Mobile Advertising

IAB: US Mobile Ad Revs $3.4 Billion in 2012

Consistent with what could be projected from the 1H numbers the IAB released, the trade group reported this morning that mobile ad revenues in the US for 2012 were just under $3.4 billion. This number is below what many other firms had projected but still represented more than 100% growth.

Overall, mobile ad revenue constituted 9% of total internet ad revenues for the year, which were $36.6 billion. Retail and financial services are the top two ad categories. And over time more of that digital retail ad spend should migrate to mobile. Within a few years, we should probably expect that about 20% to 25% of the overal digital spend should go to mobile. That will still lag consumer behavior but be more in line with it. 

The following are the breakdowns by category and format for US online advertising as a whole: 

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There was no sub-category breakdown provided by the IAB for mobile. However search dominates, followed by mobile display. The full report, which isn't yet out, may provide further insight into the division of revenues. 

Mobile Display Ad Estimates: Social Sites Beat the Networks?

A week ahead of the actual mobile ad numbers from the IAB IDC has released its estimates of 2012 US mobile advertising, as well as projections for 2013. The company says that mobile ad revenues were $4.5 billion in 2012 and will reach $7 billion this year. Our view is that the actual 2012 number will come in just under $4 billion. 

According to IDC, search advertising represented 61% of mobile ad revenues in 2012 or $2.8 billion, while display brought in $1.7 billion or 39%. Directionally those numbers are right though the precise proportions may be off. For example, IDC's estimates of Google's share of search advertising is 79%, which is too low. It's more like 94%. 

The most interesting part of IDC's figures and analysis is its juxtaposition between social networks (publishers) and mobile ad networks. Here are IDC's 2012 mobile ad revenue estimates for the major social networks/publishers (Pandora isn't a social network obviously):

  1. Facebook: $234 million
  2. Pandora: $229 million
  3. Twitter: $117 million

And here are the IDC-estimated mobile display ad-network revenues:

  1. Google: $243 million
  2. Millennial Media: $151 million
  3. Apple: $125 million
  4. Jumptap: $90 million

The argument is that publishers/social networks have beaten the mobile ad networks. Online publishers essentially lost out over time to the ad networks on the PC internet because of traffic fragmentation and limited reach of most publisher sites vs. networks. The question is: will this happen again as real-time bidding and mobile exchanges become established? Or will major sites/publishers retain their ability to capture and control significant mobile ad dollars? 

One point to be made here is that sites like Facebook and Twitter offer a multiplatform solution (and so does Google) that enables marketers to reach users on the PC and mobile simultaneously and usually with a single buy and single ad creative. That represents an efficiency advantage over most ad networks. 

The Outlook for 'Home' Screen Advertising

Yesterday Facebook introduced its homescreen Android makeover-takeover strategy: Facebook Home. It comes both fully integrated into a phone (HTC First) and as an app download. As you know it replaces the standard Android home and lock screen experiences with a proprietary Facebook environment. 

Mark Zuckerberg and others at the press event yesterday confirmed that there would eventually be ads in its "Cover Feed." Cover Feed is the new photo-centric dynamic feed that constitutes much of the experience of Home. It includes Facebook content and select "Open Graph" partner content (e.g., Foursquare, Instagram). 

Facebook stressed that it was working to make sure that any ads that eventually do appear (probably within a year, depending on adoption) would be consistent with the aesthetic experience and of sufficiently high quality. We're starting to see more ads in the mobile news feed that are of, shall we say, uneven quality. 

However Cover Feed ads have the potential to be quite effective. If they're scarce and if Facebook uses strict standards they could become the equivalent of "Super Bowl ads for mobile." That of course will largely depend on how widely Facebook Home is adopted. There's early survey data that suggests limited demand -- but surveys don't always tell the whole story and can be contradicted by actual behavior. 

In the past there have been several startups that sought to offer home or idle screen ads on mobile devices. All failed for various reasons (not enough scale, insufficient ad quality, limited advertiser demand/adoption). Today, to my knowledge, Amazon's Kindle (multiple devices) is the only place where such ads exist at any kind of scale. The picture above, at right is an example of a "Special Offer" on Kindle Fire. 

I could find no data about the general consumer attitude toward these ads -- though there is plenty of online discussion about opting out. I also was unable to find any discussion or data about the efficacy of these ads and whether they perform for advertisers. 

For many of the reasons already cited it's way too early to project how much Facebook could earn from Home ads. But if there are millions of users who adopt Home in the US and around the world, the ads could generate broad exposure (like TV advertising) and significant potential revenue for Facebook. 

An interesting secondary question arises: if the most active mobile users migrate to Home (and use the app less often), do ads on Home then effectively cannibalize ads on the Facebook app in the conventional news feed? 

