Resources for Mobile Advertising
Borrell: Local Mobile Ads To Double This Year
Posted by: | CommentsBusiness spending on mobile-marketing will more than triple this year as the category starts a soaring 5-year growth trajectory, according to a Borrell Associates forecast to be released this week. And local mobile spending will double in 2010 as it begins a similar 5-year boom.
“If this were a drag race, the pacer car just exited the track and everyone’s hitting the gas,” said CEO Gordon Borrell. “With mobile devices already in the hands of 80% of consumers and devices suddenly becoming more graphical and useful, local mobile marketing appears to be on a very fast jag.”
It’s a breakout year for a new disruptive marketing channel, says Borrell’s 2010 U.S. Local Mobile Advertising & Promotions Forecast. Starting with mobile coupons, mobile spending will eat into print Yellow Pages and direct mail revenue much as the Internet has disrupted newspapers. It may even pull dollars away from the Web-based advertising that spawned it.
Nationwide, mobile marketing will jump from $2.7 billion in 2009 to $9 billion in 2010, the report predicts – and then will rocket to $56.6 billion by 2014. Two-thirds of the spending will be various forms of advertising, but one-third will come from promotions budgets to enable coupons, contests and discounts.
Spending by local businesses will follow a similar path at a slightly slower rate, jumping from $285 million in 2009 to $586 million in 2010 – and then spiking to $14.7 billion by 2014.
“It all begins to look a lot more local,” said CEO Gordon Borrell. “Marketers really understand that the people who are going to buy from them are 5 or 10 miles down the street. Even national marketers are targeting local.
“ Today at lunch I’ll go on my Droid phone and touch an app that will guide me to coupons within 10 miles of wherever I am, whether I am in Orlando or Williamsburg or New York city. It’s much more powerful than a stack of coupons that are only for businesses within a 10-mile radius of my house.“
Adoption of this new marketing medium will be the fastest yet, the report predicts, with several factors driving the growth:
- A pre-installed user base. With 80 percent of the population using cell phones, and 31 percent already switched to smartphones, Borrell believes mobile ad share could reach dominant penetratration faster than any medium before it, including broadcast TV and the Web.
- Ease of use and convenience of portable devices.
- A proliferation of new mobile devices and apps. “Think beyond phones, PDAs, and notebook computers,” the report reads. “Gaming devices, e-readers, cars, and cameras can also be included.”
- What about tablet computers like the iPad? “Yes, that’s what drives a lot of the future growth,” said Borrell. “These projections are for personal interactive devices – but not out-of-home screens that ‘move’ in elevators, taxis or buses.
Borrell Association projections are based on a mixture of media companies’ receipt-level data, plus surveys and other research that tracks business spending. “We dig deeper into more sources and deeper local sources than other projections,” Borrell said. “That’s why our numbers tend to be a bit bigger than other numbers.”
“It’s like trying to count the trees in a forest. You can take an aerial snapshot and get a pretty good count of the big trees, but we’re getting in there and counting saplings and new growth in the forest as well.”
Borrell is bullish on mobile coupons to kick-start the growth, particularly for small- and medium-sized businesses.
“Anecdotal results are already there, big time, for the few SMBs who have tried it.” reads the report. “Redemption rates for mobile coupons are 10x that of mail- or newspaper-distributed coupons. When a restaurant in Texas pays $37 to send out 500 text messages for a “buy-one/get-one-free burger” offer and gets 60 people to walk in the door, for incremental revenue of $1,000 per day, there’s something dramatic going on.”
Beyond the obvious appeal to consumers, Borrell sees coupon functionality growing as devices mature. “The simplest thing – texting – will take hold first,” he said in an interview. “With all the other things like the iPad, what will happen likely is newspapers and other companies will port over all the content and put some ads on it. But the winners in the end are people who come out with completely new applications. …
“The winners in the end will be the people who build the business to the exact specifications of what mobile can do for it.”
The rapid rise of mobile media gives great opportunity to companies that make the most of it, Borrell said.
“Yellow Pages could be big winners if they transfer customers from one medium to another,” Borrell said. “The biggest potential loser in this is direct mail, particularlly with couponing. … Actually, big losers are any local media companies that don’t understand or misinterpret the power of digital marketing.”
Many media companies are shifting from “selling ads” to acting as marketing and research consultants to help business understand the explosion of interactive options, Borrell said. “Local advertisers are even more confused than media because they’re getting so many opportunties thrown at them. We recommend that sales forces explain what’s going on. …
“They’re not saying ‘How much would you like to buy?’ They’re saying ‘How can we serve you?’ …
“Everyone underestimates the confusion for the local advertiser. If you have a local sales force, you have a much stronger opportunity to sell. It’s just much more comfortable for a local business face to face than with someone they don’t know on the phone. Of course, the results have to be there, as well.”
What about media companies who don’t embrace this kind of change?
“It feels like being nibbled to death by ducks.”
Source: NewsCheckMedia LLC. – Borrell: Local Mobile Ads To Double This Year
Will 2010 be mobile advertising’s big year?
