The data in the market generally reflect some contradictory things regarding consumer attitudes toward mobile advertising. Majorities of survey respondents (from our surveys and third party data) say they don't want to see ads on their handsets. However, their behavior very often reflects something else: they want offers and will respond to them.
A recent AOL-UniversalMcCann study (n=1800) showed that 38% of US smartphone users took some sort of action in response to mobile marketing/advertising.
If the data are segmented by handset and demographics what you find is that more sophisticated users on smartphones are the most interested and the least offended by mobile advertising vs. the general market. Here's recent general mobile user survey data from our April survey:
Now see Compete/TNS data released yesterday:
We have some earlier, very similar findings. When presented with concrete information and offers, consumers are interested -- especially when it means saving money. These are smartphone users who are much less hostile to mobile ads. The 77% figure in the chart at the top goes down to 53% when smartphone owners are segmented out. In other words the number of those using smartphones who don't want ads is 53% vs. 85% for non-smartphone owners.
Finally, InsightExpress released some data that also reflected that the "absence of advertising" was an issue of diminishing importance:
Source: InsightExpress Digital Consumer Portrait (7/09, n=1,210)
Mobile advertising works at levels that far outstrip conventional PC advertising. But many consumers are still ambivalent about it because they fear spam, tracking, incurring costs, etc. There's no easy way to explain the discrepancies in the data and in the contast between consumer attitudes toward mobile ads and actual behavior.
Today at the Mobilize conference Motorola announced it's long-awaited first Android phone the "CLIQ" (from T-Mobile) with "Motoblur." For about 10 minutes it wasn't clear what the phone was called. It seemed like it was called the "Motoblur" but then T-Mobile took the stage and called it the CLIQ. It's officially called "Motorola CLIQ With MOTOBLUR."
This is some of the most confused branding in recent memory. To compound matters it's being called DEXT with MOTORBLUR in the UK and Europe. Putting all that aside, the phone is interesting for a few reasons:
The "MOTOBLUR" social software (MySpace, Facebook, Twitter) is the type of thing that carriers arguably should be doing (i.e., customizable home screen) to remain relevant to end users. Instead, they're building apps stores, which in my mind face very mixed prospects.
Google experimented with pay per call and click to call functionality in AdWords several years ago on the PC and then killed it. Now it appears that Google is returning to PPCall as a mobile ad format. Yesterday the search engine held a conference call/webinar with financial analysts to talk about the outlook for its business. Here's what was said by two analysts on the call about new ad formats that Google is introducing both online and in mobile:
From JP Morgan's Imran Khan (via Business Insider):
Google plans to introduce new ad formats. Google hasn’t made many changes to its text ad format and now sees this as a big opportunity. For example, advertisements for movies may be best in the form of trailers, and product advertisements may be best in the form of pictures and descriptions. The team is currently working on ad formats better suited to mobile, video, picture, maps and local searches.
From Citi's Mark Mahaney:
In an effort to bring more relevant ads to users, Google recently launched four new ad formats and expects to expand these over time: A) Video Ads – Users can play a video ad within the sponsored links section. This would be ideal for movie trailers, video games or companies selling complex products; B) Site Ads – An ad would contain sublinks to more specific products that take users directly to those products on the site; C) Product Ads – Ads that show pictures, prices and description of products; D) Local – Google shows address, directions and in some cases logos of local establishments; and E) Mobile – Google added click- to-call which is a new mobile monetization ad format. (emphasis added.)
PPCall is a natural ad format for mobile for self-evident reasons. The question in my mind is how Google will manage bidding and analytics vs. the rest of AdWords.
Update: Here's Google's official statement after I asked for clarification:
We're indeed working on expanding our click-to-call ads to appear next to high-end mobile search results. The first tests of the ad will likely give users a choice of a Web URL *and* a click-to-call option within the ad. We will then evaluate the results and look into a click-to-call-only ad for high-end mobile.
There are various forms of in-store marketing: coupons on shelves, end caps, on floor, in-store video, POS screens and so on. But here's something really valuable and fresh: Aisle411. We discovered it through the Voxeo blog.
The company works with retailers (big boxes) to help consumers locate products on store shelves -- within the store. I don't have a dollar figure but I know from personal experience that this is a problem: consumer wants to buy something but can't find it on the shelf. The salesperson is either ignorant, not available or otherwise unmotivated and so the consumer winds up frustrated ("I guess it's not here"). How many sales are lost because somebody can't find the item they're seeking and give up?