Image credit: lovemyfire.com

PlaceIQ Introduces 'Place Visit Rate' Mobile-to-Store Metric

In what might be considered something of a breakthrough, AdAge is reporting that agency Starcom MediaVest will be working with location-data specialist PlaceIQ to document what "percentage of customers served a mobile banner ad for a retailer subsequently visited one of that retailer's stores."

This is part of a new real-world ROI metric PlaceIQ is introducing. The company's new measurement is called "Place Visit Rate." 

I spoke to PlaceIQ founder Duncan McCall about this several weeks ago but it was pre-case study release and so non-public at the time. PlaceIQ uses an unique but anonymous ID to connect users in the aggregate who've seen mobile display campaigngs with in-store visitors. Here's how the company explains its methodology:

PVR is measured by aggregating all of the devices that were messaged during a campaign and analyzing the number of those same devices that were later seen within a specific location or place footprint. Additionally, PlaceIQ can also set up A/B testing to measure PVR lift by identifying control groups or messaging additional PlaceIQ audiences. 

PlaceIQ emphasizes that it doesn't track individuals:

Place Visit Rate does not track individuals, but rather measures if a set of anonymous devices moved to a certain location. All location data, device data and histories are disposed of by PlaceIQ after the campaign completes.

The methodology is imperfect and can only identify a portion of users who seen an ad and then shown up in a store. An article in AdAge claims PlaceIQ is only able to track "15% to 25% of all mobile ad traffic it monitors."  Beyond this, as we all know, "correlation doesn't equal causation." However this is a big step forward in terms of being able to measure the efficacy of mobile display advertising.   

Historically, coupons have been the most reliable way to measure online-to-offline impact. And mobile payments may one-day make "closing the loop" on online or mobile ads fairly routine. However most ad networks and marketers have had to use proxy data (calls, map lookups) to determine the offline impact of mobile ads. 

Telenav/Scout can track users who see an ad and then navigate to a store location. It's not clear however how often someone sees a mobile display ad and then invokes navigation to a store. 

There are others such as ShopKick and Placed, which measure in-store visits. And there are a "2.0" group of startups working on various flavors of in-store vists and activity measurement. Among them are Euclid Elements and WirelessWERX. The latter uses indoor location to provide business intelligence and analytics services for retailers. 

Accordingly there are a range of methodologies now to try and track or capture online-to-offline ad impact. PlaceIQ's approach is a significant new entry into this arena and others may quickly try to match or approximate it. 

Nuance Brings Voice Interactivity to Mobile Display Advertising

Bringing new meaning to the term "conversational marketing," voice services provider Nuance has introduced mobile "Voice Ads." The new units use the Nuance voice platform to enable smartphone (and presumably tablet) owners to interact with these ads. It's not clear right now whether these interactions would occur exclusively on display landing pages or in the initial mobile display ad creative. 

In a Siri-like way users talk to the ads and potentially receive one of several pre-programmed responses. In one sense these new Voice Ads are not unlike more traditional audio/radio ads (think Pandora).

However the interactivity --  if done well -- could create much more engagement and "lift" for the campaign. Coupled with a campaign such as Old Spice something like this might have worked extremely well. Indeed, the campaign creative and concepts are key. Poorly executed ideas could quickly backfire and become fodder for brand parodies. 

Nuance is promoting a range of benefits from using Voice Ads including engagement, brand lift and better recall. 

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The company says that it has already partnered with leading agencies and mobile ad networks to ensure the units are widely available:

Nuance Voice Ads gives mobile advertisers and creative agencies an opportunity to go beyond the limitations of the four-inch mobile device screen and create a conversation with consumers through the power of voice recognition. Voice Ads finally creates an opportunity for brands to deepen the relationship with their consumers, with targeted interactive ads that deeply engage their core audience – much in the way that the world’s most popular mobile personal assistants have deepened consumers’ relationship with their mobile phones.

Nuance has partnered with many of the leading companies in the mobile advertising ecosystem to ensure broad reach and distribution for Voice Ads – a completely new format for mobile advertising. Creative advertising agencies include Digitas, OMD and Leo Burnett, while mobile advertising companies such as Millennial Media, Jumptap and Opera Mediaworks (AdMarvel, Mobile Theory, and 4th Screen), will provide distribution to more than 100,000 app publishers and hundreds of millions of consumers globally. In addition, mobile rich media ad servers such as Celtra are providing tools for rich media production and analytics on mobile devices.  

One could also imagine clever integrations that tie into call centers at the end of the interaction to close a sale. Again, everything is going to depend on strong concepts, execution and user experiences. Nuance offers a relatively tame mock campaign example using Voice Ads in this video.

More than Half of Twitter Ad Revenue from Mobile

A new forecast from eMarketer estimates more than half of Twitter's ad revenues (53%) will come from mobile advertising this year, up from virtually no ad revenue from mobile in 2011.

