Mobile ad networks are a stop-gap: the real opportunity is elsewhere
We're delighted to have Damian Glover, a writer for the Economist Intelligence Unit, as 'analyst-in-residence' supporting the 'Telcos Role in Advertising Value Chain' event in London this Thursday (29th March), run in partnership with the GSM Association. Here Damian shares his thoughts on Mobile Ad Networks:
To Boldly Grow...
Mobile advertising networks such as Admob, Third Screen Media and Nokia's recently launched Ad Service are predicated on large-scale media consumption on mobile devices. Whether or not this transpires, I believe media-hosted mobile advertising will prove to be a sideshow to the main event.
It's easy to understand the current interest in extending the advertising network model to mobile. Fixed-internet ad networks such as Google AdSense, Advertising.com, ValueClick, Tribal Fusion and BlueLithium have made rapid inroads into the digital advertising market during the past few years. According to comScore, at least 15 ad networks each reach over a quarter of everyone online today. Moreover, this reach is being translated into revenue: ad networks now account for a quarter of online display advertising, according to e-consultancy.
The rise of the online ad networks has been driven by the explosion of blogs, niche interest sites and other long-tail web content, coupled with a homogenous delivery platform (the web browser) that permits audiences to be tracked and ads served across a diverse range of properties.
It's advertising, Jim, but not as we know it...
However, two conditions make mobile advertising very different to the on-line world:
1. Media ownership is likely to be more concentrated on mobile... Greater resources are needed to produce content that works across a range of devices, creating significant barriers to mobile publishers. In addition, recent research and analysis reveals a strong bias among mobile internet users towards messaging applications, maps and social media - services that have favoured the emergence of a handful of dominant destinations on the fixed web.
2. ...but the delivery platform is more fragmented. With mobile internet users focusing their attention on a relatively small number of properties, and accessing these via a proliferating range of devices and networks, mobile advertisers are more likely to be impacted by the fragmented delivery platform than by fragmentation of the media landscape (the issue addressed by advertising networks). At the same time, the bigger mobile media owners have little incentive to cede control of ad sales to third parties (Third Screen Media recently acknowledged it is seeing a trend of mobile media owners choosing to stay outside its ad network and rent its ad serving technology instead, as Fox News has done).
Mobile delivery platform fragmentation manifests itself in, for instance, cookies being handled differently (or not at all) by different mobile browsers, web-originated MMS messages being blocked by some operators, video stuttering on some handsets while playing smoothly on others, and a litany of other headaches. Some, but by no means all these issues are being addressed by specialist solutions providers. The lack of consistent support for cookies is looming as a particularly intractable problem for "traditional" mobile marketers.
I need more power, cap'n...
While displaying ads on mobile websites may initially be an effective brand awareness tactic, this is likely to be largely due to novelty, rather than the limited impact of a 150×20 pixel banner. Mobile marketers point out that the key purpose of mobile ads is to drive interaction with the brand - yet what will mobile users be interacting with? Only a small number of brands currently have a dedicated mobile internet presence; even fewer can justifiably claim to offer a compelling mobile experience.
A more fundamental hurdle to the mobile ad networks - and indeed to traditional advertising being transferred successfully to mobile at all - is that advertisers do not know mobile users sufficiently well to understand what they are likely to find interesting, useful or valuable. This is an essential requirement if mobile advertising is to avoid becoming a counter-productive nuisance. Mobile ad networks simply cannot provide this level of insight into mobile users.
This is illogical, captain...
The real opportunity is for mobile devices to become digital assistants that learn about their owners and anticipate their whims - a possibility hinted at by Joe Uva, the CEO of ad agency OMD, when he outlined his vision of a "media concierge" service at the iMedia Brand Summit as long ago as February 2005.
The only entity in a position to achieve this level of understanding of a mobile user is their mobile service provider. Mobile operators are (or soon will be) the gatekeepers to such key enablers of advanced mobile advertising as customers' identity, presence and location information. Moreover, they are the only companies with a sufficient level of trust to make credible claims about protecting such extremely sensitive data (their customers may complain about high bills and poor customer service, but rarely dispute call charges).
Mobile advertising needs to be promoted as, and perceived by users as, a valuable service. Operators need to own the customer experience - after all, they will be answerable for ads targeted and delivered using their capabilities. Everything about the service must be transparent, from who is providing it to how users can adjust or cancel it. The overriding need to protect the user experience means ads can't simply be pushed to users by third party advertisers. Rather, ads must be pulled from an ad server (possibly, from many ad servers) by the operator and delivered to users, based on the operator's unique understanding of which ads are likely to be most relevant at the instant of delivery.
The system that performs this task will probably need to be located within the operator's network. Certainly, the operator will need to put in place dedicated resources to actively administer the business rules that determine when advertising is triggered, and constantly refine these rules based on customer feedback. In short, only the operator is qualified to judge which ads should be delivered to which users.
This turns the notion of targeting on its head. Traditionally, advertisers are the ones who deem which kinds of consumers should receive their messages; in the coming era of advanced mobile advertising, operators will make the call about which messages to send to their customers.
In short, it's down to the operators to leverage their network capabilities, customer records, transaction and behavioural data and other unique assets to develop a deep understanding of their customers and what they're into - with the customer always in control of how, if and when their data is used.
Rather than aggregating inventory or "eyeballs", the greater opportunity for mobile advertising networks is in aggregating advertising content. The most successful ad networks will be the ones who provide the most contextually rich offers for mobile operators (and eventually web media owners and IPTV service providers) to deliver to their customers. There will also be an opportunity for niche players to specialise in helping advertisers enrich the metadata associated with digital ads.
Warp Speed 10 please, Scottie
A number of things need to happen before this becomes a reality. The mobile industry needs to define a common language (probably an XML schema) which can be used by advertisers to communicate an ad's properties, including time codes and geo codes. Meanwhile, advertisers need to work to include as much rich information as possible with product and offer details. APIs provided by Point of Sale software vendors already provide retailers with the basic infrastructure to do this.
Of course, none of this will happen overnight. Advertisers will continue to tap mobile operators to reach the "young affluent and fun" demographic, and the nascent market for basic targeting of mobile users served by the mobile ad networks will undoubtedly continue to grow in the short to mid term.
If advertisers can no longer dictate who their ads are seen by, what incentive will they have to provide their ads to a third party aggregator with no inventory or eyeballs to their name? In a word, results. This kind of advertising will simply work. Ultimately it comes down to people knowing themselves better than advertisers do, and choosing to share aspects of their identities and lifestyles with one, trusted service provider.
Damian Glover helps technology, media and telecoms companies implement digital content publishing activities to establish thought leadership and drive lead generation. He can be contacted at firstname.lastname@example.org.