Consumers are prompted to call 1-877-AISLE411 by an in-store display. They're taken through a DA-like menu (store, city, item) and ultimately directed to the aisle where the item is normally stocked ("sippy cups are in aisle three"). The system also gives stores the opportunity to promote other items (upsell related items) and specials of one sort or another.
It's pretty interesting. Here's a quick demo with call flow.
AT&T has revamped its successful YPMobile iPhone app and included local business video profiles and PPCall ads. Previously there had been no ads on the app. According to the press release out this am. The main changes are the following:
It hasn't yet shown up (for me at least) in the iTunes store so I wasn't able to test out the video or take any screens of the ads. However PPCall is, for obvious reasons, well suited to mobile handsets and I imagine AT&T/Yellowpages.com will see some nice volumes to their advertisers from the iPhone app.
Beyond its own mobile app Yellowpages.com advertisers gain mobile distribution through Bing:
Facebook's new mobile iPhone app is a considerable upgrade over its previous one. I won't do a review of the app, but it offers much more utility than before (including chat, notes, photo uploads, etc). We'll continue to see new features and various enhancements in future versions too (next up is probably video uploads). There's also been some speculation that it could become a mobile apps platform within an app (others are pursuing this approach). While all but a relatively small number of highly successful Facebook apps basically languish online, mobile offers an opportunity to reinvigorate the strategy.
There's also Facebook's payments strategy, which could expand to mobile (it's already got a relationship with Zong using mobile phones to pay for virtual goods online [watch for a potential acquisition of Zong by FB]). Then there's the recently announced expansion of Connect from the iPhone to the broader mobile Internet.
Facebook also just announced a relationship with Nokia integrating Facebook (via "Lifecasting with Ovi") into the N97 and new Nokia N97 Mini phones. Here's a promotional video showing how it works:
The company also said in August that it has 65 million users globally who access the site from mobile devices. That's reportedly more than triple what it was in December, 2008.
Clearly mobile is a very key part of Facebook's strategy now and could make it a dominant globaly player in mobile across a number of fronts, including, potentially advertising. It's probably only a matter of time before Facebook becomes an ad network. Indeed, if I were Facebook I would take a look at buying one of the leading mobile ad networks top accelerate that development.
U.K.-based Juniper Research predicts that mobile marketing tools, such as coupons or "smart posters," will help spur growth in near-field communication (NFC) mobile payment transactions from $8 billion in 2009 to $30 billion by 2012.
The newly released report outlines the opportunities for both mobile payments and mobile retail marketing and includes forecasts in the emerging market of NFC-enabled handsets.
Report author Howard Wilcox sees mobile coupons as a particular interesting marketing opportunity for point-of-sale mobile transactions:
"Many people focus on the use of NFC for payments but in fact it is poised to revolutionise the way many people shop too. The ability to tap smart posters and receive coupons and product information also presents new channels to market for merchants.”
San Francisco-based mobile ad network Greystripe has received an additional $2 million in series C funding, after raising $5.5 million earlier this year. This round comes from a new investor, Peacock Ventures (a joint venture fund of General Electric and its NBC Universal unit), bringing the total amount raised by Greystripe to $17.5 million.
Greystripe's appeal to investors is largely based on the company's flashy, gaming-like advertising that appears before a free download for iPhone users. According to reports, as part of the deal, Greystripe will supply ads from NBC Universal brands such as Sci-Fi Channel, Bravo, and MSNBC to its network of ad-supported mobile and iPhone apps.
Gartner's is the latest in the flood of mobile ad forecasts to hit the market. As reported in MediaPost, here are the highlights:
The leading region (probably based on the number of subscribers and handsets, rather than the characteristics of the ad market) is Asia, followed by North America and Europe, according to the IT consulting firm.
Gartner says the leading ad category will be display, followed by search, apps and SMS.
The company also sees smartphones constituting 45.5% of handset sales by 2013. This may be aggressive, however. It depends on pricing chiefly. But developments such as the BlackBerry Storm being cut to $50 (in anticipation of Storm 2) and the $99 iPhone 3G will continue to drive smartphone growth.
In addition the upgrading of feature phone capabilities is a bit of a wildcard in mobile ad forecasting. Certainly SMS is a universal platform that is handset "agnostic," but other types of ads will likely make their way into improved feature phones over the next few years.
Related: Separately, Forrester said that European mobile Internet penetration will be 39% by 2014. My belief is that this figure is conservative. However the degree of engagement is highly variable and dependent on dataplan and smartphone adoption.