In total, eMarketer estimates global ad revenue at $528 million for 2013, pushing upward to $1 billion for 2014.

But ads on mobile devices are driving incremental growth over the next two years. By 2015, Twitter is expected to pull in $1.33 billion in worldwide ad revenue, more than 60% of which will come from mobile advertising.

TwitterMObile

The rapid growth in mobile ad revenue is due in part because "Twitter has ultimately benefited from the increased focus on mobile by competitors like Google and Facebook, which have both expanded their own mobile ad offerings and worked to convince advertisers to shift dollars to mobile devices," says eMarketer. Advertisers are clearly showing more interest spending money on mobile ads.

The report shows Twitter ad revenue is slowly shifting globally with 83% of 2013 ad revenue from the U.S., down from 90% in 2012.

Apple iOS Devices Continue Market Dominance in Mobile Advertising

Mobile advertising and platform exchange firm Velti has released its monthly snapshot on the "State of Mobile Advertising" for February 2013.

Among the interesting tidbits, the report found Apple iOS devices accounted for a whopping 8 out of the top 10 mobile devices serving ad impressions. iPhone devices had a 37.4% share, while iPads comprised 17.2% of all impressions served in February.

And while Samsung Galaxy devices comprised less than 5% combined market share, the report speculates the release of Galaxy S 4 might significantly alter the mobile ad market in the coming months.

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In terms of market share by OS, Apple still clearly shows an advantage holding steady at around 65% for the month of February 2013.

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One noteworthy datapoint in the report highlighted how weekends continue to see the highest levels of app usage, with Sundays accounting for 15.7% of all impressions served. The report stated: "Publishers and marketers should keep in mind daily usage patterns as an important factor in getting the highest return on clicks, and ultimately revenue, for their specific site or app."

Velti_DayofWeek

Velti’s "State of Mobile Advertising" report gathers data from the Mobclix Exchange and is provided on a monthly basis.

A Report for Those Who Doubt Mobile ROI

This morning Google released the results of an extensive study conducted among US mobile users with Nielsen in Q4 2012. The survey explores mobile search behavior in particular and uses a combination of interviews, online survey data, diaries and search query logs to get a holistic picture of search activity on smartphones. Tablets weren't part of this research. 

Among the many interesting findings there are two big ones that stand out: 77% of mobile searches happen at home or work, even when there's a PC nearby. And 55% of mobile-search related conversions (call, store visit, purchase) happen within "one hour or less" of query completion.

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These two stats illustrate two larger "truths" about mobile. The first is that mobile devices are increasingly "primary" for people as a method of internet access. Speed and convenience were cited by respondents as reasons for substituting a smartphone for a PC in a search context. 

Marketers need to be cognizant of the fact that large numbers of people will be using their smartphones (and tablets) at home to search for things, whereas before they might have used a PC. At work people may be motivated by other considerations, such as privacy, to use mobile devices vs. corporate-provided PCs. 

The other "truth" is illustrated by the 55% figure: conversions often happen very quickly after a mobile search. This reinforces the notion of the focused, "need it now" mindset of many mobile search users. Mobile searchers take a variety of actions after completing their queries. They go to websites and do additional research, they make phone calls and they go into stores. They buy things. 

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But marketers can't see most of that activity, hence the complaints about mobile ROI. Most marketers get confused and "lose the trail" when users go offline. You can track calls and site visits, you can capture email addresses and you can monitor e-commerce transactions via mobile. However it's challenging to get complete visibility on all the ways that mobile is influencing purchase behavior.

The slide above illustrates the range of activities mobile search triggers. But more importantly, Google and Nielsen found that 45% of mobile search queries were undertaken to help make a purchase decision -- so-called "goal oriented" searches. And most of these will result in a conversion, often offline. 

The totality of the data released in this study (download the pdf) show that mobile users are more focused and are typically farther down "in the funnel" than PC users. Mobile (search at least) is clearly driving lots of conversions. Marketers just need to open their minds about what constitutes a "conversion" and get creative about ROI and attribution. 

Otherwise, they're not seeing what's really happening with their customers and how critical a role mobile is playing in the overall marketing and sales process.

Report: Tablets Mostly Beat Smartphones for Ad (CTR) Performance

Many of the Q4 reports released by the ad networks and major agencies showed the growth of tablet-related ad spending. That's a trend that will further accelerate under Google's new "Enhanced Campaigns" regime in which tablets are grouped with PCs for paid-search advertising purposes. In other words, marketers cannot separate PC and tablet paid-search campaigns. 

Last week Adobe reported that tablets had passed smartphones for share of global traffic.  

13926_di_global_traffic_deviceIn many ways tablets are the new PCs, taking their place for many at home use cases. Tablet owners tend to behave more like PC shoppers, including displaying a greater willingness to covert online. By contrast, smartphone owners typically don't convert on the small screen making ROI harder to track for marketers targeting those devices. 

