The mobile ad industry runs the risk of getting over-hyped, but firms working in the
space are showing signs of growth even in the shadow of bigger Internet companies.
If you think of mobile advertising as being in its teen-age years, then you probably expect it to feel a lot of growing pains, in addition to the euphoria that comes at that time of life. Maybe there are growth spurts, mixed with bouts of anxiety.
Regardless of its maturity level, it’s increasingly becoming a cluttered space, but a smattering of companies say the outlook is getting better for several reasons. Network speeds have advanced, and phone functions – not just the iPhone – are improving. Brands are devoting more of their budgets this year to mobile advertising beyond the experimentation stage. People are starting to use more data services. Perhaps more telling: Mobile ad firms are getting calls from agencies rather than the other way around.
JOIN THE CROWD
The down side may be that with so many companies involved, it becomes confusing for advertisers. To name a few, you’ve got AdMob, Ad Infuse, Amobee, Millennial Media, MSN’s Screen Tonic, Nokia’s Enpocket, Rhythm NewMedia, and who could forget Google, Yahoo! and AOL’s Third Screen Media? They’ve got platforms, networks and inventories. But they’re all different and all vying, in one way or another, for wireless eyeballs.
AdMob, which doesn’t do deals directly with carriers, dubs itself the largest mobile advertising marketplace and recently opened an office in New York City to better serve agencies there. AdMob sells mobile ads on behalf of more than 3,000 publishers, including branded sites such as AccuWeather, CBS and ESPN, says Jason Spero, vice president of marketing at AdMob.
The company is going up against Yahoo! and Google, but that doesn’t seem to matter. AdMob has served more than 15 billion ads in the last two years, including more than 2 billion in the month of December alone. The company says it has seen dramatic growth, both in the number of campaigns as well as size of budgets available for mobile marketing.
Cowley: This ad
A significantly greater number of big brands are participating in mobile advertising far sooner than they did in the first two years of Internet advertising, says Brian Cowley, president and CEO of Ad Infuse, which is working with carriers and content publishers in the United States and Europe. “I believe very strongly the mobile advertising segment is growing a lot faster than Internet advertising did,” he says. What’s becoming clear is there is no one-size-fits-all approach. “We’ve always believed and the market is showing the carriers are going to want to work with multiple mobile advertising companies.”
BETTER THAN TV?
Mobile advertising via video is an area some mobile advertising companies consider more risky or nascent than areas like messaging. But that’s not stopping Rhythm NewMedia, which makes no bones about its desire to go after TV advertising dollars.
“We are to TV what snacks are to meals,” says CEO Ujjal Kohli. The company already works with carriers in Europe and is expected to launch in the United States early this year.
The TV poses several big problems for advertisers, he says. It’s difficult to target specific demographics. It’s not possible to control how often a given commercial is seen by somebody – if they see it once, they’re likely to forget it and if they see it more than three times, it gets irritating. The youth segment that brands covet so much don’t watch TV when they’re on the phone or PC. There’s too much clutter on TV, and Tivo and other devices give people more opportunities to skip commercials.
Rhythm addresses those problem because its can do “very, very precise” targeting, he says. Brands can target by age and gender. Frequency is more precise – “we can make sure no one sees it more than three times.” Young people are on their phones a lot. Video snacking, unlike television, is spread throughout the day, not just airing during primetime. And there’s not much clutter – a 35-year-old guy watching a sports highlight is more likely to remember a commercial on his phone, which doesn’t have Tivo.
So far, the video ads are mostly repurposed TV ads adjusted for the phone because the scale is not large enough to make a lot of phone-specific ads, but more of those are expected to come this year.
Cashen: Most video
Also working on more creative ways to insert ads in mobile videos is mywaves, whose business model is based on advertising. Susan Cashen, mywaves’ vice president of marketing, recently was in New York to meet with brands and content owners. “We are talking to people with brilliant creative ideas,” about video, in particular, to connect to the consumers, she says. Most of the mywaves video content is professionally created as opposed to user-generated video. Its users are predominantly 18- to 25-year-old males, but its base is broadening to include more young women, she says.