And the EU is investing in LTE to boost mobile Internet speeds and growth. This will help drive adoption. In Europe mobile subscribers pay considerably less on average than in North America.
The mobile ad networks have gotten together and carved out a day to woo brands during Advertising Week in New York later in September. Dubbed the Mobile Advertising Summit, the event is sponsored by four mobile ad networks:
The agenda is full of agencies, with some big names from traditional ad agencies, including:
among others . . .
Yesterday the news came out that ad network AdMob had acquired the assets of "mediation layer"/aggregator AdWhirl. This likely sets the stage for an exchange play (in earnest) by AdMob, analogous to what Yahoo has with RightMedia on the PC.
AdWhirl enabled iPhone developers to sign up for ad units/inventory from a wide range of ad networks, to improve fill rates -- it was promising 100% -- and optimize CPM/CPC revenue in addition. At one point AdMob had said it was no longer going to work with AdWhirl but later decided not to go through with that move. Now the former has bought AdWhirl.
Deal terms where not disclosed. AdWhirl had reported $1 million in funding and so I'm guessing that the purchase price was south of $10 million (perhaps several million shy). Reportedly AdWhirl will now expand to encompass other apps platforms, including Android, BlackBerry and so on.
In expressing its objections to AdWhirl's methodology at the time, AdMob VP Ali Diab said in a blog post:
What we have also found over the last few months is that mediation layers significantly impair AdMob’s ability to optimize the selection of ads for the apps that choose to use them, by obstructing our view of these applications’ traffic profiles. These traffic profiles are a key input parameter that we use at AdMob to select the right ad for the right app at the right time. By working directly with the publisher, AdMob is able to generate a much more accurate profile of the traffic, in terms of both volume and timing, generated by a specific iPhone app, which will enable us to optimize the revenue potential that we can deliver for the app.
Now AdMob has embraced the "mediation" concept, perhaps shrewdly so. AdWhirl can now be the basis of a broader marketplace or exchange that will reach multiple smartphone platforms. AdMob thus gets a kind of "hedge" if the mobile ad market should start to heavily favor exchanges vs. networks. Other networks, such as Quattro, have been experimenting with delivering third party ads along with their own to publishers.
AdMob CEO Omar Hamoui provided the following statement to TechCrunch:
Our open source solution will be both for the client and the server. We anticipate there will be many independent servers run by developers, and possibly our competitors as well. Once we release the code into the community, we think it will be adopted widely.
Most developers use mediation layers for percentage based inventory allocation. This is not something that you can game or manipulate. The mediation component either fulfills the percentage allocation or not. We are committed to making this solution as open as it needs to be to make everybody comfortable. We also expect the market will hold us accountable to this course of action.
The AdWhirl team has visited our offices over the past several days as we have worked through this deal. However any claims that we have historically been sharing data with AdWhirl or manipulating how it works for our benefit is completely false.
Since the news broke we’ve been talking to developers and they agree that the key is an open and transparent solution. We expect to be held to that.
The article in which that quote appeared asked the question whether AdMob would maintain AdWhirl as a "neutral" exchange or whether it was going to favor its own advertising. Commenting on the deal, along those lines, Greystripe CEO Michael Chang said the following about a potential "conflict of interest" for AdMob:
“We believe that it is a conflict of interest for an ad network to own a mediation company. A mediation company needs to be a separate entity to do its job of unbiased optimizing of a number of ad networks.”
If AdWhirl does remain neutral and open as AdMob CEO Omar Hamoui promises it should continue to thrive. If it becomes biased toward AdMob's own inventory or in some other way, new "meditors" will rise up to replace it.
According to the Pew Internet & American Life Project, based on a review of historical survey data, the top daily activity for US teens is text messaging. In other words, teens text more than they do almost anything else. In addition, we've reported on mobile SMS campaigns that reflect response rates that are often 2X to 10X higher than online advertising. Yet T-Mobile has said that SMS campaigns in Europe with well-known brands were, on average, 30X more effective than online display advertising.
Here's Pew's teen activities chart:
In addition SRG reports (n=2,000) that for young women (12 -24), mobile is the technology with the greatest impact on their lives:
You should join us then for the forthcoming webinar in Thursday, August 27: SMS Marketing: Direct Route to Consumer Engagement, featuring 4Info and ChaCha. We'll provide an overview of the market and they'll provide cases and concrete examples of SMS marketing in practice.
It's free and if you sign up you get a copy of our corresponding white paper -- also for free.
Scarborough Research has found that the combined category text/email now exceeds "Internet sites" as one of the ways that US consumers obtain coupons. Newspapers remain the top source.