Because online conversions are more likely and prevalent for tablet users, the "danger" is that marketers will neglect smartphones or that smartphones will be "ghettoized" and considered good for only a limited number of purposes. In fact mobile/smartphone advertising is great for both DR and branding purposes. 

Mobile DSP Adfonic now offers data that show, across most categories, tablet advertising appears to outperform smartphone ads in terms of CTRs (though ultimate influence on conversions isn't measured).

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As the chart above reflects, "tablets achieve especially strong CTRs for advertisers in the Style & Fashion, Lifestyle & Health, Entertainment & Media, and Travel verticals." Smartphones are stronger in other categories such as retail and automotive. People tend to use tablets in the evenings and on the weekends. 

Over time marketers will determine which devices are better suited to which types of advertising. However companies need to have a comprehensive strategy that recognizes the "multi-screen" consumer, who will move from device to device before converting. 

Although Kindle Fire and Nexus 7 are gaining, Apple tablets continue to dominate web traffic. The following chart shows North American traffic over the past three months, comparing the top-three devices on Chitika's ad network.
Changes in tablet traffic Chitika

Tablets Pass Smartphones In Global Website Traffic, Will Marketers Respond?

According to Adobe's marketing group tablet growth is outpacing that of smartphones. This trend also showed up in several Q4 reports from other online marketing firms such as Marin Software. 

Adobe says that on a global basis, mobile devices (smartphones + tablets) generated 15% of all internet traffic. Of that 15%, tablets edged smartphones with 8% of traffic. The company also says that tablet users spend much more time and are much more engaged than smartphone users: "on aver­age inter­net users view 70% more pages per visit when brows­ing with a tablet com­pared to a smartphone." 

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Among the countries measured, the UK is seeing the highest share of internet traffic from tablets followed by the US and Canada. 

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ComScore previously reported that about 36% of total US internet time is being spent on mobile devices, even though they're generating less than that in terms of overall traffic. Part of the reason for such a discrepancy may be apps, which are often not measured but where "9 out of 10" mobile minutes are spent. 

While 6 and 7-inch tablets exist somewhere between a smartphone and a full-sized tablet (i.e., iPad Classic), tablets are increasingly replacement devices for PCs. PCs still have the largest installed base and a home in the enterprise, among business users and for more selected purposes in the home. But the centrality of the PC as the gateway to the internet is over.

Using Gartner data, USAToday chronicled the decline of PC sales (which aren't coming back): 

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The "problem" with tablets is that many marketers treat them like PCs (including Google AdWords) and don't give them special attention. A study released in Q4 last year found, for example, that only 7% of retailers' websites were tablet friendly.

Yet tablet-app mobile ad creative can be very effective. In general tablet ads (in apps) are much more engaging than smartphone ads right now.

As tablets continue to gain momentum as PC replacements we may see a very odd situation develop. That is: smartphones might be given perfunctory treatment as an ad platform or otherwise neglected in favor of tablets with their larger "canvas." However, as suggested, the bulk of marketers may treat tablets like PCs and not address them with specialized ad units.

Accordingly, as mobile devices take more and more consumer time and engagement "online advertising" could become considerably weaker than it is today. 

Report: National Advertisers Getting More Sophisticated about Local-Mobile Targeting

This morning mobile ad network xAd released its year in review report. The document contains a range of information and data about the company's offerings, including the performance of ad campaigns on its network. The focus of the report is on national advertisers (rather than SMBs). And it presents a picture of marketers getting a great deal more sophisticated about local ad targeting on mobile devices.

As laid out in the report, xAd is now offering a range of local targeting flavors on mobile: behavioral, place-based, POI and event targeting.

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In the graphic above you can see that from Q1 to Q4 the number of national advertisers using more sophisticated forms of geotargeting increased dramatically from 27% to 81%. In other words only 13% of xAd's national advertiser campaigns in Q4 were using "standard geo," (zip, city, DMA). The remaining 81% were using one of the other more complex targeting methods (all involving location) such as behavioral.

Of the 81% using a more precise form of location targeting, here's the breakdown:

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In the report xAd offers performance metrics for these approaches compared to industry averages. The company says that its targeting methods provide a substantial performance improvement over traditional (non-location targeted) mobile search and display advertising.

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In particular on the display side xAd breaks down how each of its more elaborate forms of location targeting perform. Behaviorial does the best, followed by place-based targeting.

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Finally the following are the top consumer search categories for all of 2012 and the top advertiser categories on the xAd network. The latter are national advertisers and don't include small businesses. There's a general alignment across both columns but it's obviously not 1:1. 

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The company's advertisers tend to be more sophisticated about location and more inclined to experiment with it. It would be great if these advertisers were representative of the entire industry. However they're not. A recent CMO Council survey showed how many agencies and national advertisers still don't "get" location.

