Mobile advertising, long tabbed as the next big thing, is finally getting its share of attention. Google and Apple, poised in a battle for dominance in what's being hailed as the successor to the PC Internet, have spent a combined $1 billion to buy mobile ad networks AdMob and Quattro Wireless. And Microsoft last week at the Mobile World Congress in Barcelona, Spain, previewed its next mobile phone platform, Windows Phone 7.
Yet despite the excitement over the potential of mobile ads, they currently come up short for the kind of advertising most appealing to brands. In the words of Apple CEO Steve Jobs, as reported by BusinessWeek last month, "Mobile ads suck."
To be sure, there are exceptions to this statement. Dockers ran a lauded campaign targeting iPhone users that let them make an actor dance by shaking their phones. And Universal Pictures is running a mobile ad campaign for The Wolfman that features video edited specifically for mobile, with close-up shots that work best on the cell phone's limited screen real estate.
For the most part, however, mobile ads are reminiscent of the early days of the Internet, when formats were typically static banners or spare text links. AdMob, the mobile network Google inked a deal to buy for $750 million last November, boasts serving over 161 billion mobile ads, but over half those placements are text links.
"We're still creating that format of the future," said Tony Nethercutt, vp of sales at AdMob. He sees issues more pressing than creative limitations, including the ability to quantify a mobile audience similar to what GRPs do for TV, and integration within the digital ad system in third-party ad servers.
Brand advertisers instead have placed more focus on building their own applications to directly reach consumers. These applications can range from utilities, like mobile banking apps, to pure entertainment experiences, such as a soon-to-be-released app from Miller Lite, Tip 'n Spin. The game, tied to the NCAA men's basketball tournament, has players see how long they can balance a digital basketball on top of a Miller Lite bottle. Those kind of experiences aren't available through static banners, although mobile ads are critical to gaining distribution of those applications, said Nethercutt. (See also: "The App Flap")
"Everyone discounts the [mobile] banner," he said. "I don't discount the banner. It's like discounting the 30-second spot."
Mobile ad networks point to enviable engagement rates for banners. Jumptap reports click rates of 2 percent, far above the typical .1 percent for Web banners. And Dynamic Logic has studied over 75 mobile ad campaigns and found the mobile placements two to five times more effective in metrics like recall, awareness and intent.
"The medium isn't cluttered," said Ali Rana, vp of emerging platforms at Dynamic Logic. "The ads themselves are simple. They're going back to the early days of online. [This] resonates with folks."
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