The firm's recent consumer survey found "that 8.6 million (8%) of U.S. households currently acquire coupons via text messages and/or email." According to Scarborough:
Those consumers who obtain coupons via text messages and/or email tend to be young, affluent, educated and female. Scarborough data shows that they are 14% more likely than the average adult to be ages 18-24; 51% more likely to be a college graduate or have an advanced degree; and six percent more likely to be female. Where do these consumers live? The top local market for text message and/or email coupon users is Providence, RI. Twelve percent of households in Providence typically obtain coupons via text message or email. Washington D.C., Atlanta, San Diego, Austin and Chicago, where 11% of households get coupons via this medium, are also among the leading markets for this activity . . .
While I understand the logic of grouping email and SMS together, they're two distinct mediums. However, we've also found high levels of consumer acceptance of mobile offers and coupons (vs. other types of mobile advertising) in our consumer research.
AdAge features a piece that advises mobile marketers to start looking beyond the iPhone. Yes, that's prudent advice as a general matter; the iPhone represents a tiny slice of the handset market. However, if you're talking apps then it's all about the iPhone -- at least right now. The app experience is less significant on Android; it will grow over time and as more Android devices enter the market it will become a potentially important apps platform.
Rhomobile and Appcelerator (and others) have "write once" native apps development platforms. This scenario will become more common, allowing publishers and developers to more efficiently build apps across the major smartphone platforms. Right now, however, among smartphones it's really mostly about the iPhone:
According to Nielsen (pre 3Gs), iPhone users:
As the AdAge article points out, if you want reach beyond the iPhone, you can and should think about the mobile Internet. Google itself is increasingly banking on the browser as its "cross-platform" strategy. However if you need an app to create the optimal user experience then it's: iPhone, BlackBerry, Android, Windows Mobile and Symbian (outside the US) in order of potential reach.
Related: After iPhone exclusivity ends, AT&T is looking to a "plethora" of devices to constitute its "second act." AT&T reportedly envisions a broad range of connected devices with related consumer subscriptions to the network.
PaidContent has used Nielsen data (from an article in Mobile Marketer) on unique visitors to compile a list of the largest mobile ad networks. Here's the list according to the site (based on monthly unique reach in the US):
I invite the companies on the list (or comScore) to dispute it and provide their numbers.
City guide and local search utility CityVoter has launched an iPhone app. I spoke briefly to CityVoter CEO Josh Walker about the app and provided some feedback. During the call, he acknowledged that it was imperfect but that the company was testing it and would develop version 2.0 after gaining customer and market feedback. He characterized it as a first effort. And with that caveat, it is a good one.
CityVoter provides local content for media partners such as local TV affiliates and newspapers.
The new iPhone app features categories that allow users to browse the top five businesses ("winners") in each. Some of the categories are clever or non-traditional (such as "cheap eats," "great meals," "out and active"). The difference between CityVoter and many other local sites and mobile guides is that it features "best of lists" (based on community voting) rather than an extensive list of businesses in the particular heading or category.
The idea is efficiency. Walker pointed out that this was especially true for mobile, where users often want quick information. Here are some screens:
The app lacks certain features that I believe would make it more useful. But the top lists, use of images and category browsing are very helpful. I told Walker that the horizontally scrolling "parade of winners" on the home screen should be modified in my view.
The highly visual nature of the app is central to its appeal. And that's most fully expressed on the carousel screen.
One of the interesting things about the app is that unlike some of its competitors that use categories and location awareness to find nearby businesses, CityVoter doesn't do that. It only uses location to find the user's city at the outset.
AdMob says this morning that it served its "100 billionth ad." The company has been around since 2006 served its "billionth" ad in 2007. (McDonald's comparisons seem inevitable here.)
Here are some data cited in the blog post announcing the 100 billionth ad:
Meanwhile, AdMob has decided, at least temporarily, to not discontinue support for "ad mediators" AdWhirl and TapJoy:
In order to ensure that we are focused on doing what is best for our publishers, we have decided to temporarily delay the discontinuation of support for mediation layers until we can introduce a comprehensive plan that meets our publishers’ needs while also continuing to provide advertisers and end users with the best possible experience on mobile.
It took quite awhile for "ad exchanges" to arise online. Years after the proliferation of ad networks ad exchanges came along to aggregate inventory and bring more "liquidity" to the market. They also aim to overcome market fragmentation. Indeed, there are more than 400 online ad networks and, depending on how one defines exchange, 5-10 online ad exchanges.
