MoPub’s Payne on Mobile Ads: Banners Are Out, Interstitials Are In

The last generation of mobile advertising companies like AdMob and Quattro (now Apple’s iAd) is starting to give way to a new crop of startups, fueled by departing employees from the last wave of acquisitions.

We sat down with Jim Payne of MoPub, the first of several forthcoming mobile startups from the AdMob diaspora. Backed with seed funding from Accel Partners and Harrison Metal Capital, it’s building a platform that will let developers serve the most lucrative ads from multiple networks like iAd and Google AdSense.

However, unlike earlier mediation companies such as AdWhirl, developers won’t need to integrate SDKs from every single ad network. MoPub also has extra bells and whistles that will let developers control the frequency of ads or handle geo-targeting.

Recognizing the big trend that developers are moving away from paid downloads to free-to-play, MoPub is building an in-app payments solution that will let developers advertise their virtual goods at the most optimal points in a game. Publishers will be able to target promotions to players based on how active they are or whether they have bought items in the past.

The product is currently in beta with several companies including Accel-backed Booyah, but should be out publicly later this quarter. Payne says it will probably be free for most developers but the largest ones will have to pay. “We’d rather commoditize ourselves instead of having someone do it for us,” he said.

Since leaving Google, Payne said he’s seen a few shifts in the market. A main one is the growth of interstitial ads, or ones that take over the full phone screen in between parts of a game.

“Heretofore, the common mobile monetization scheme has been the banner, that 320 by 50-pixel ad. But we’ve found that actually post-roll or interstitial ads are having a higher conversion rate,” he said. “Often in a game, you’re trying to get a user to accomplish a task. So it’s great to put an interstitial after that.”

CPMs are generally declining across the board, while developers are seeing fill rates range from 70 to 80 percent. But breakout hits like Angry Birds are so powerful that they’re taking impressions away from other developers on networks like AdMob.

A mobile developer himself, Payne said he conceived the idea for MoPub after finding that managing different ad networks was problematic, especially considering Apple’s unpredictable approval process. If something went wrong with a third-party ad network, it was hard to make an immediate fix.

“There needed to be a holistic way for all application developers to manage their inventory,” Payne said. “There wasn’t an easy way to run experiments, like trying interstitial ads. Baking in AdMob or AdSense was too much of a commitment if I found something wasn’t working well or was corrupting user experience.”

After quickly building a prototype, Payne showed it to two other co-workers Nafis Jamal and Bryan Atwood and then ran the idea by Thomas Korte, who was putting together the San Francisco incubator AngelPad. MoPub joined the first AngelPad class and raised funding shortly after.