Mobile advertising: It’s overrated

Samir Soriano is the director of marketing at display ad retargeting platform maker ReTargeter.

Mobile ads aren’t effective. They could be, but they’re not yet, which makes me wonder why so many advertisers spend so much money advertising on this platform.

Mobile ads are annoying, ugly and often irrelevant to the end user. Over 40% of college students in the US said they found mobile ads to be annoying, while less than 2% of mobile consumers said they pay attention to targeted expandable mobile ads. A poll by YouGive found that only 14% of people ever click on mobile ads, and a report from Deloitte shows that about 88% of UK mobile phone owners ignore mobile ads.

Just a decade ago banner ads were seen in the same light: ugly, annoying, and ultimately ineffective. More recently, however, display ads have made improvements in their designs and the way they’re targeted. Recent case studies have proven this. Smartly targeted and well-designed campaigns can work to increase brand visibility and purchase intent. In 2010, display saw revenues totaling $9.9 billion, up 24% from $8.0 billion in 2009. Google’s Neal Mohan made a prediction at the Interactive Advertising Bureau (IAB)’s MIXX conference that display advertising will become a $50 billion industry by 2015. Mobile may be receiving all the hype, but display is what’s actually driving the revenue and innovation.

IAB and PricewaterhouseCoopers estimated mobile ad revenues to be $550 – $650 million in 2010, and the number of companies advertising on mobile has more than doubled in the past two years. While mobile advertising has seen explosive growth over the past few years, its ability to add value to advertisers is nowhere near that of display advertising’s.

It will eventually reach display’s level — probably soon — but to get there, there is a lot it has to learn in terms of targeting and design.

Learning from Display: Targeting

Display advertising has seen a huge maturation since the inception of real-time bidding. It has allowed marketers and media buyers to advertise across a large amount of inventory at an affordable volume. Today, low budgeted online marketers can target their ads behaviorally and contextually across some of the most visited and relevant sites, and witness a growth in brand recognition and sales. Cookie-based retargeting methods, which allow advertisers to use cookies to target audiences based on their browsing behavior, have really driven improvements in the overall effectiveness of display advertising. When combined with additional contextual, geographical, and/or demographical targeting layers, retargeting gives advertisers access to some of the most effective online advertising capabilities available. While display targeting isn’t perfect, it has definitely made huge advances, and has been proven to add value.

While mobile advertising has a lot of similar targeting options, it is heavily lacking on behavioral data. Your impressions can be focused on apps that are more appropriate for your demographic and geographic audience. However, cookie-based retargeting methods in the mobile space are still very new and don’t work across all platforms due to mobile’s fragmentation. iOS Safari browsers, which consist of 23.5% of mobile browsing in the US, actually disable third-party cookies by default, making mobile retargeting a tough feat to accomplish.

However, some companies out there are working hard to help advance mobile’s targeting capabilities.

• New York-based TapAd is working hard toward creating an effective mobile retargeting solution. While its service works across Android OS, which controls the majority of mobile browsing, it still needs to tackle the iOS behemoth, which has a very strong mobile presence, as well as a massive majority share of tablet browsing. Mobile ad targeting needs to become more relevant to the end-user – its capabilities will get there, but there is still a bit of evolution required.
• Another New York-based company, AppNexus, offers a real-time advertising platform that allows companies to buy, sell, and build technologies around its display inventory exchange API. It has also recently added in-app mobile inventory to its arsenal. While this may not seem groundbreaking at the moment, taking this step allows companies to build targeting capabilities over AppNexus’ inventory or integrate their own mobile data and inventory into AppNexus. Additionally, it isn’t too far fetched to think that AppNexus is starting to build its own mobile-exclusive targeting capabilities.

Learning from Display: Creative

Do you remember what banner ads looked like in 1999? Here’s a reminder:

The progression of banner creative over the past 15 years is truly remarkable. New efficiencies in Javascript, Flash, and overall internet bandwidth have advanced banner ads from annoying low-res flashing .gif files to something more along the lines of mini-websites. These ads are easily accessible by being embedded alongside publisher content that viewers have actively navigated to. Combined with the effective targeting and end-user relevancy that display advertising offers, display ads are finding new ways to not only be clicked on, but to be engaged with by the right people.

By contrast, today’s in-app mobile ads aren’t helpful and remove a lot of value from the end-user’s app experience. These ads are obtrusive, and half of them are clicked by accident. Mobile bandwidth can’t handle high res images just yet, and mobile screens aren’t big enough to show ads that aren’t obtrusive.

Display ads similar to the ReTargeter ad pictured (disclosure: I work for ReTargeter) fit nicely within browser windows. They can contain multiple points of engagement and social sharing capabilities, which add a lot of value to the viewer’s overall brand experience. Conversely, in-app ads take up a huge chunk of real estate, which means they’re easily tapped accidentally. The ad-supported version of Angry Birds, for example, is notorious for this: Ads tend to pop up in the middle of gameplay, ruining the flow of the game for the user. On the advertiser’s side, these static and often irrelevant ads ultimately diminish the value of the brand.

Just as some companies are striving to improve mobile targeting, other companies are redefining mobile creative and how it is delivered.

• San Francisco-based Flite is one such company. Its platform allows advertisers to create interactive display ads and comprehensive mobile mini-sites. Where the platform really shines is in having its display ads push the mobile mini site onto a consumer’s phone. Innovations like this are a step in the right direction, but we have yet to see ad networks integrate any sort of native display-to-mobile functionality.
• Innovation isn’t exclusive to smaller companies like Tapad, Flite, and AppNexus. Google has been working to help move mobile advertising in the right direction as well. Google says that one in five search queries in retail are on mobile phones, and that most of these queries are in reference to local availability. Because of this, Google has created a free and simple mobile landing-page creation tool, targeting local small businesses. While mobile landing pages aren’t technically “creatives,” they do serve a similar advertising purpose. Mobile search users far too often end up on a local store or restaurant’s site via search, but many sites aren’t optimized for mobile browsers. Companies that use this tool will help keep their mobile visitors from bouncing too quickly, but I think that the full power of a mobile landing page has yet to be discovered.

What’s next for mobile?

For businesses today, mobile should take a back seat. It has another four years before it’s really effective. Right now, it seems that mobile advertising is still where display advertising was in 1999. Display ads have seen a lot of advances since then. With vast improvements in targeting capabilities and creative design (augmented partly by hardware improvements), display has slowly evolved into something that’s relevant and interesting to consumers. It will take some time, but I foresee increased mobile bandwidth, more unified mobile browsing standards, and a redefined definition of mobile “creative” will all help fuel the effectiveness of the already growing mobile advertising market. I can’t wait to look back to this article four years from now.