The CMO Council survey explored national advertiser "localization" tactics. The overwhelming majority of survey respondents (over 80%) didn’t make the connection between mobile and local:

nationals:  mobile local

Source: CMO Council/Balihoo (n=296 national marketers/agencies)

Perhaps once more national advertisers become aware of the performance lift and case studies associated with location targeting they'll wake up to its potential. In the interim those national advertisers using more sophisticated local-mobile targeting are "conquesting" their competition.

Yelp Moves into Mobile Display Advertising

It has only been a few months since Yelp introduced ads at the top of search results in mobile. Now, according to AdAge, the company is adding mobile display ads to its mobile apps (and probably later its mobile website).

The first advertisers will be InterContinental Hotels (IHG) and Taco Bell. They will apparently have exclusive visibility in their respective categories throughout March. I was unable to find a live screenshot for either advertiser. However the left image below (via AdAge) shows a Taco Bell ad on the business profile page. On the right I've also captured a "search ad" and its presentation in Yelp's iPhone app. 

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What's not clear is whether Yelp advertisers will be exempt from having these new displays ads on their profiles (they are exempt from competing ads online). It will also be interesting to see how these ads perform. Will they be more brand oriented or more direct response (including special offers)? 

While Yelp users in the restaurants category, I'm guessing, are less likely to change their plans and go to Taco Bell hotel category users could well respond to an offer or incentive from IHG as they plan a hotel stay.   

It will also be interesting to see whether Yelp will sell its own ad inventory exclusively or whether the company will take third party mobile display ads. My guess is that Yelp probably would be concerned about the quality and relevance of third party mobile display ads and will be unlikely to take them for at least the near-term (if ever). 

Survey Shocker: Mobile Media Beats TV Around the Globe

Move over TV, your time at the top of the media hierarchy is coming to and end -- at least outside the US. Last week ad network InMobi released its Q4 "insights" report. The document is based on survey data drawn from more than 14,000 respondents in multiple countries around the world. However many questions don't include answers from US and UK mobile users.

The "big finding" is that around the world (US, UK excluded) time with mobile has surpassed TV. In fact time with mobile beats all other media channels. The chart below reflects aggregate findings from 12 countries, though not the US and UK. 

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The survey also discovered that 62% of respondents "engage in mobile activity" during TV watching. Accordingly TV ads in general see diminished attention because of mobile (beyond ad skipping). However this also represents an opportunity for marketers to use mobile devices to measure their TV ads' effectiveness or to generate concrete actions in response to TV ads. 

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Another "big" finding is that internet users are now going online through mobile devices in numbers equal to the PC internet or primarily use mobile to go online. This phenomenon is most pronounced in developing markets, as one might imagine. But it's also true in the US according to the InMobi data. 

According to the survey 38% of US respondents "mostly" use mobile to go online. This finding (and others) may well be biased because the survey respondents were found through the InMobi ad network: "Recruited via InMobi global mobile ad network between August and November 2012." This is therefore going to tend to be a more mobile-centric audience than the US internet population as a whole. 

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Another interesting result, this respondent pool says that it rarely clicks ads unintentionally. In contrast to some of the estimates and data floating around in the market (e.g., 40% of mobile ad clicks are "inadvertent") only a small minority said that mobile ad clicks were mistaken more than 10% of the time.

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Though these findings may not be entirely representative of internet users or perhaps even US mobile users as a whole they're still striking in multiple ways.

Back to the TV vs. mobile time spent: most marketers' ad spending and behavior fails to recognize the profound shifts in the market captured by and reflected in these data. The idea that mobile now dominates TV in terms of time spent or that mobile captures attention from TV even during TV time will be unsettling -- if not shocking -- to most brand marketers.

And most right now will have no idea what to do about it. 

By Ignoring Standards Will Rovio Save Mobile Advertising?

Rovio (formerly known as Relude) was founded by three students in Finland in 2003. In 2009, as Rovio, the company released Angry Birds for the iPhone. To call it phenomenolly successful would be an understatement. 

Most people are aware the Angry Birds games have been downloaded more than a billion times. However many in North America may not recognize that the Espoo-Finland based company is now a global entertainment brand, with "activity parks" in Europe, an Angry Birds cartoon series and a feature film coming in 2016.

The company has expanded into publishing and character licensing. It claims more than 260 million monthly active users. Rovio's YouTube channel has more than a billion views. It also says that its retail products "are now generating a major part" of its revenue. 

Against that backdrop, last month the company annouced a new "Brand Advertising Partnership Team." Rovio hired a number of advertising industry and digital media veterans including Michele Tobin, Betsy Flounders Novak, Matt Pfeffer, Todd Tran and Raphaelle Tripet. Tobin is quoted in press materials saying, “Our new Brand Advertising Partnership Team in the US will enable us to now partner directly with other lifestyle brands." Tobin is the Head of North American Brand Advertising Partnerships. 

