to embrace programmatic buying. I recognize that we are not that far beyond the debate about whether programmatic will take hold; and yet we will soon be in a place where it is not necessary to even use the word programmatic—it will simply be assumed. The term programmatic will become a non-essential qualifier.
2. We will get comfortable — and then very productive — in a post-cookie world. Mobile advertising never had a cookie and online advertising is losing its cookies now too. There was (and maybe still is) some serious angst from online folk about this reality; but in 2013 the mobile crowd had the ironic luxury of designing a new data model from scratch. We designed an exchange-based model that delivers integrated first- and third-party data, enabling buyers and agencies to build proprietary cross-channel linking and targeting solutions that will help catalyze brand spend.
3. Premium publishers will bias private exchange as a core growth engine in mobile. Premium publishers can — and will — gain immediate leverage from mobile private exchanges. We expect up to 50% of the revenue on the Nexage Exchange to come from some form of private exchange by the end of 2014, growing from 25% in 2013. It is a model many publishers are familiar with in online. It gives them superior brand safety and price controls, and they can easily run complementary online and mobile private exchanges. Massive gains in mobile liquidity mean that private exchange won’t pinch revenues; it will simply allow publishers to better shape the revenues to fit their priorities.
4. Developers will execute smart ad strategies to maximize lifetime value (LTV). LTV is a core measure of business health, and app and game developers are increasingly using it to understand how well they are monetizing their customers. It has become an even more important measure as up to 95% of customers do not contribute to in-app or subscription revenues, and large inactive customer bases weigh on results. The focus on LTV will alter mobile ad strategies. It will lead to a more concrete discussion about smart ad strategies that consider brand safety and ad quality risk; increase re-engagement ads to existing customers to promote usage and in-app purchases; and implement ad ops best practices related to ad type (rich media/video), ad placement, ad frequency, time-outs, and the exposure time of the ad (among others). Smart ad strategies will also affect which users developers acquire, moving customer acquisition from more of a buckshot approach to an approach that targets customers more likely to stay active and productive.
5. Agencies and buyers will get mobile creative. There was hope that investments in online creative, landing pages, and commerce workflow (among other things) would easily port to mobile. They didn’t. And that lack of mobile investment had a direct impact on mobile results. Late in 2013 and now in 2014 a shift is underway. More targeted mobile investments—such as mobile creative (especially rich media and video), mobile sites and landing pages, and a focus on UX to drive mobile commerce and other mobile transactions—will drive immediate and impressive mobile gains.
6. Progress in attribution will open the floodgates. There is a lot of work being done to provide a sound and rationale attribution model to help brands accurately understand the value of their mobile campaigns whether they are awareness/consideration campaigns or call-to-action campaigns. A model is emerging to support both: a pragmatic approach to awareness and consideration campaigns that is much like that in TV, and models that identify post-click transactions for call-to-action campaigns. Together, the emerging model will grow agency and marketer confidence, and will open the floodgates to brand spend. Cross-channel will be a strategic imperative; mobile will be a distinct spend.
Ultimately, the goal is to engage the consumer as they go about their day—as they move across their devices and across media. The customer-centric approach necessarily drives cross-channel strategies. The question is how those strategies will be operationalized for the different media (e.g., TV, radio, online, mobile, etc.). The overall strategy, media mix decisions, and broad campaign management structure will be cross-channel; but the creative, decisioning, tactical campaign execution, and spend will be channel specific for practical reasons. There will be distinct radio spend, TV spend, online spend, and mobile spend—just like there will be distinct channel attribution to govern media mix.
In 2014, there may be more attention paid to the differences of mobile because it is unique, it is new, it hasn’t made its way into marketers’ “muscle memory” yet, and, perhaps most importantly, it is the most personal medium for the consumer.
2014: Full Speed Ahead
2013 was the year when the dust settled for mobile advertising and the road ahead became clearer. This clarity may take the “shrill” out of some of the market debate. It will move the focus from the “what” (what is programmatic) to the “how” (how do I capitalize on programmatic), which is an important and positive step to driving success for each market participant and advancing the market as a whole.