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Mobile Advertising the Operator Holds the Advantage


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  • 1. Service Provider Mobility: Mobile Advertising – The Operator Holds the Advantage Posted by Brian Walsh Sep 15, 2009 The online advertising market is forecasted to exceed $40 billion in the U.S. and $52 billion globally by 2011, representing the fastest growing segment of the overall advertising market (Piper Jaffray & Co.). Mobile Advertising is the fastest-growing segment within online advertising and is expected to exceed $14 billion globally in 2011 (Strategic Analysis). And mobile advertising is effective! Multi- channel ad campaigns have demonstrated that a mobile ad component delivers a disproportionately larger percentage of campaign traffic, click-through rates, and other call-to-action behaviors than fixed line online advertisements. An Imbalanced Ecosystem Mobile operators have a unique opportunity to insert themselves into – and gain revenues from – the online advertising ecosystem. In the fixed broadband internet, a small number of players have dominated the market, leaving service providers struggling to gain a meaningful share of advertising revenue. But in mobile, the advertising market is still nascent, and operators have the opportunity to clearly establish a role as a compensated player in the value chain. The mobile advertising ecosystem is made up of multiple players: advertisers, advertising networks, agencies, publishers and mobile operators. Advertisers contract for an ad campaign with an advertising agency, who works with online publishers and advertising networks to place ads (via web banners, Flash-based ads, text links, or embedded video) over mobile operator networks into the ad inventory on web pages. In the existing ecosystem, the mobile operator receives very little revenue from mobile banner or display advertising delivered to its subscribers on smartphones or laptops/ netbooks with mobile broadband dongles/aircards. Generated by Jive SBS on 2009-12-07-07:00 1
  • 2. Service Provider Mobility: Mobile Advertising – The Operator Holds the Advantage Challenges to Mobile Advertising Targeting Selection of ads for delivery on a web page usually starts with contextual advertising, which involves the placement of ads based on the content and theme of the visited web page. However, contextual advertising has limited effectiveness because while the ad insertion might have relevance to the web page, it isn’t necessarily relevant to the individual user accessing the web page. Traditional methods for improving online ad targeting have relied on tracking of web browsing behavior with cookies, which are used by advertising networks to track web preferences and usage patterns. However this approach is often unreliable because many savvy users regularly delete cookies or set their browsers to a privacy mode to block them. Other approaches to track users based on behavioral targeting techniques have been opposed by consumer privacy groups in some countries. Operators Can Uniquely Improve Mobile Advertising Effectiveness Missing from today’s approaches is the role that mobile operators can uniquely play to improve the performance and efficiency of mobile banner and display advertising. Advertisers, online publishers, and advertising networks are willing to pay operators for accurate and reliable targeting information to improve the delivery of campaigns and thus command higher CPM rates from advertisers. Operators have additional subscriber information such as location, user device type, bandwidth speed, etc., which can enhance the effectiveness of online advertising campaigns. The challenge for operators is to provide this type of information and protect subscriber privacy while still providing high value to the advertiser. Generated by Jive SBS on 2009-12-07-07:00 2
  • 3. Service Provider Mobility: Mobile Advertising – The Operator Holds the Advantage A new and interesting approach that Cisco is developing with partners and operators provides the participants in the online advertising ecosystem with anonymous demographic data that can be used to effectively target advertising without compromising subscriber privacy or tracking the behavior of individual users. Using a high-speed, low-latency application blade on the Cisco 7600 Series Router, the operator inserts an “identifier” into the HTTP headers of selected IP data streams, and shares these encrypted identifiers with trusted online advertising partners. These operator-controlled identifiers are correlated with demographic databases which can only be accessed by advertising partners registered to the operator’s advertising ecosystem. Information is delivered in real-time to the advertising network partner describing the source of a web request in general terms (locality, demographic segments, etc.) without tracking user behavior or directly identifying the subscriber. With such data available, a highly relevant advertisement can be inserted from the ad network in real-time onto the retrieved web content page. By using only anonymous demographic information, the solution never handles any personally identifiable information (PII), which avoids privacy concerns that have arisen with other online advertising targeting approaches. The types of subscriber data that the operator can provide to advertisers anonymously with this HTTP header insertion approach include: · User locality Information – the subscriber’s postal code can be correlated with commercial databases to create geo-demographic profiles based on local income levels, household size, voter data, and other population data · User Device and Access Information – e.g., access network bandwidth, user's roaming status, type of subscriber device, etc. · Other third-party data – further refinement can be gained with additional data such as local weather, “store locator” information for restaurants, hotels, or retailers who wish to advertise promotions or offers to targeted demographics. Operators could further leverage their customer relationships to include additional voluntary opt-in information from subscribers – perhaps in return for free, ad-funded services – that could be used by advertisers to uniquely personalize online advertising and marketing campaigns.  Lastly, with very transparent subscriber Opt-in privacy policies, mobile operators might further enhance targeted advertising with subscriber location information from the operator’s network. Generated by Jive SBS on 2009-12-07-07:00 3
  • 4. Service Provider Mobility: Mobile Advertising – The Operator Holds the Advantage This new approach to Mobile Advertising can provide new revenues for mobile operators, more effectively marketing campaigns for advertisers, and more engaging experiences for subscribers who would receive more relevant advertising and content. Stay tuned to hear more about this new break-through approach in the near future. 712 Views Tags: mobile_internet, mobile_monetization, targeted_advertising, mobile_advertising Oct 27, 2009 1:25 PM David Almstrom the only problem in this equation is I that most operators are not capable of managing this type of service. You are spot-on with the opportunity that the operator has in terms of knowing the exact location of the user, handset capabilities, etc. However, giants like Google is running faster and is already leveraging this type of information. If you have downloaded the very handy Google for Mobile app (which I have on my E71), when I start it, the first thing the apps does is to determine the location (postal code). The App already knows which type of device I have and if I have a cookie in the browser, Google will also know my gmail-address (e.g. iGoogle services) and is far better placed to offer value-added highly targeted ad services. However, ad-funded free services is the way to go for operators in the future to reach out and create higher value services, such mobile mail (free data, free subs, etc.) and/or free music download/streaming. Cisco's approach is quite interesting in how to provide relevant information to the ad networks. But from my experience talking to the ad/agency industry, they know little to nothing about how to target a mobile user base and offer different types of services/freebies. Nov 6, 2009 10:07 AM Brian Walsh David Almstrom in response to David you are right that operators haven't yet shown that they have the business or ad industry knowledge to "insert" into this market. Mobile advertising is a complex ecosystem, and operators are going to have fit into those rules of engagement while delivering subscriber/network-based value that ultimately leads to improved targted advertising campaign results. The mobile ad market is still early days though, so operators do have a chance to craft a monetized role in the value chain, but as you say, Google is already moving quickly! Generated by Jive SBS on 2009-12-07-07:00 4
  • 5. Service Provider Mobility: Mobile Advertising – The Operator Holds the Advantage Generated by Jive SBS on 2009-12-07-07:00 5