Just as Rovio is making a big push into advertising the IAB and MMA are seeking to lock down standardized mobile ad units in the hope that standards will drive more adoption and investment in mobile advertising. That assumption may or may not be correct but the consquences of standardization at this still-early stage may be to "institutionalize" lackluster ad creative.  

On the PC, display ad unit standards were partly responsible for the development of "banner blindness," which in turn led the Online Publishers Association years later to break away and create new, bigger ad units that were more like TV and encouraged deeper audience engagement. 

Rather than standardization what mobile advertising needs is radically improved ad creative. While there are some great case studies and pockets of progressive thinking about mobile, most mobile display is unispired and even perfunctory.

Rovio is taking a very expansive view of digital advertising and may be able to do some highly customized promotions and ad campaigns that are more analogous to TV than to conventional digital display. This was the original imperative behind Apple's iAd efforts.

Rovio plans to work closely with brand advertisers both in creating novel campaigns that it hosts and in lending its characters to third party advertising. The skill and vision of its new brand team should give us hope that the digital and mobile campaigns Rovio creates will operate as models or best practices examples for the broader industry.   

Waze Picks xAd to Deliver Location-Based Ads to Navigation App

Social navigation app Waze and xAd announced a partnership at Mobile World Congress in Barcelona today. Waze intends to deliver ads to users "along [the] designated navigation path." The company is not the first to try and do this; Mapquest initiated something similar with national advertisers a couple of years ago but in an incomplete way. 

Waze has a very engaged audience and has benefitted from the initial stumbles and challenges of Apple Maps. It was one of the alternative mapping and navigation apps recommended by Apple. Telenav also mixes location-based ads and navigation in an app. 

According to the press release this morning:  

Through the use of xAd’s proprietary technology, ads can be further targeted based on context factors such as past anonymous search behaviors while leveraging the unique functionality of Waze to serve ads at the most relevant time along their route – when the consumer is likely to see and engage with the offer…. at zero speed. 

In addition to its own social data, Waze integrates social and location-specific content from Yelp, Foursquare, Facebook and YP into its app. Users can choose results from any of these sources when they conduct a local search via Waze.

According to the press statement xAd will be the exclusive provider of both search and display ads in Waze. I was unable to find any example ads this morning in the app. I'm sure the integration will be thoughtful however. Waze recognizes the need to preserve the integrity of the user experience. Too many or irrelevant ads would risk alienating its audience.   

The Miserable State of (Local) Mobile Ad Creative

Location-based ad network Verve Mobile announced a Series C investment this morning of $15 million led by Nokia Growth Partners. This brings to more than $21 million the funding raised to date by Verve.

The company is one of several location-based mobile ad networks. An incomplete list of others includes xAd, YP, LSN Mobile, Telenav/ThinkNear, Marchex. In addition, all the major mobile ad networks offer varying flavors of geotargeting.

While local-mobile advertising holds enormous promise, most mobile display revenue forecasts associated with the segment are overblown for many reasons. They often contain overly simplistic assumptions or fail to recognize the complexity of the space and challenges that must be first overcome to realize its potential. 

In addition to local "infrastructure" challenges and the difficulty of proving ROI from mostly offline conversions, a major challenge facing local-mobile advertising is poor or sloppy mobile ad creative. Weak mobile creative is a problem with mobile advertising in general but it's especially true in the local space. The following are a few examples of the "current state of the art." 

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Beyond the fact that there's no call to action on the Tiffany's banner above, the landing page showcases various types of jewelry for e-commerce sales. However it's highly unlikely that a consumer would click on the ad and then buy a necklace or other jewelry item within the ad. People might go to the Tiffany's site later and buy there. 

However, what's much more likely is that someone would peruse the jewelry online but buy later in a local store. Unfortunately the store locator is yet another page down and generally buried. It should be much more prominently displayed on the landing page and connected to maps and directions. 

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The ad above was presented on the AP news app. One problem is that the ad copy is small and challenging to read. However, what's more problematic is the way that the ad dumps users into an HTML5 version of Google Maps without any context, branding or additional information. 

It's a map to lead you to a dealer (one infers) but you don't actually know what you're looking at or how it connects to the ad clicked on.  

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Immediately above is a Radio Shack ad that appeared in a local newspaper app. Like the Tiffany's ad it's really promoting e-commerce. Radio Shack has hundreds of local stores but nowhere -- not anywhere -- in the ad is there an obvious store locator. Again, the majority of users are unlikely to buy directly through the ad. The lack of a store finder is a missed opportunity. 

These are just three recent examples among many others of the many problems with mobile display and local-mobile display advertising in particular. 

