Consumers are switching from static to mobile devices (smart phones, tablets, etc.) at an unprecedented rate. While many web publishers can still reach users by placing ads in a native browser – such as Safari on iOS devices or Opera on Android devices – the relatively small screen real estate makes many of these ads ineffective and overly obtrusive.
To stay relevant, and profitable, publishers must look for new ways to reach consumers on their mobile devices. I recently interviewed three thought leaders from SAS to find out what they’re doing to meet the new and growing mobile advertising opportunity: Jeff Wood, Ryan Treichler, and Jim Hazen.
To get everyone on the same page, how does mobile fit into the whole digital advertising world?
Jim Hazen: Back in 1990, people used a product called Prodigy, which let them email and post on message boards. It also had ads, which makes sense, as Prodigy was rolled out by a group of companies that included J. Walter Thompson, the ad agency. But it was the launch of the Worldwide Web in ’91 that really started the digital advertising age. Now fast forward to early 1996. That’s when NetGravity and FocaLink released the early ad servers. DoubleClick came out after that, and then came the cost-per-click networks. Mobile was around all this time, but the 2G technology couldn’t handle much more than text messages. The turning point for mobile came in 2002, when SK Telecom in South Korea launched its 3G technology. And then in 2007, we got the iPhone 1, and everything took off after that. Today, everything is moving to mobile.
Jeff, you’ve been in the ad serving business since the mid-1990s, so you’ve seen a lot of these changes firsthand.
Jeff Wood: I have, and it’s been a very exciting career for me. But the past year has been quite amazing. I’ve been talking with our customers, who are web publishers, and they are seeing their traditional user base shift dramatically from consuming content on PCs to consuming it on phones and tablets. We’ve been saying for about the past decade that “this is the year of mobile,” but it never took off. Well, this year it’s actually happening. Every company I talk to, publishers, banks, telcos, retailers, you name it, is now actively trying to figure out their mobile strategy. It’s a front-burner issue.
Ryan Treichler: I talk with publishers every day, and the majority of them are telling me that it’s a zero-sum game. Mobile is cannibalizing display. I know that Jim has heard otherwise.
Jim Hazen: It really depends on who you talk to. Some publishers are seeing mobile as an incremental thing not necessarily cannibalizing consumption in other channels, while others are seeing massive shifts in how their audience is consuming content. For the display business, many publishers have been seeing a long-term decline in viewer registration. Right now, only about 20 percent of their traffic registers or logs in. So they’re looking at mobile as an opportunity to change that. If they can get users to register with an app they’ve created, they can expect to see 80 percent or more people logging in. That will give them better customer data, which can be better monetized.
That’s because you can provide advertisers with a more targeted audience to selling, cross-selling, and upselling.
Jeff Wood: Most publishers have really good data about their customers. However, they have struggled to leverage this asset because visitors were not willing to sign in to the PC-driven web. Mobile apps reduce the friction in the registration process dramatically, so this now becomes an opportunity for publishers to rethink their first party data strategy and to make use of a 360 degree multi-device view of their customers. This creates a win-win-win situation. Advertisers get the audience they’re looking for, publishers get better value for their inventory, and consumers get a better experience. The result is that publishers end up getting better value for their inventory, inventory that has been quickly losing value on the PC-driven web.
What are some of the technical obstacles that have to be understood in a mobile strategy?
Ryan Treichler: There are really two major components: mobile web and delivery into apps. Many publishers have simply considered phones and tablets to be just another type of web display device. This is straightforward ad serving. Of course, when you have a screen that is a fraction of the size of laptops and desk monitors, creative is hard to squeeze in. You also risk annoying the user and getting inaccurate click-throughs. There are some studies out there that show mistaken – or fat-finger – clicks at as much as 50 percent. The mobile strategy that gets the value publishers are looking for involves ad delivery into applications.
