Industry still waiting for mobile ad revolution
Mobile advertising is a business opportunity. Or actually it has been for the last 15 years, and we are still waiting for it. Advertising became mobile through Facebook, Google, web sites, and in-app ads. In most cases it doesn’t offer too much novelty compared to web ads in the same services. What’s going to happen to all the promises about the big mobile advertising revolution?
Mobile ad CPM’s (price per 1,000 page viewers) are low. Location based advertising has been one of the biggest failed experiments in mobile and advertising business. Carriers have created quite desperate concepts to get to the advertising business. Ad funded mobile subscription concepts have mainly failed. People hate getting SMS ads. Advertising inside mobile and tablet apps consists mainly of untargeted static banners.
Mobile advertising is growing regardless. In the UK, for example, the market grew almost 150% in 2011, totaling £526 million ($822 million). The expectation is it will hit £1 billion in this year. It is almost 10% of the digital ad spend and 3% of all ad spend. But almost 70% of that comes from search advertising, and 90% of that goes to Google.
Brands are moving more ad money to digital mediums. Procter & Gamble just reported declining profit, blaming move to more advertising from TV or papers to digital means. Many people see ads through their mobiles and tablets nowadays, but this advertising doesn’t really utilize any unique features of mobile devices. Maybe the word ‘ad’ is not the right word for mobile and social media. An ad is something that interrupts you, but mobile is a very personal device, and you don’t accept uncontrolled interruptions.
We can learn something from other mobile services in terms of how ‘commercial communication’ could work better. People select what kind of news feeds, notifications and content they want to follow in their mobiles. Now they can also set up alerts based on time and location. People also want to go see fun or interesting videos in YouTube. People install mobile apps that help them in their daily activities. People want to interact, share and experience with other people. But it is not possible that all companies that want to advertise offer all these tools with their own apps and services.
It is never possible to give full control to users to select ads, it just limits advertising too much and people are lazy in making that kind of selections. It is never possible to offer only relevant ads, and it is never possible that all ads are so fun or interesting that many people want to share them to their friends. Advertising is also always based on a mass media approach. And today marketing campaigns must use several channels and be able utilize the special features of each channel.
It is possible to profile mobile audiences based on behavior, typical daily locations and demographics. The profiling doesn’t have to be constrained to individual levels, but consist of more like customer segments. Not only should advertisers profile and select audiences, but they also have the opportunity to offer tools to users to create their own filters to select ads based on their segment and context. And it is possible to link ‘commercial communication’ to different useful mobile services like nearby search, payments, loyalty card (or other reward models) apps, apps to manage your calendar, shopping and finding information on products and ads seen.
Maybe we could divide mobile commercial communication to three main categories: 1) ads that must become more relevant and based on user profiles and contexts in browsing and apps, 2) easy ways to use mobile to support ad campaigns outdoor or in TV, e.g. to find more information, and 3) recommendation and discover services in apps that are useful or entertaining.
An issue is that these models don’t really fit the old models for selling and buying ad inventory, planning campaigns and measuring results. The traditional CPM or web era CPC (cost per click) are not enough. Maybe the new big winners of mobile ad era are not tech companies that make smarter location services or analytics, but new type of ad and media agencies that are able to change the models to buy inventory, offer multi-channel campaigns and measure audiences and results in a relevant way, and companies that combine valuable apps with relevant commercial recommendations and information.
Jouko Ahvenainen is serial-entrepreneur and co-founder of Grow VC Group (growvc.com), a new funding solution. In the 1990s Jouko worked for Nokia in Europe and Asia, and then lead the 3G practice at Capgemini globally. The last 12 years Jouko has been an entrepreneur and investor.