Google Introduces Enhanced AdWords Campaigns to Boost Mobile Ads (and Revenues)

Google today introduced some major changes to AdWords to both make it easier to manage campaigns across multiple screens and to enabled more "nuanced" bidding and targeting. There's a very complete discussion at Search Engine Land.

A cynic or skeptic would argue the changes are directed primarily at bringing more advertisers into mobile and bringing mobile revenues up for Google (although advertisers can effectively still opt out of mobile). 

One of the major changes is that advertisers can now make mutiple bids ("bid adjustments") for a single ad based on variables such as device, location and time of day. Mobile bids will be set at desktop/PC levels -- mobile CPCs are lower than desktop CPCs -- and advertisers will have to actively reduce them if they want to bid less for mobile clicks. 

Some may see this as "strong arm tactics" by Google to raise mobile search revenues. However the company believes it's simply adapting AdWords capabilities for a new multi-screen environment.  

Below are some of the main bullets (slightly edited) from the Google Inside AdWords blog explaining the new features: 

Bid adjustments: With bid adjustments, you can manage bids for your ads across devices, locations, time of day and more — all from a single campaign.

Example: A breakfast cafe wants to reach people nearby searching for "coffee" or "breakfast" on a smartphone. Using bid adjustments, with three simple entries, they can bid 25% higher for people searching a half-mile away, 20% lower for searches after 11am, and 50% higher for searches on smartphones. These bid adjustments can apply to all ads and all keywords in one single campaign.

Dynamic creative: People on the go or near your store may be looking for different things than someone sitting at their desk. With enhanced campaigns, you’ll show ads across devices with the right ad text, sitelink, app or extension, without having to edit each campaign for every possible combination of devices, location and time of day.

Example: A national retailer with both physical locations and a website can show ads with click-to-call and location extensions for people searching on their smartphones, while showing an ad for their e-commerce website to people searching on a PC — all within a single campaign.

New conversion metrics: Potential customers may see your ad and download your app, or they may call you. It’s been hard for marketers to easily measure and compare these interactions. To help you measure the full value of your campaigns, enhanced campaigns enables you to easily count calls and app downloads as conversions in your AdWords reports.

Example: You can count phone calls of 60 seconds or longer that result from a click-to-call ad as a conversion in your AdWords reports, and compare them to other conversions like leads, sales and downloads.

All of these enhancements are designed to make search advertising both easier and more effective for marketers in a larger, more fragmented device universe. By the same token Google is trying to generate more money from its mobile advertisers and clicks, something it has struggled somewhat to do. 

In its last quarterly earnings Google reported that average CPCs decreased 6 percent vs. Q4 2011 (attributable almost exclusively to mobile). 

How Damaging Would 'Do Not Track' Be to Mobile Advertising?

The digital advertising industry opposes "Do Not Track" (DNT). No surprise there. Indeed, the industry went "ape shit" (to use the vernacular) when Microsoft declared that IE 10 in Windows 8 would be set to DNT by default. Yahoo and the The Digital Advertising Alliance, a trade group comprised of the American Association of Advertising Agencies, the IAB, the DMA, the Association of National Advertisers and the American Advertising Federation, said they would simply "ignore" IE 10's DNT default settings. 

The rationale ostensibly was: "Microsoft is making a decision for the consumer; this isn't the consumer's decision." However another reason was that DNT fundamentally threatens behavioral targeting, profiling and retargeting.

A widely held view in the online advertising industry is that consumers, if they fully understood the benefits of targeting, would willingly accept it in exchange for more relevant ads. There's mixed evidence on this point.

In a Q1 2012 survey of roughly 2,000 US adults the Pew Internet & American Life Project found that 68% of respondents didn't want to be tracked and targeted while 28% were comfortable with it "because it means I see ads and get information about things I'm really interested in." Thus two-thirds of these people were explicitly rejecting the notion of trading privacy for more relevant ads. 

 Online targeted advertising

This morning the US Federal Trade Commission released a report on mobile privacy. It makes a boatload of recommendations to developers, OEMs/platform providers and ad networks. Without listing them out in detail, they mostly focus on education and disclosures. However the FTC also recommends that platforms (iOS, Android, Windows, etc.) adopt a global DNT capability that would block third parties from collecting information about them (including location).

Here's what the FTC says about DNT in the report:

Some consumers may not want companies to track their behavior across apps. Indeed, one survey found that 85% of consumers want to have choices about targeted mobile ads. A DNT mechanism for mobile devices could address this concern.

Accordingly, Commission staff continues to call on stakeholders to develop a DNT mechanism that would prevent an entity from developing profiles about mobile users. A DNT setting placed at the platform level could give consumers who are concerned about this practice a way to control the transmission of information to third parties as consumers are using apps on their mobile devices.

