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Mobile on the Cusp (Again)

Ubiquitous smartphones, soaring ad spend and plenty of challenges
  • February 11 2013

There’s little doubt that mobile marketing is coming of age.

Nearly half of American adults now own smartphones. Mobile search is moving toward overtaking desktop. More and more merchants are implementing mobile payment options. And spending on mobile ads is skyrocketing.

While we may be moving into a mobile-centric era, mobile marketers still face a wide range of challenges in executing effective and engaging campaigns. Metrics are spotty. Context—with the near non-existence of tracking mechanisms like cookies—is hard to quantify. Small screen size can make creative implementation tough. Multiple formats (i.e., iOS, Android, Windows Phone, not to mention mobile Web) make consistency difficult. And consumers have hardly warmed to the mobile ads they currently receive.

“The advertising opportunities are not, at this point, as compelling as the desktop. Targeting is not as accurate as it needs to be, and the research to prove out the ROI of mobile is not there yet,” says Eric Franchi, co-founder of digital agency Undertone Networks. “Plus, it is just plain hard to execute a mobile buy due to lack of standardization.”

Mobile still makes up a single-digit share of overall ad spend, but its growth rate has been so strong that forecasts change rapidly. In December, eMarketer upgraded its estimates significantly, saying 2012 U.S. mobile ad spending would top $4 billion, a 180 percent jump over 2011. This year it will grow another 77 percent to $7.19 billion, increasing to nearly $21 billion in 2016. Yet for 2012, mobile accounted for only 2.4 percent of total ad spending, eMarketer notes, and is expected to reach an 11 percent share by 2016.

The growth is being fueled by advertising opportunities on popular sites such as Google and Facebook, which are seeing large chunks of their traffic coming from mobile. A year ago, Facebook didn’t even have a mobile ad platform. But in its recent fourth quarter results, it noted that mobile accounted for 23 percent of its nearly $1.6 billion in revenue. And the potential is there for that figure to grow, as Facebook indicates that more than half of its monthly active users access the site via mobile.

Where audiences go, ad dollars certainly will follow. The challenge for mobile advertisers is to integrate ads into the users’ state of mind while he or she is surfing the small screen, playing a mobile game, using a social network or seeking entertainment. And mobile users are not yet sure that marketers are meeting that challenge.

Millward Brown’s November 2012 AdReaction report found that consumers have high expectations for mobile marketing, but they are disappointed in the advertising they’re seeing on their devices. In fact, just 9 percent of consumers in the study indicated they have a very/somewhat favorable attitude towards mobile advertising, well below the 49 percent favorable rating for TV or 22 percent for online display.

Which is why brands are becoming increasingly concerned about ads getting in the way of the mobile experience. eBay, for example, is seeing a growing share of business conducted via mobile—it finished 2012 with $13 billion in volume handled by eBay mobile, and PayPal mobile handled almost $14 billion in payment volume. But the company has been cautious about serving ads via its primary mobile apps. A company spokesperson explains that, “After several tests in 2012, we opted to keep our core apps free of third-party ads to emphasize an optimal shopping experience.”

“The biggest obstacle is definitely relevance,” says Asher Delug, founder and CEO of mobile ad network Airpush, regarding consumer attitudes towards mobile ads. He notes that the lack of persistent cookies in mobile has made it harder to target with the same precision buyers have become used to online. To compensate for the lack of cookies, Airpush requires users to opt in to its push notification ads (text ads shown in the notification tray of Android devices) so that it can target more precisely.

 

Moving toward mobile first

Weather is one of the most important apps for mobile users (checking the forecast is something more than half of smartphone users do every day, according to Pew) and The Weather Channel’s app for smartphones and tablets has been downloaded more than 100 million times. It has been a solid revenue source for TWC—mobile accounts for about 20 to 25 percent of digital revenue, according to Curt Hecht, chief global revenue officer of The Weather Company, parent of The Weather Channel and weather.com. But like other mobile media properties, it is still trying to crack the code for successful ad units. “From the industry’s perspective, in terms of quality and effectiveness, mobile advertising right now is probably a C,” says Hecht. “It’s wildly inconsistent.”

As a result, TWC has tried to work with advertising and media partners to come up with more innovative mobile ad options. Later this month, it will launch a unit that “will offer brands a canvas where they can show the brand itself instead of being confined to a small box,” notes Hecht.

TWC is one of a growing number of media properties and brands that might now be considered “mobile first”—where mobile usage drives other behaviors and where mobile ads can serve as the entry point to deeper engagement with the brand across other media.

For example, Dunkin’ Donuts launched a smartphone-based mobile payment app last summer that not only allows customers to pay via their phone, but also lets them send mobile gift cards to each other. It followed that up with a fall campaign on The Weather Channel app designed to increase app downloads.

Hispanic advertisers as well are considering a mobile first approach, given that Latinos are more likely than other segments to own a smartphone. Jorge Rincon, COO of Adsmovil, which targets Hispanic mobile users, cites the Obama campaign’s successful use of mobile advertising to engage Hispanic voters (a campaign that ran on the Adsmovil network) as an example of mobile in the lead in Hispanic-focused campaigns.

Even those campaigns where mobile takes a secondary seat need to consider how mobile users will interact. Email marketers, for example, now need to consider how offers will look on a mobile device as various studies have found that upwards of 40 percent of emails are now opened on a mobile device. “When we deliver email, we want to be sure when it is read on the phone it looks right,” explains Jeannette Kocsis, SVP of digital marketing at The Agency Inside Harte-Hanks, noting the need to plan for mobile as part of any omnichannel campaign.

 

More interactive units

Many believe that mobile needs to move away from interruptive banners and similar units to more rich media and video—the types of units that are more closely related to branding.

When Activision launched Call of Duty: Black Ops II last December, mobile was a high-profile element to the campaign for the highly anticipated video game. A new rich media feature from agency Millennial Media leveraged the camera functionality of mobile devices to create an interactive, social experience. Targeted at gaming enthusiasts and men 18-34, the ad creative ran as an expandable banner and an interstitial. Once the consumer clicks on the ad, an image of the official Black Ops soldier appears, along with a prompt to call up their camera, take their picture, and have their face inserted onto the soldier, bringing out “the solder in all of us,” the tagline for the game. Once the image is created, the user can download it and share it via social media.

“The campaign actively encourages consumers to interact with the ad, and lends itself perfectly to social media and viral sharing,” explains Alex Hicks, account manager at MEC Global, which did the media buy. “Mobile presented us with a creative way to connect consumers with the Call of Duty brand and present them with an experience unlike anything they had seen before.”

Mobile games are another option marketers are using. A little less than half the time spent on mobile apps is spent playing games, according to analytics company Flurry. But again, “The ad has to be an enhancement of the game experience,” says Mark Donohue, SVP at WildTangent Media, the advertising division of the game developer. In games such as Polar Bowler, WildTangent looks to incorporate advertisers such as Quaker, Marie Callender’s and Cartoon Network into the game play by having them sponsor bonuses that players can earn instead of showing up as banner ads. “We’ve tried interruptive display,” adds Donohue. “It doesn’t perform. The intrusion has an adverse effect on the user.”

Still, with mobile now fully ingrained in consumer behavior, marketers are eager to get their efforts moving. “It’s not a race to mobile first, but not wanting to be mobile last,” says Ernie Cormier, CEO and president of Nexage, a mobile ad exchange. “What we see is in the past, brands wondered whether it was too early to get into mobile. Now advertisers don’t want to be too late.”