3
The market has spoken. After five consecutive years of unfulfilled potential for mobile advertising, Millennial Media’s recent, hugely successful IPO shows the market’s recognition of mobile’s real value. And with good reason.
We all thought the high profile acquisitions of AdMob and Quattro by Google and Apple respectively were the turning point. But that was more about land-grabbing and posturing for what was to come.
And what was to come was the realization of an industry that has been in a nascent stage for too long. What Millennial Media’s IPO reveals is that the market is now seeing what the industry already knew – mobile is the next move for the massive, big-spending advertising industry.
Yodel Mobile says smartphone usage in the UK alone has risen 70 per cent in two years to include over 13m adults. Gartner says mobile advertising revenues will exceed $20bn (£12.7bn) globally by 2015, and the Internet Advertising Bureau and PwC say that the UK market alone will exceed £1bn in that same timeframe. Added to all this, comScore released a report last fall stating that 25 per cent of consumers in the UK recall seeing an ad on their mobile device.
As smartphone penetration in markets such as the UK grows, so does the potential of mobile advertising revenues to become a significant line item in ad spends. The key to any ad campaign is reaching as many eyeballs as possible. And clearly, mobile is proving to be capable of just that.
Key drivers
The adoption of faster and more functional devices and better network optimization to access content, along with the growth of an app economy, are some of the key drivers creating the right conditions for significant increase in mobile advertising revenues. Mobile usage has disrupted how content is consumed, and mobile advertising has disrupted the advertising industry.
More and more brands are beginning to recognize that the mobile channel must become a significant part of their overall marketing mix. Yet, according to analytics company Flurry, budget spends on mobile are disproportionate, compared to the time consumers spend on their mobile devices. A recent Flurry report revealed that the amount of time that people spend on their mobile devices is 23 per cent, compared to about 40 per cent of time that is spent watching television. Yet mobile receives about 1 per cent of ad budget spends, compared to the 43 per cent that television receives.
Mobile offers brands the ability to connect directly with consumers like never before. Today’s brand can connect in so many ways - through social networks, the mobile web or in-app. Brands can experience direct responses, receiving real-time feedback from consumers via the mobile channel.
Mobile ad networks deliver not only eyeballs, but also, engagement, and the ability to transact. An ad that offers a coupon, or special offer, enticing the consumer to click on the ad, is where the real value of mobile advertising lies.
The value of an ad is no longer solely about an impression but rather, about engagement. And this is where a shift is occurring for media buyers. Today, brands can come into contact with more traffic via a mobile ad, but the ROI on clickthroughs and post-click engagement is where the true value of mobile ad spend can be found.
An ad offering a “free test drive” at your nearest luxury car dealership, for example, is enticing. Click on the banner and arrive at the contact information. One more click and you are a phone call away from booking that test drive. The consumer is willing to transact, but convenience is key. This is where brands should consider measuring the immediate benefits of mobile advertising.
Now, ask anyone if they would prefer a mobile website or a mobile app without advertising, and you will get a resounding yes. But ask the same people if they would rather pay for apps or have them subsidized with ads, and the answer will tend towards free. And finally, ask if they would prefer an ad that is contextually relevant and hyper-local, and again, the answer will be a resounding yes.
Numerous challenges
There are many mobile ad networks for brands, agencies and media buyers to choose from. More importantly, there are many mobile advertising strategies to consider to create the most effective campaign that will generate the results necessary to justify why mobile must be key in any ad budget. Yet there continue to be numerous challenges to overcome.
Mobile advertising is complex, with a fragmented mobile technology environment due to thousands of different devices, and different operating systems, accessing hundreds of different networks around the world. Consumer behaviour remains unpredictable, in terms of where and when users will consume content on a mobile device. And finally, there is no unified approach or standard to measuring performance and user interactions.
But these can be overcome. Millennial Media’s valuation jumped to $2bn when it went public; its shares popped 97 per cent on its first day of trading. While founder Paul Palmieri once joked that Quattro and AdMob stole the spotlight, Millennial ran out of the gate stronger than all. The market clearly believes that mobile advertising is poised for tremendous growth.
Michelle Sklar is VP, industry relations, at Poynt