The platforms are in a position to better control the distribution of user data for users who have elected not to be tracked by third parties. Offering this setting or control through the platform will allow consumers to make a one-time selection rather than having to make decisions on an app-by-app basis. Apps that wish to offer services to consumers that are supported by behavioral advertising would remain free to engage potential customers in a dialogue to explain the value of behavioral tracking and obtain consent to engage in such tracking.

Apple has already begun to innovate with a DNT setting on its platform. Apple’s iOS6 allows consumers to exercise some control over advertisers’ tracking activities via the “Limit Ad Tracking” setting. Although the setting could be more prominent, this is a promising development, and we encourage Apple and other platforms to continue moving towards an effective DNT setting on mobile devices that meets the criteria we have previously articulated for an effective DNT system: that it be (1) universal, (2) easy to find and use, (3) persistent, (4) effective and enforceable, and (5) limit collection of data, not just its use to serve advertisements. We will continue to have discussions with stakeholders in the mobile marketplace on this important issue.

If such a platform-level DNT capability was available -- and obvious -- to smartphone and tablet users, I suspect that a majority of them would adopt it, as the Pew data above suggest. Perhaps a meaningful minority percentage of users would accept tracking/profiling as the price of more relevant advertising. But I still believe it would be less than 50%.

Of course one of the things that users don't understand is that they'll get ads regardless -- just lower-quality ads. 

Facebook Delivers Strong Quarter, Mobile Now 23% of Revenues

Facebook delivered the goods this afternoon. The company beat analysts' estimates and reported quarterly revenues of $1.56 billion and $5.09 billion for the year. Advertising revenue for the year was roughly $4.3 billion.

Despite the beat, Facebook shares were down after hours. 

Advertising revenue for Q4 was $1.33 billion, or 84 percent of total revenue. Impressively mobile advertising represented 23% of total ad revenue, which is up from 14% the previous quarter.Even more significantly Facebook said that mobile daily active users exceeded web daily users in Q4 for the first time. CEO Mark Zuckerberg characterized Facebook as "a mobile company" accordingly.

Facebook revenues Q4

MAUs Q4 FB

Mobily only users FB

There were 680 million mobile monthly active users in Q4 (compared with just over 1 billion in total). Of those 157 million were mobile only users.

Yahoo Rebuilding in Mobile: Excerpts from the Q4 Earnings Call

Yesterday Yahoo reported Q4 2012 earnings and full-year results. In several respects company did better than expected in Q4, though display revenue was down 5%. Search revenue was up 14%. Display advertising is the single biggest source of revenue for the company. 

On the earnings call CEO Marissa Mayer discussed the company's strategy. Among other things, Mayer is focused on improving Yahoo's mobile sites, apps and products, branding them consistently and upgrading them in those areas where Yahoo wants to concentrate. Improved Yahoo Mail and Flickr apps were two recent product upgrades for mobile. 

Mayer is very focused on modernizing Yahoo user experiences and generating more usage and engagement accordingly. She believes that will bring more revenue opportunities including in mobile.  

Below are some of her verbatim remarks about mobile from the earnings call transcript:  

Yahoo! is focused on making the world's daily habits inspiring and entertaining . . . Essentially, we need to start a chain reaction . . . To start that chain reaction of growth, we've identified approximately a dozen products to focus on, each a daily digital habit. When taking multiple platforms into consideration for each product, desktops, mobile web, mobile apps and tablets, there's a lot of work to be done . . . 

Focusing more on the pure advertising and monetization standpoint, there's greater opportunity with the big 4: Search, Display, Mobile and Video . . .

In 2012, we saw our Mobile adoption grow to more than 200 million unique monthly users. From a monetization perspective, this is still a very nascent source of revenue for us. With any platform shift, revenue always follows users, and Mobile will be no different . . .

Obviously, we have a large mobile web offering and people tend to use things like Yahoo! Finance, omg! on their mobile browsers on their phone. They also tend to use some of our applications . . .[M]ost of our applications and our mobile web experiences have Yahoo! Search boxes . . .

In terms of having 50% of our engineering workforce on Mobile, I think that this is something that will ultimately happen. I think you start looking many years in the future, it's hard to imagine that there are going to be technology companies where that isn't true. To date, we have started to shift some of our engineering teams to be more focused on Mobile. We need to get to a critical mass on that.

Just a few years ago Yahoo was well ahead of Google in terms of mobile advertising and revenue. Today that's hard to believe. Cleary, however, Mayer "gets it" and is working with her team to address Yahoo's current mobile deficiences. And the 200 million monthly unique users is a very encouraging figure for the company. By constrast Facebook, Yahoo's biggest display rival, has 600 mobile uniques on a global basis. 

Even though Yahoo is building out its mobile assets, I would expect the company to make several mobile acquisitions -- perhaps on the consumer side but also of a mobile ad network or exchange.  In fact, I would be surprised if Yahoo didn't make a meaningful acquisition to bolster its mobile advertising business.