The mobile advertisement puzzle

Posted by in Mobile

I’ve been spending some time in the mobile ad space lately. I’m not an “ad” guy – and indeed I never see the ads on the web and just find them ugly. The only one that work on me are the retargeting ads showing me over and over again that gadget i’m trying not to buy.

Anyway back to basics… Why are brands advertising?

  • Brand equity: Let’s be fair, this kind of non-ROI-based advertisement has mostly disappeared from the web. This is the kind of advertisement that was typically used at the infancy of the ad-financed Internet, when brands where paying millions to get banners all over the place, but that would not lead to any actual money earned…. only brand equity
  • ROI-based ads: Getting a qualified email, making someone buy a product… all those actions are creating tangible value for the brands, hence giving them the ability to actually earn money from spending money on advertisement. Since the crisis kinda cut out any negative-ROI budgets, those ads are what brands are going for.

On the web, it’s pretty easy to earn money from an ad-recruited user

  • e-commerce => direct tangible money
  • sign-up & email acquisition => acquisition cost vs long-term customer value
  • Fan/follower acquisition : like the previous point but … well.. even harder to properly transform into an actual user/ customer

Now back to mobile. Life is way tougher here:

  • m-commerce: in 2011 it was accountable for 0.7% of total sales in 2011 (6.7B vs 188.1B)
  • acquisition: way harder than on the web, sign-up processes are hell, typing is hell, screen size is smaller and acquiring a customer is tougher. Even fan/follower acquisition with is an integrated experience is harder. Facebook’s latest iteration enhanced that greatly though.
  • Connexion: although everyone brags about their N-G network, white areas are still legion and even in dense city it may be hard to get a decent connexion

The main ways to sell something on the mobile at the moment are through the various stores (app sales, content sales…). I personally never click on ads as navigation being not as fluid as on the web I’m always pissed when I’m being moved away from the page / app I’m currently using.

The mobile puzzles adds a few pieces though to the web one

  • Location – less on iOS now – but fully on Android & co – being able to channel a mobile user to a physical point of sales as YOOSE is doing makes a lot of sense.
  • m-payment – wether you believe this makes any sense at all, m-payment is coming with a pile of solutions, from credit-card picture snapping, to square and paypal mobile or m-banking, you actually have plenty options to use your smartphone to pay.

Now just like Facebook has explained a gazillion times in their IPO documents, Media consumption is shifting massively from the web to mobile.

But this shift is way ahead of proper solutions to monetize the media as the mobile ad puzzle will remain incomplete as long as there’s no easy way to acquire a customer or perform a quick sale.

Bottom line, this market is amazing:

  • Huge potential for progression
  • New technical challenges (proper location-based campaign management at the web-scale has real technical challenges)

And although fortunes have already been done on the mobile ad market (such as the admob sale to google for 750M$ back in 2009) turns out they only scratched the tip of the iceberg.