Posted by: | CommentsJanuary 10, 2010
The Mobile Advertising Ecosystem
Mobile ads can be delivered in the form of messages like SMS and MMS, banner and full-page ads on Mobile Internet sites, mobile search ads, in-application advertising and mobile video. Mobile ad impressions are generally bought at cost per thousand (CPM) or cost per click (CPC). The main measures of success are the number of users reached, click through rate (CTR) and the number of actions — for example, number of downloads — prompted by the ad. SMS and MMS are still considered the most effective advertising channel, with correspondingly higher pricing. Most users will read at least part of an SMS received.
Mobile ad networks distribute mobile ads to publishers like mobile websites, application developers and mobile operators. The cheapest way to advertise is via a blind ad network where advertisers can’t pick specific publishers but can often target by country and content channel. Admob and InMobi fit into this category. Premium ad networks like AOL or Nokia focus on a limited number of prestige publishers like mobile operators and specific big-traffic sites, and the advertiser pays extra to target those sites specifically. Some larger publishers and mobile operators run their own ad platform, like the one supplied by Amsterdam-based startup MADS. There are also many small players who supply niche services. Mobclix, for example, is an ad exchange startup targeting smart phones via multiple ad networks. Finally, there are the publishers themselves such as eBuddy, maker of one of the most popular mobile IM applications.
Where Is the Money?
The US mobile ad market was estimated to be around $416 million in 2009. While the majority of US mobile ad spending still goes to messaging like SMS, spending on applications and search is on the rise. MADS Sales Director Jasper de Vreught says, “We do see a development where the average spend per campaign is significantly increasing. CPC will become more important, whereas in the premium model, CPM is now still the predominant charging model.“
Mobclix supplied me with some data (not shown here) on the highest yielding application categories in October 2009. This data was from 4000+ applications with a 70% reach across iPhones and iPod touches.
The most popular finance applications (the top 100 serving ads) made 4.5 times the average advertising revenue of the top ad-serving applications overall, while social networking applications make 3.9 times the average and education applications 3.7 the average. So if you are a developer trying to make revenue from advertising, social networking looks like a great choice, since it has high ad revenue and fewer competing applications (2,098 as opposed to 17,147 in entertainment) than other categories. Gaming, on the other hand, looks like it is becoming saturated.
The most popular entertainment applications only make 0.8 times the average top applications. Despite very high CTR, utilities were also only making 0.8 times the average in October 2009 because of a lack of high-end advertisers. However, by December 2009 this had increased to 1.7 times the average due to an increase in advertisers focusing on specific types of users and apps.
IM application eBuddy recently started serving mobile ads. According to eBuddy founder Jan-Joost Rueb, “Mobile is rapidly growing even though we started only a few months ago. Mobile advertising revenue is higher than revenue from [eBuddy's non-ad-supported] pro versions right now. ”
Targeting and Technology
One of the most attractive characteristics of mobile for advertisers is the opportunity for more accurate ad targeting. Typical parameters include carrier, device type and mobile channel, with the possibility to add location, behavioral, and demographic information (the latter often requires user opt in). Frequency of use, reach and usage context are the important factors when inserting ads into applications. However, MADS founder Ashu Mathura contends that current targeting software still only does about 25% of what is needed.
MADs did a H&M campaign in which ads were served to two groups of users: all users, and those who had already clicked on a H&M ad. Unsurprising, the campaign has a much higher response in the second user group. Based on this insight, it might make sense to create a sequence of ads as part of a campaign, where a second ad in the sequence is only served to users who have clicked through the first. I could certainly see myself being interested in ads that remind me when the H&M sale starts and offers a voucher if I make it to the second or third ad. MADS also sees potential in the idea of users opting in for certain types of ads in return for rewards like discounts.
Interesting developments on the technology side include interactive video advertising (introduced last year by Admob) and making greater use of smartphone features such as the accelerometer and camera, such as for augmented reality ads.
Mobile Advertising in 2010
Most players see Google’s Admob acquisition as an endorsement of the mobile ad market in general. InMobi, which is the only ad network to reach profitability other than Admob, thinks that the industry is at the 1.0 stage. According to Anne Frisbee (Head of North America at InMobi), the acquisition has actually occurred “quite early in the evolution of the industry”.
Jasper de Vreught from MADS says that in the future “there will be a clearer division between two business models: the “long tail model” like AdWords and AdMob, and the “premium model” like Doubleclick and MADS, which are aiming to build a network of premium publishers and attract premium advertisers. MADS’ Mathura also says that while there is a lot of focus on downloaded apps right now, most of this functionality is likely to move into the cloud, and there’ll be a corresponding impact on how advertising is done.
According to eBuddy, the media agencies have still not really embraced mobile and tend to stick to the old and proven formula. Rueb says “It’s important for eBuddy to get the premium advertisers on board. There are too many VAS (value-added services) advertisers like ring tones right now.” Other players say similar things. Advertisers still like to see things like TV spots, which they understand, even though this is often not rational in terms of return on investment. Maybe 2010 will be the year when advertisers start seeing mobile less as an experiment and more as a serious part of their campaigns.
Source: Mobile Beat: Will 2010 be mobile advertising’s big year?
