Paul Childs, Chief Operations Officer at Adfonic, gives his thoughts on the last 12 months in mobile advertising and asks if it was the year when the industry finally came of age.
For years bullish vendors, up-beat analysts and even the odd journalist have been predicting the illusive ‘year of mobile’. A year when the mobile advertising industry finally lives up to all its hype and potential to become an essential element of any integrated digital marketing campaign. While this vision may still be a little way off, 2010 has certainly been an exciting year of development and one that has put mobile advertising firmly on the map and on the agendas of leading brands, publishers and agencies.
The mobile advertising industry’s growth in 2010 has been influenced by several key drivers; increasing Smartphone and tablet adoption; subsequent increases in mobile advertising inventory and also by the massive explosion in the apps market. There are literally hundreds of new apps every day, across multiple platforms with iOs and Android forging ahead along with the addition of new stores from RIM (Blackberry) and OVI. Spend on branded apps has also grown significantly for iPhone and Android devices.
2010 has seen winners and losers in the battle for our hearts and wallets when it comes to spending on mobile devices. It was certainly not a good year for Palm and its OS launch came and went with very little fuss. On the other end of the scale, RIM began to gain traction and its popularity now extends beyond its traditional, business user base, by appealing to a wider audience, in particular the all-important teenage market.
Whilst the second half of 2010 saw Android gain significant market share, the iOs remains the dominant mobile platform in terms of public perception. While other vendors may resent the level of attention steeped on Apple, the market has a lot to thank the iPhone for, having raised awareness of what was possible on mobile. There are now more than 50 million Smartphone users in Europe (source: ComScore) with 20% of handsets running on iOs.
Earlier in the year IDC reported that the worldwide Smartphone market had grown about 50% year on year during the second quarter of 2010 with the highest growth registered by Android partners. In terms of the phones themselves, it also found that Nokia was still the largest Smartphone supplier with a 38.1% market share, followed by Blackberry with 17.8% market share. Apple was in third position, with 13.3%. HTC next with 7.6% and Samsung had 4.8% share of the market.
The Windows 7 mobile story is interesting and will play out in 2011 when we are likely to see SDKs launching to support this attempt by Microsoft to claw its way back into the mobile market.
Market Consolidation
M&A activity in 2010 has confirmed the huge potential of mobile as a new way of reaching and engaging with consumers. Google’s acquisition of Admob and Apple’s acquisition of Quattro Wireless were amongst the first to put a real value on mobile advertising companies and preceded a series of further smaller mergers and acquisitions such as Amobee and RingRingMedia, Velti and Mobclix and MCSattchi and Inside Mobile. We’ll undoubtedly see further consolidation in the market in 2011 as the mobile advertising industry continues to evolve.
Agencies
2010 has seen agencies and advertisers become increasingly savvy in demanding and driving better performance, transparency and reporting from mobile advertising. They now see the potential of mobile to deliver tangible results and we’ll see more and more test budgets develop into bigger budget campaigns which form part of a wider cross-channel campaigns.
The last two quarters have seen DSPs (Demand Side Platforms) become a key buzzword within mobile with the launch of several platforms such as those offered by GroupM and Adremixer. DSPs sit between the networks and the agencies and provide agencies with a greater level of transparency which enables them to see exactly what activity is delivering results across the networks they’re working with.
Technology
There have been a number of technology themes throughout the year that have grabbed headlines.
Perhaps the most talked about topic has been real-time geo-targeting. Demand from advertisers to target local audiences with locally relevant messages is increasing and some networks, including Adfonic, offer the possibility to target right down to local postal town level.
Of increasing importance is the ability to provide real-time reporting and analytics, giving advertisers and publishers access to the granular data they need to optimise campaigns as they happen in order to drive performance and earnings and see true return on investment.
In addition, conversion tracking for iOs and Android apps is now used by many advertisers giving them the ability to measure the number of app installs per campaign in real time and determine a Cost per Installation that enables optimisation at ad network level.
While banner advertising still remains the most popular form of mobile advertising, new larger screen Smartphone and tablet devices are driving demand for new formats. Mass market ad units have now extended to support the traditional IAB skyscraper, button, banner, MPU and leader board formats for iPad and tablet devices, while creatives designed for desktop and laptop devices are also being reused on mobile platforms.
