SessionM’s Lars Albright discusses the state of mobile ads

SessionM credits its recent success in driving engagement to its rewards-based ad network. Users who interact with an ad on the SessionM network receive virtual currency which they can then redeem for gift cards, sweepstake entries or donations to a selection of charities.

SessionM co-founder and CEO Lars Albright spoke with Inside Mobile Apps about the current state of mobile ads including why ad networks have to break away from banner ads, why advertisers have been slow to increase their spend on mobile and what to expect in the future from mobile ads.

Inside Mobile Apps: We’ve heard other ad providers say that the mobile ad network is over saturated with banner ad networks and video ad providers. What do you see as the next big opportunity for mobile ad providers?SessionM co-founder and CEO Lars Albright headshot

Lars Albright, SessionM co-founder and CEO (pictured right): The use of banner-based advertising is over saturated and is proving to be limited in its effectiveness across a variety of different types of campaigns. I’m not saying that there’s no place for banner-based advertising because there certainly is and the overall industry is growing across the board. There’s so much room for improvement, optimizing the format, and the way consumers think about ads, to break outside of the banner-based experience. The next phase of advertising is coming up with new ways to get consumers to engage with the advertising content. There’s ways to make the creative experience one that’s truly entertaining, invaluable and interesting to consumers. There’s ways to recognize and reward consumers for their time, which is what we do at SessionM. We’ve adapted to the new digital consumer and we know that they expect to be recognized and rewarded for their time. If you do that within the ad experience, you can actually capture people’s attention incredibly effectively.

You have to think of high quality experiences that take advantage of the larger screens and faster connections speeds in mobile devices. Not just sitting back and trying to continue to serve up banners. Close to 90 percent of people find mobile banner ads irritating and 80 percent ignore them entirely.  We have to really be honest about what those ads are doing and how consumers are interacting with them. We have to break outside, we have to change it.

IMA: Smartphone penetration has reached 50 percent of all mobile phones in the U.S., but mobile marketers are still attempting to figure out the right ways to approach advertising on mobile. Why hasn’t anybody figured it out yet?

Albright: I wouldn’t agree with the statement that nobody has figured at least pieces of it out. There’s been a ton of progress that’s been made when you think where the ad market was just few years ago and where it is now. What’s going to make this really work is giving the buyers or agencies scalable ways to buy media to the right audience, with a rich media and high quality experience that also provides some sort of new context or value for the consumer.

There’s also a mix between really creative integrated experiences and scalable solutions. We don’t believe that you can come up with one-off solutions that require very in-depth integration because they just don’t scale. On the other hand, you can’t just shotgun out a bunch of poorly or moderately targeted banners and just take your low click-through rate and expect that the market is really going to excel either. You have to find that middle ground where you can buy at scale but you buy high-quality experiences like video, games, polls, or a whole bunch of different things, but you can do it efficiently and easily. If you talk to a lot of the buyers and media agencies, they’ll say that’s a key thing for them is being able to buy at scale easily and reporting that efficiently and easy for them to understand.

IMA: At a panel session on mobile advertising’s appeal to consumers and potential marketers hosted by media and communications agency PHD, Eli Goodman, a media evangelist at ComScore, said 12 percent of all Internet usage is now on mobile, while between one to two percent of a marketer’s ad budget are put in mobile. Why have advertisers been slow at tapping into mobile for ads?

Albright: Part of it is back to my last answer that the buyers would say they need easier and more efficient ways to buy that are integrated into their centralized systems of how they deal with different media. Mobile has been a bit slow to catch up to that. You have a lot of fragmented and different partners or vendors in the industry offering up different solutions and that can be challenging, so that’s one thing. The other is getting people to embrace new things and get out of what’s easy to do and really what’s right to do depending on what the consumers’ patterns are. Clearly the patterns that they’re spending more time within apps and websites on mobile devices. The third part of this is dealing with the clients themselves and making sure that they understand what’s going on in mobile, and when they think about budget, they are allocating enough to that space. Mobile has to be a core component of that, not just spending two percent, but spending seven, 10, 15, 20 percent percent because year-over-year this number is growing dramatically.

IMA: On the other hand, despite us seeing other marketers slowly putting more of their budget into mobile that mobile ad revenues have increased 92 percent in the last year, what can you attribute the rapid growth of mobile advertising to?

Albright: Part of it is that budgets are getting bigger. In the early days of advertising, getting a six-figure brand buy was tremendously challenging even just a couple of years ago. That’s becoming more and more common place. We get a lot of buys between $100,000 to $250,000, and those are good signals that the actual spend allocation toward mobile is growing. We see signs of that growing again next year as well where people will not only be making six-figure commitments, but multi-million dollar commitments. New techniques like what we do at SessionM, providing that consumer value exchange and getting people to interact more deeply and the results become very compelling. When you have good results, you’re able to go get repeat buys and people to spend more. It’s a combination of all those things working together.

IMA: Speaking outside of the U.S., we’ve seen that there’s been huge growth in mobile ads in China, how can mobile ad companies take advantage of that rising market?

Albright: Across the board there’s growth in Asia. You see a lot of activity on cost-per-click advertising or search advertising that happened there. My recommendations for companies that are growing rapidly in Asian markets is most likely to do it through strategic partnerships with leading players in the space that have high-quality relationships with the brands and agencies in those markets. It’s hard to go to a place like China and try to break in as a foreign company and go and penetrate their agencies and buyers at the levels you need to.

IMA: Which app categories are performing the best for SessionM and what app categories will grow in the future for the industry?

Albright: We see performance that’s strong across all our categories because of the type of experience that we’re giving to consumers. Entertainment and utility are very strong categories. Games has always been the dominant category and will continue to be a dominant category. The sheer numbers of players, people adopting casual gaming, and the amount of applications that have significant daily active users in the gaming space, is far above other categories. In general you’re going to see a rise for entertainment and utility and you will continue to see strong games.

IMA: What kind of mobile ads could we expect coming out next year in the mobile industry? How will it differ from mobile ads of the past?

Albright: They’ll build on mobile ads of the past. You’ll see delivery of rich-media ads to be more abundant given the connection speeds and device capabilities like larger screen sizes. That’s not radically different, but it’s going to be a continued build. One thing that we do, and you’ll see more and more of, is game-based advertising. Bringing in a consumer into a branded mini game experience. Without some overarching system or reason for people to interact, you really are not capturing enough of the attention of the digital consumer these days, which is why I would take all the things I’ve said and layer it into a value exchange-based ad program.

IMA: Mobile app ads on iOS seem to generate more revenue than Android. Do you see Android catching up and how?

Albright: I do see Android playing a bigger role. One is that performance on Android, particularly the CPI market, is extremely healthy. We see a lot growth there as more apps are aggressively trying to acquire users. We do see more brands that are starting to become less iOS. iOS still is more prevalent than Android, but we’re already starting to see some of that level out. The more you can also show that the audiences on Android are similar quality to the audiences on iOS, that makes brand buyers comfortable to buy across both platforms.