“People from the desktop world” are ignoring mobile advertising

Talk to Vungle CEO Zain Jaffer about display advertising and he doesn’t pull any punches.

“It’s dead,” he says.

He then goes on to talk about how kids consume technology: “Kids are now going around trying to swipe newspapers, and tap televisions,” he says.

Vungle is a mobile video ad platform, so it’s not surprising that Jaffer has a negative bias towards the well-worn standby of web ad formats. Still, bias or not, as mobile becomes a more dominant advertising force, many are questioning the best way to engage users on their mobile devices.

Jaffer says the old formats are outdated and, while he’s tried to influence how the IAB (the organization that sets standards for ads) treats mobile, Vungle instead has had to create its own formats. “The industry is moving so slowly because, frankly, it’s full of people from the desktop world.”

His frustration extends to agencies, brands, and media companies who he believes are controlling advertising spend by staying with what’s safe — both traditional media and desktop based digital. “They’re holding the industry back by trying to force the world to be the way they know it. People are forgetting that smartphones and applications are completely different. They may have people inside who love tech and understand that the shift is happening, but it’s still much safer to spend tens of millions of dollars on a Super Bowl ad.”

In part, it’s because we’re still early, and data about what works and what doesn’t is only now starting to hit home. In a detailed survey of 176 publishers, VB Insight found that ad units offered by companies like Vungle and Ad Colony are performing among the best of any unit types out there.

Many senior people in large companies understand the urgency to go mobile, Vungle’s Jaffer acknowledges, but often they can’t persuade the ultimate decision-makers. “If people try and take a risk and spend money inside on, say, mobile applications, they’re putting their neck on the line — it’s not in the DNA that these agencies and brands come from.”

These companies need to incentivize innovation, and not just as a test budget, he says. “They need to put a real damn budget against it.”

As to Vungle, it’s creating video advertising opportunities that have never existed before, such as in-app video ads. Let’s say a player’s in the midst of a mobile game, and their character dies. At that point, they’re given the chance to watch an embedded video ad, and in exchange, their character is revived and they can pick up gameplay right were they left off.

“When you look at how people consume TV, or even desktop, it’s definitely a lean-back experience,” says Jaffer. “But if you look at how people consume content on their phones and applications, they’re leaning in, engaged, and you’re capturing them right at the perfect time.”

In this way, the question of format for him isn’t so much one of technical specs, but far more about the context around the ad itself. “When and how you experience the video is where the power for formats really lies — and no one today has really thought about formats in those terms.”

The majority of Vungle’s clients are game publishers. That could be because, as Jaffer claims, the freemium model is leaving a lot of money on the table. While installs go way up with free games, Jaffer says, “believe it or not, less than 5% of players engage with in-app purchases.” Of course, for him the answer is advertising which may help monetize the remaining 95% of players.

Vungle isn’t limiting itself to games. Lyft has become a major advertiser, and Jaffer has been in talks with several other content publishers trying to monetize the mobile channel. He’s discovered something that has him going back on a previously-held position.

“I used to believe mobile web is dead and apps are the future.” he offered, “But now I actually believe some publishers do better inside mobile web and some publishers do better inside applications.” The bigger challenge for large content publishers is the referral traffic driven by Facebook and Twitter which has become very difficult to monetize.

“The user clicks on a particular post in a friend’s newsfeed, goes to the mobile web page, reads the article, and they exit. These guys’ biggest pain point is, ‘How do we monetize this traffic that really has a short lifetime value?’” He spoke of one large publisher he couldn’t name who told him 84% of their traffic is coming from referral.

Jaffer is trying to help publishers crack that one.

Zain Jaffer, CEO of Vungle, will be joining other senior execs at Mobile Summit and participating in one of the fireside sessions focusing on rich advertising in mobile. More details on the sessions at Mobile Summit and be found on the event’s agenda page. Space is extremely limited — we’ve only got seats for a total of 180 executives — but it’s not too late to apply for one of the remaining seats.