All networks now fully support SDKs for the most popular mobile platforms and with development keeping pace with devices, we’ll soon see the roll out of new Windows 7 SDKs as adoption picks up.
Supply Side Players (SSPs) on mobile and online will shift towards Real Time Bidding (RTB) exchanges in 2011. RTB enables impressions to be purchased in real time using a bidding model that is based on predefined targeting criteria such as demographic or location; advertiser spend is subsequently more efficient as bids are placed based on the data available that matches their targeting criteria. The greater the availability of data, the better the opportunity to target, and advertisers pay a higher value for this information. RTB is more of an integration benefit for networks at this stage as the volume of data available still limited. We’ll start to see the impact of RTB for advertisers over the coming years as the availability of targeting data increases.
Challenges and Opportunities
Today mobile represents an estimated 1% of media budgets. But with forecasts suggesting that by 2013 more people will be accessing the web by mobile device than PC, there is clear potential for mobile budgets to grow and catch up with increasing mobile internet consumption. As critical mass kicks in, there are several challenges that need to be addressed in order for mobile to live up to its potential.
Perhaps the most significant challenge for the mobile advertising industry is the issue of transparency. Marketers need the same level of insight and availability of data throughout the campaign process that they are used to with online, in order to accurately measure ROI and customer value. Post-click tracking is crucial in closing the loop on campaigns and providing visibility to truly determine the success of a campaign. Advertisers and brands must be able to see what mobile activities lead customers to actually spend money, rather than driving acquisition only.
Furthermore, there needs to be a shift away from the current campaign buying model where advertisers buy access to mobile devices, platforms and mobile operators, to a means of buying audiences based on lifestyle and socio-demographic criteria, as well as their propensity to buy products and services. In the same way that traditional and digital media buys are based on gaining access to specific audience groups, mobile networks needs to provide advertisers with the ability to buy on these metrics.
It is important also to look at the unique opportunities that mobile presents to tap into incremental audiences. Consumers access the mobile web at different times and engage with mobile sites and apps in different ways than via traditional PC connections and advertisers need to remember this when planning their campaigns. Though real-time analysis of clicks within the Adfonic marketplace, we’ve gleaned some valuable insights into the contrasts between mobile user behavior patterns compared to activity on the traditional web.
When online traffic on laptops or PCs starts to dip from early evening, mobile traffic levels are building. Indeed, we’re seeing traffic levels build steadily throughout the evening before peaking around midnight. Early morning – again a quieter time for traditional online traffic – also sees mobile traffic levels spike as consumers access the mobile web via Smartphone devices on their way to work. These patterns offer a clear opportunity to advertisers to reach new audiences.
Our in-depth real-time reporting has also enabled us to dispel some of the myths surrounding Smartphone usage in the UK. Advertisers and brands should bear in mind when planning campaigns that contrary to what was previously thought, tablets and Smartphones are now UK wide devices, with consumers spread across all major urban conurbations, not just London.
2011 outlook
Mobile has certainly proved itself in 2010 as both increased spend and M&A activity demonstrate. Mobile is now a mass market opportunity with the volumes to drive full campaigns; developments throughout 2011 will see advertisers and agencies truly take advantage of the opportunity to buy and target specific mobile audiences. Test budgets will move into significant amounts of spend with full campaign briefs. Along with this, we’ll see mobile video campaigns begin to gain traction as networks develop inventory specifically for video.
The explosion of tablet devices will lead to a significant ramp-up of tablet inventory for mobile media buyers across iOs and Android platforms and content made specifically for tablet sites and apps will continue to gain popularity. Without a doubt, Smartphone and tablet shipments will surge in 2011 and the number of phones versus PCs and laptops will continue to rise.
So, has 2010 been the year that mobile lived up to its true potential? Not as such, but it is increasingly unlikely that the industry will be able to name a single year as the most important in its history. Instead, it is growing year on year and will to continue to be the fastest growing advertising medium in 2011. It is certainly maturing as an industry and once true transparency is achieved; once the ability to buy based on audience increases and once the unique opportunities to target and engage with consumers are tapped into, mobile will be able to prove once and for all that it delivers and will be an unstoppable force.