4 trends fueling mobile advertising

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There’s no denying the growth of mobile advertising. eMarketer has increased its forecasted ad spend for 2012 to $2.6 billion, an increase of 80% over 2011. Mojiva’s mobile ad network manages about 45 60 billion ad impressions a month. Another ad network, InMobi, says smartphone impressions on its global network grew 488% in 2011.

What’s driving this growth? The most obvious factor is simply the increase of smartphones and tablets. New research from Google finds that smartphone penetration has reached 45% in the UK, 38% in the US and France, 23% in Germany and 17% in Japan. The Pew Research Center’s Internet and American Life Project found that tablet ownership among US adults nearly doubled (from 10% to 19%) between December and January.

More people are using their mobile devices to access the web, and apps are growing like weeds across Apple and Android platforms. In the Google study, more than two-thirds of US smartphone users said they access the mobile Internet daily.  

There’s still plenty to complain about, of course. A lack of scale has kept tablet-specific advertising out of reach for many advertisers and publishers. The mobile ecosystem remains a confusing jumble of sell-side and buy-side platforms and service providers, increasing the complexity of multichannel campaign management and measurement for brands, buyers and publishers. Excess inventory has driven down CPMs, at least for consumer publishers.

“There’s so much inventory it’s unbelievable,” said Dave Gwozdz, CEO of Mojiva, parent company of the Mojiva mobile ad network and Mocean Mobile, a mobile ad serving platform. “Billions and billions of impressions go unsold every day.”

More publishers and advertisers, however, are finding that the potential benefits of mobile publishing outweigh the risks. As COLE Publishing’s Jeff Bruss noted in a recent post, “Recognizing mobile opportunities early could keep your bomb shelter stocked with enough canned goods to survive the latest digital apocalypse.”

Where is mobile advertising heating up the most, and where do the biggest opportunities lie? There are four emerging areas that publishers should at minimum be thinking about, if not building competencies around, over the coming months.

HTML5

Many publishers are thinking about HTML5 development as it relates to their own content. But there are also significant potential benefits from HTML5-based advertising. HTML5, with its rich media capabilities and cross-platform support, opens up a wealth of creative possibilities for publishers and advertisers.

“Rich media providers are building services and self-serve capabilities that make it much more efficient to build rich media ads,” said Victor Milligan, CMO of mobile ad exchange Nexage. “This will accelerate the quality and quantity of high-value ad creative.”

HTML5 is not just for creating splashy car videos or movie trailers; B2B publishers can use the technology to help advertisers integrate lead-gen programs, including webinars and microsites with multiple content assets, into mobile or in-app ad units.

“For B2B publishers, it’s ultimately about productivity – how do help a reader learn about something in the shortest amount of time,” said Martin Hensel, president of Martin Hensel, president of Texterity, a publishers of digital magazine editions and other digital and mobile publishing solutions. “You have to make it worthwhile for the reader to engage. And we think HTML5 is the ultimate engagement tool.”

Texterity is redoing its digital edition platform around HTML5, a move that Hensel said will “allow us to radically streamline our development process around one core infrastructure.” The company plans to retire the proprietary Web browser that’s currently required to access the digital editions it builds for clients. HTML5 will also enable Texterity to integrate the development silos it now must maintain to support iOS and Android apps.

Video

HTML5 encompasses all rich media ads, but video deserves a separate mention as a key driver of mobile advertising. The potential for mobile video has some experts positively gushing at growth opportunities. Spending on mobile video advertising is expected to increase by 122% to $151.5 million this year, up from $68.2 in 2011, according to eMarketer.

Publishers and advertisers are learning more about where video enhances the mobile experience instead of detracting from it. Pre-roll, for example, doesn’t play well on the small screen.

“There’s a greater emphasis toward relevance,” said Milligan. “We’re seeing a better intersection of the nature of the ad and the nature of the viewing experience.” One example: Inserting an interstitial within the logic of a game app, where it serves as an intermediary to the next stage instead of intruding on the game itself.

Increasing the quality and relevance of the ad also increases their value to publishers. Milligan said rich media ads on the Nexage exchange typically sell for 8-11 times more than a typical banner ad.

RTB

Real-time bidding – when combined with a private exchange – will help publishers get more mileage from their mobile inventory without cannibalizing their direct sales. Because third-party cookies are not available on mobile devices, a private RTB exchange is appealing to mobile marketers because it provides access to first-party audience data.

“For many premium publishers, there’s a broad question about whether mobile ad exchanges a key part of their channel,” said Nexage’s Milligan. “They’re trying to find ways to improve efficiencies without destroying value.”

In December, Nexage announced plans to help publishers launch private mobile exchanges based on the company’s RTB platform. A private exchange with real-time bidding – supporting the same price floors and other controls they maintain with their direct sales teams – is a way to drive volume while maintaining quality and premium pricing, Milligan said.  

M-Commerce

Forrester says mobile commerce will remain a small but growing portion of the overall e-commerce market, with revenues reaching $10 billion this year – although that’s still just 3 percent of what Forrester expects in the total e-commerce market.  In an MPA study of tablet magazine readers last fall, 59% of respondents said they would like to buy directly from ads in digital magazines.

Mobile commerce is slowly moving away from the click-to-call model that many advertisers managed so badly. A new generation of m-commerce functionality is emerging that will tie ad creative directly into mobile payment systems such as Google Wallet, making purchases easier and more seamless. Location-based functionality will enable brands to offer daily deals or direct users to a local retailer or dealer.

In a 2011 Texterity study, 66% of magazine app users said they took some action on advertising, including 40% who said they had made a purchase directly through the app or via a website, store or catalog.

While in-app purchasing has been a logistical challenge for smartphone users – typing credit card information onto a small screen can be pain – tablets stand to make these transactions easier simply because they provide more screen real estate to fill out payment information.

“Mobile makes purchasing a here-and-now event,” said COLE Publishing’s Bruss. “Those who deliver the information, ads and experiences that best fulfill that need, will earn the greatest returns.”

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