Jim Hazen: I do believe that mobile apps give the opportunity to get context via authentication if you provide value, whether it’s information, offers, or rewards. I believe that publishers have seen a decline in value mainly due to the perception of value. If there is no value, there is no need to authenticate. If a publisher can provide value – such as exclusive content, more relevant content, or rewards – then the user will be more likely to authenticate. That authentication, combined with location, gives the ultimate context for analytics to understand your audience. For the first time, we can understand more about customer behavioral signals to offer them more relevant and compelling information, and can then generate a more valuable audience for publishers to monetize on the other side as well.
Jeff, a mobile ad strategy sounds like it’s a tall mountain to climb. What are some things mobile offers to make it worth the effort?
Jeff Wood: There are so many ways that mobile can revolutionize not only ad serving, but a company’s entire digital marketing strategy. Above all, mobile is going to become the spearhead of all forms of customer engagement; it’s increasingly the first contact you’ll have, and thus must feed effectively into everything that occurs subsequent to that moment. It thus presents an urgency and immediacy for advertising that never existed in prior forms of display advertising.
Another thing that only mobile can offer is geo-fencing, which is simply location-based targeting. Suppose the advertiser is a national chain of coffee shops, and you want to not only target a certain demographic on a certain day and time, but you only want to target a specific location. With geo-fencing, you can pick a location on a map and draw a circle. If the user fits all the other criteria and walks into that circle, he or she will get an offer from the coffee chain.
So mobile can provide well-targeted marketing.
Ryan Treichler: We can get even more targeted than that. Suppose the circle has a highway or river in it and you serve an offer, but the recipient can’t get to the coffee shop. That’s a bad serve. But if you build things like walk-time constraints into the campaign, then you are only serving people who can actually use the offer. We can also use device detection to understand device constraints, which drive the size and type of creative offered on that device. This process creates a significantly more optimal experience.
Jim Hazen: Location-based advertising sounds good in premise, but I believe that advertisers aren’t quite ready to be all that specific with it today. Analytics have long been used for precise targeting, but for mobile there’s definitely a maturity curve. The mobile location can be used as a signal to say “here I am.” A marketer might have already generated a list of offers an individual is eligible for doing marketing optimization, and is just waiting for some type of signal to tell them they are ready to be served. I think that’s what most marketers can handle today, where they run batch analysis to figure out the optimal offers and then wait for a signal to deliver them. This will eventually evolve into more of a real-time, adaptive learning model where location and content are constantly being re-evaluated to determine what the next best offer should be.
Better targeting sounds like it will help publishers get more from mobile than they are now. Jeff, what are some of the other things that will help monetize mobile advertising?
Jeff Wood: Like display, mobile ad serving needs more than just matching creative with the user. Publishers need robust reporting and analytics to better understand their inventory. Forecasting is key – it’s hard for a publisher’s sales team to sell inventory when they don’t know how much they will have. Without good forecasting, you’re just leaving money on the table.
Jim Hazen: We are still in the infancy of mobile advertising, which means that there are huge challenges – but also huge opportunity. I think it’s obvious that that is where everything is heading. Look around and everyone is buried in their phone; but how do you monetize that experience? That’s still a little fuzzy. If you look at what people use their device for, that gives some indication where advertising needs to head: checking weather, reading news, watching videos, sports, social media, taking pictures, and so on. Advertising needs to be where the user is most engaged on their mobile device, in a way that is suitable to their activity.
One last question: how does mobile fit into an overall digital marketing strategy?
Jim Hazen: From a CI perspective, I don’t see mobile as a separate entity, but as part of an over-arching platform. Organizations aspire to move away from being channel-centric and towards being customer-centric. This means treating customers consistently across all channels, acting like you know them and managing campaigns and offers across all these different channels. Customers increasingly expect it. Whether you interact with a brand online, in a store, in a call center or on your iPhone, you expect to have a consistent experience. Companies that don’t get this will ultimately lose out. While organizations aspire to this goal, they are struggling in their efforts due to data siloing, organizational issues and technical complexity. Mobile just adds to all these challenges.
At the end of the day, I don’t think mobile will be its own thing. Rather, it needs to be part of an integrated marketing management suite, one that utilizes a common data platform to create a complete view of a customer, achieved with deep analytics. That then gives the company the ability to manage and execute across all channels, both digital and non-digital. That is the marketers’ vision.