SEARCH & MORE
The mobile search and advertising space is heating up as well. In the last quarter or so, JumpTap more than doubled the number of carrier customers, some of which are not yet publicly announced, for its search and advertising solution.
Responding to the growth, the company recently hired interactive advertising veteran Paran Johar as its chief marketing officer. He’s in charge of opening JumpTap’s New York City office to work closely with the advertising community. Johar’s background includes MRM Worldwide, McCann’s digital division. “It’s rare that you have an opportunity to shape an industry. I think mobile advertising, mobile search is taking off and JumpTap is certainly at the leading edge of that,” Johar says.
Last year was a year of experimentation, whereas 2008 will be the year of initial scaling, says JumpTap President and CEO Dan Olschwang. “It’s very clear there is a strong momentum going for the white-label approach and more carriers understand this is the way to go if they want to sustain a strong position in the value chain,” he says.
This year, it’s not a matter of whether mobile advertising should be used but how best to use it, says Eric Eller, senior vice president of products and marketing at Millennial Media. Fox Interactive Media’s MySpace, for one, is working with Millennial to sell and serve mobile-based ads.
Consumers choose whether or not they want to engage with ads, and consumer interest appears to be increasing. Like almost anything, “if you have a great idea and a good creative concept, then you’re going to get the numbers you’re looking for,” says Jeff Arbour, vice president of mobile integration at The Hyperfactory.
Ad Infuse’s Cowley compares the mobile ad space to the first or second inning of a 9-inning game. “The game has started,” he says. But it might be a while before we see who wins.
|Microsoft & Yahoo!: 2 + 2 = ?|
Microsoft’s bid to buy Yahoo! for about $44.6 billion is focused on the deal’s online potential, but if it were to go through, it surely would bring changes to the mobile ad world, although sources disagree over how dramatic those changes might be. While Yahoo! reportedly was exploring other options as of presstime, some sources said if an agreement were reached, they could envision a stronger mobile competitor to Google, while others saw it as advantageous for smaller companies that offer white-label mobile ad/search solutions.
“In a sense, Microsoft is coming to the table with mobile assets that I think could dovetail nicely with Yahoo!’s,” says Neil Strother, analyst at Jupiter Research. “In theory, if the two companies come together and come to market with a cohesive mobile strategy and products around that … it would give Google some competition there.”
Scott Silk, CEO and president of Action Engine, says if the bid goes through, it would greatly enhance Microsoft’s presence in the mobile arena. “Yahoo! has been the hands-down portal winner for mobile innovation with its recently launched ad-enabled Yahoo! Go 3.0 service and its Yahoo! Mobile Developer Platform,” he said, in a statement. “Combining these products with the growing reach of Windows Mobile-powered phones could make a real impact and place Microsoft in a strong competitive position to fight Google’s Android strategy.”
Thus far, Microsoft has not gained much traction in establishing a mobile presence, says John Byrne, analyst at Technology Business Research. It doesn’t have a lot of operator partnerships. By contrast, Yahoo! has been signing up mobile partners, including Telefonica and a growing list of Asian operators.
Paran Johar, JumpTap’s CMO, says he doesn’t see a Microsoft/Yahoo! combination having any effect on the mobile advertising/search space, and if there were any impact, it would be favorable for JumpTap.
For one thing, a combination would lead to less innovation for the two companies, which would be distracted with a merger when “we’re at a tipping point right now in mobile marketing. Time is critical,” Johar says. For another, Microsoft and Google are perceived as not being operator-friendly, and Yahoo! has been on the fence, so to speak. If a deal goes through, it will be clear which side Yahoo! is on, he adds, and it’s not the carriers’. (JumpTap’s U.S. operator partners include AT&T, Alltel, Boost Mobile and Virgin Mobile.)
But Byrne doesn’t expect a merger to affect Google’s wireless strategy. Google is pinning its mobile prospects largely on the success of the Android platform and the attempt to take an “open standards” approach. Google has determined that if customers have their druthers, they will use Google for mobile search on mobile devices just as they do on the PC, he says. “So to the extent operators and manufacturers embrace the platform, the result will be more ad opportunities for Google and its advertisers. Not coincidentally, the platform is designed to make it nearly seamless to place ads on a mobile environment the way you can in a PC environment.”