What's holding back tablet advertising?

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Tablet ownership continues to grow rapidly, and many publishers remain convinced that tablets hold the keys to their digital futures. But tablet-specific, in-app advertising – the kind that commands premium rates – continues to lag.

As magazine and newspaper apps proliferate – media consultancy McPheters & Co. tracks nearly 4,000 such iPad apps as part of its iMonitor service – there’s plenty of opportunity to capture premium ad dollars through advertising that takes advantage of tablets’ touch-screen functionality and larger screen sizes.

Relatively few publishers and advertisers, however, are investing heavily in rich media ads that provide compelling in-app experiences on a tablet. Others that experimented with the platform now seem to be pulling back, convinced perhaps that the return does not yet justify the resources required to produce the ads.

“We’re seeing some exceptional advertising, but we’re not seeing as much of it as we did at one point,” said Rebecca McPheters, CEO of the consultancy that bears her name. Some publishers, she added, are reverting to traditional print ads enhanced with a link or two.

B2B publishers in particular have yet to warm up to tablet advertising. For many, the numbers just don’t justify the investment at this point, said Martin Hensel, president of Texterity, which creates digital editions for 800 clients, the bulk of which are B2B and association publishers. 

For now, many of these business publishers are content to sell mobile display or print-replica ads for their digital editions – which means they’re leaving money on the table. “By selling standard ads, publishers are underselling their mobile inventory,” said Hensel. “They could be getting $35 CPMs, but right now they have no way to differentiate.”

A lack of scale

A lack of scale is one inhibitor to greater commitment by consumer and business publishers alike.

“Tablets are growing in popularity, but as a percentage of all devices we reach, it’s still a pretty small segment,” said Dave Gwozdz, CEO of Mojiva, parent company of the mobile ad network Mojiva and the mobile ad serving platform Mocean Mobile. “While tablets are growing wildly, the users that are in a particular piece of content at a particular time makes it hard to get scale.”

Another issue inhibiting tablet-specific creative: the newness of the platform and the myriad of devices, with varying screen sizes, operating systems and UIs. Combine this with an already complex mobile ad ecosystem – in which publishers, developers, advertisers and agencies all handle the creative at some point in the publishing process – and you can understand the hesitation. Not to mention the common errors, ranging from load and display failures and bad links, that consultants such as McPheters are seeing.

“Because the ads have so many parents, we see more quality control issues with [in-app] advertising than with the editorial,” she said. One recent example: an audio accompaniment to an ad that failed to turn off when the user navigated to a new page.

“The creative was great,” said McPheters. “If only they could have done it right.”

Evolving technology and standards

Just as with any new platform or technology, most of these issues should be resolved as the technology matures, standards (such as HTML5) are adopted and best practices emerge. More pieces are falling into place. Google, for example, introduced in December new tablet-specific ad formats, including rich media templates that “will make it easy for advertisers to create rich media ads for tablets using existing assets (photos, logos, etc.) and then implement them across platforms,” Karim Temsamani, Google VP of mobile ads, wrote in a blog post.

“While most advertisers do not need to create tablet-only campaigns today, they should start thinking about how they can engage their customers on tablets in distinct ways and using made-for tablet formats,” Temsamani added.

There is incentive for publishers and advertisers to get this right. Recent studies show that engagement and response rates for tablet advertising are much higher than for static print ads. A November 2011 survey by Texterity found that nearly two-thirds of magazine app users said they have interacted with an in-app advertisement and 40% said they’ve made a purchase as a result, either directly from the app or later at a store, online or through a catalog.

In an MPA-sponsored study last fall, 59% of respondents said they want the ability to purchase products directly from ads in digital magazines.

For B2B and association publishers, Texterity’s Hensel believes the best path to early adoption if in-app tablet advertising lies in an ad network that hosts and serves HTML5-based rich media ads. Texterity is in early discussions with Crisp Media on a solution that will help publishers more effectively support HTML5 ads at scale, he said. 

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