A parallel trend is taking off in mobile, even before mobile ad networks have reached anything approaching maturity. Today mobile ad exchange Mobclix announced that it had developed the largest mobile ad exchange:
Through partnerships with over 20 leading ad networks, Mobclix provides the largest community of developers, advertisers, agencies and ad networks on one common platform for consolidated relationship management. As marketers leverage the Mobclix platform for precise audience targeting based on geographic, demographic and behavioral insights, developers use its analytics and advertising expertise to gain access to multiple networks in order to secure 100 percent fill rates and the highest eCPMs.
Mobile ad networks (partial list):
Mobile "exchanges," "mediators" and/or marketplaces (partial list):
Also some of the "networks" in the first list are starting to incorporate quasi-exchange features and third party inventory.
Measurement firm comScore says that there are 29 million smartphone owners and more than 1,000 mobile devices (obviously extending beyond smartphones) being used to "access mobile media" in the US market. The company also contends there are 233 million mobile subscribers in the US. CTIA says the number is 270 million.
Using comScore's 233 million mobile subscriber "base" and the figure of 29 million smartphone owners arrives at a penetration rate of roughly 12.5%. Our data suggest a 15% penetration level. Others in the market put the smartphone percentage even higher.
The reason the smartphone number is important is that smartphone adoption is directly correlated with mobile Internet engagement (leading indicator) and, over time, mobile ad revenues. The comScore data affirm this; smartphone users are:
The company also said that 59.5% of US mobile users have sent or received SMS messages (see our SMS marketing report here) and 25.3% have received an SMS ad.
Separately, comScore identifies the top mobile applications categories:
Source: comScore (May, 2009)
There are "three worlds" in mobile: apps, mobile Web and SMS. In the case of smartphone owners, they will use all three to varying degrees. However non-smartphone owners are generally not going to be very engaged in the "mobile Internet" because of data plan cost (and corresponding inhibitions) and generally poor user experience.
What's interesting to contemplate is an emerging category of phones that exists between low-end feature phones and the iPhone and its bretheren. This category is represented by INQ's "social mobiles," phones offering built-in apps that provide a better experience on Facebook, Skype, Twitter:
According to the release:
The new phones offer high-spec functionality without the hefty price tag - shaking up the market by giving operators a unique proposition - a 3G social mobile with the speed, usability and suite of applications capable of driving data usage in the mass market.
The INQ Chat 3G is the company's first qwerty-style phone, while the compact INQ Mini 3G expands the range and provides an entry-level social mobile ideal for the price-sensitive prepay market. They complement the award-winning INQ1.
For the two new phones, Twitter joins the suite of communications applications that INQ has already woven into the heart of its social mobiles: which include Facebook, Skype and Instant Messaging.
These are inexpensive phones that offer a high-end app experience around certain functions or sites. This doesn't provide an iPhone-like mobile Internet experience, nor is there an app store, just a few high use case apps specifically tailored to the phone. I suspect we'll see more of this sort of device, not a true "smartphone" but more full featured and high functioning than today's lower end phones -- especially to appeal to the price sensitive youth market.
Pandora, the top Internet radio brand -- really the YouTube of Internet radio -- and the top free app for the iPhone in 2008 has struck an ad sales deal with Clear Channel, according to AdAge:
Clear Channel's radio ad sales rep firm, Katz Media Group, will start selling display and audio ads for Pandora through its Katz 360 digital sales group
Pandora comes to Katz 360 with a fledgling display-ad business that just introduced audio inventory in late 2008, yielding a total $18 million in 2008, or 95% of the company's revenue. Doug Stern, Pandora's director-audio sales, expected that total to double by the end of 2009 before the Katz 360 deal, and is now even more optimistic that Pandora will fit into advertisers' mind-set as often as it does listeners.
To date, Pandora has been using Google on its iPhone app to monetize inventory with AdSense banners. Apparently there are occasional audio ads that appear on Pandora, but I've never encountered one.
I'm a daily (and heavy) user of Pandora but, as I said to founder Tim Westergren at the EconSM show earlier this year: the minute I start hearing audio ads interrupting the music I'm gone.
Pandora has spoken in the past about a subscription offering (for its heaviest users). Audio ads could be part of a dual strategy to monetize inventory but also to drive those (like me) who listen to Pandora, in part because there are no ads, to a subscription offering.
We'll see how it plays out but there's danger in injecting conventional audio advertising into Pandora and alienating its audience -- or at least me.
Pandora, which owes its success in large measure to its iPhone app, has now become a clear (channel) acquisition target.