March 2013 White Paper


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Our look at the top trends in mobile advertising globally.

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March 2013 White Paper

  1. 1. M&CSAATCHI MOBILE MENU Inside Mobile Advertising Top 5 trends and insightsMarch 2013 1
  2. 2. M&CSAATCHI MOBILE MENU ForewOrd by Maurice Saatchi “Its easier to complicate than to simplify. Simple ideas enter the brain quicker and stay there longer. Brutal simplicity of thought is therefore a painful necessity.” 2013 sees a fundamental shift in favour of mobile technology. The PC will be eclipsed by tablets and smartphones. Mobile advertising means scientific advertising – the Holy Grail. But the Gods have made Mobile a baffling medium. The more you know, the more complicated it appears. Apple, Google, Windows, BlackBerry, ad formats, exchanges, demand-side-platforms… it’s a world away from a 30” commercial in prime time. Mobile brings marketers data to die for. Now what they need is someone to carry out a simple task – to decide, out of the map of newly available data, when to go and how to get there. That is why, in this new world, Brutal Simplicity of Thought is a painful necessity. Maurice Saatchi, March 2013Inside Mobile Advertising Top 5 trends and insights Foreword by Maurice Saatchi 2
  3. 3. M&CSAATCHI MOBILE MENU Introduction Now brands have come to embrace mobile as an essential component of the marketing mix, old questions such as ‘Should I invest in mobile?’ have been replaced with ‘How do I engage with mobile?’ and ‘How do I cost This insight is effectively acquire new customers via mobile?’ Accompanying this increased desire to engage with the mobile medium comes the relentless march of innovation divided into that will always have an impact on how advertisers best utilise mobile. A multitude of ad formats, APIs, exchanges, demand-side-platforms and emerging technologies, as well as concerns over tracking, can prove intimidating to 5 core areas: many and act as a barrier to those who wish to maximize their engagement with this fast growing medium. The current state of the This is not another document which seeks to convince brands of the value of mobile as a marketing medium – this 1 mobile advertising market is a well-established market which has been conveyed by many others. Nor is this document a ‘Mobile advertising masterclass 101’ seeking to educate brands on the basics of mobile advertising. Instead, this document aims to provide strategic insight for brands and agencies on the key trends and changes which will affect advertisers in Key developments in mobile the mobile market during 2013, as well as some possible solutions to help overcome these challenges. 2 and advertising technology The changing face of 3 mobile advertising Campaign tracking 4 and measurement The importance 5 of being localInside Mobile Advertising Top 5 trends and insights Introduction 3
  4. 4. M&CSAATCHI MOBILE MENU 1. The current state of the mobile advertising market It is a familiar refrain in the mobile advertising business; spend on mobile campaigns lags far behind consumer attention devoted to the mobile medium. In a way, that’s good news, as it illustrates the immense potential and opportunity for both publishers and advertisers to mine this exciting new channel using innovative new ideas. So, what are the numbers? Berg Insight estimated that mobile ads and marketing comprised a €3.8 billion (U.S. $5 billion) market in 2011, dominated by Google’s AdMob and Apple’s iAd platforms. But Berg is predicting that numbers will grow by a factor of 5 into a €19.7 billion market in 2017. In the UK, the Internet Advertising Bureau UK (IAB) said the sector grew by 132% to £181.5 million in the first half of 2012 to account for 7% of digital ad spend. This trend is reflected in the activities of the market’s more forward-looking agencies. For example, M&C Saatchi’s mobile division contributed 15 to 20% of the agency’s total UK profits last year. Progress is being made fast. But there is a long way to go. To put the above figures into context, digital was 16% of all expenditure in 2012, making mobile outlay equal to just over 1% of the entire UK spend on advertising. Yet mobile is grabbing an ever-larger share of consumer attention, as demonstrated by the diagram below, where time spent on mobile is at 23%. 43% 40% 2012 U.S Ad Spending vs. Consumer Time Spent By Media 23% 29% 22% 16% 11% 9% 1% 6% Radio Mobile AD SPEND PER MEDIA Web TIME SPEND PER MEDIA Print Source: Mary Meeker (KPCB), eMarketer, IAB TVInside Mobile Advertising Top 5 trends and insights 1. The current state of the mobile advertising market 4
  5. 5. M&CSAATCHI MOBILE MENU According to a US study by Flurry, people now spend more time on mobile apps (127 minutes per day) than they do on the desktop web (70 minutes). Mobile is not far off TV, which commands 168 minutes of viewing a day from people now consumers. spend more time What is holding mobile back is a belief that the audience is too fragmented to be reached effectively and that good, on mobile apps useful data on users is still elusive. This is not the case, anymore. New services and technologies, demand side platforms and real time bidding are making it far easier for brands and agencies to run targeted mobile campaigns than they and achieve impactful results and excellent ROI. do on the Meanwhile, new forms of ‘rich media’ advertising are making the executions more appealing to end-users. desktop web. Takeaway • Mobile advertising continues to experience rapid growth • Consumer time spent in mobile apps is exceeding desktops and will soon overtake TV • Overall mobile expenditure in digital still remains relatively small • Marketing manager concerns over lack of data/insight and tracking on mobile should be dispelled as this is no longer the caseInside Mobile Advertising Top 5 trends and insights 1. The current state of the mobile advertising market 5
  6. 6. M&CSAATCHI MOBILE MENU 2. Key Developments in mobile and advertising technology The evolution of the ad network… The rise of demand side platforms The way brands and agencies buy mobile inventory is changing, fast. They are taking more control of the buying process, which is ripping up the old order. Traditional mobile ad networks are raising funds to grow into more sophisticated operations (InMobi, Millennial, Adfonic) or being bought by larger telco companies (AdMob to Google, Quattro to Apple and Tapit to Phunware). As a result they do not like the name ‘ad network’ because it implies they are intermediaries offering no value beyond access to inventory. More and more, they prefer to bid directly on inventory via ‘exchanges’ or ‘mediation layers’ as this reflects their ability to supply tools that let ad buyers target consumers more accurately, and do so themselves using self-service platforms. In the formative years of mobile advertising, a group of companies offered access to blind networks. Advertisers would buy space based on basic criteria such as vertical, time of day, OS and so on. The ads would then be assigned to suitable inventory. These networks were blind as the advertiser would not be able to specify where the ads went. Alternatively, advertisers could go direct to premium inventory sold exclusively by partner ad sales teams. This was time consuming. Today, mobile planners and buyers can deal with over 20 ad networks connecting to the same 6 or 7 inventory services. That is wasteful and unnecessary. In effect these companies are middlemen, contributing little. This is not the end of mobile ad networks as we know them. The networks still have direct integration with certain publishers outside of the Real Time Bidding (RTB) inventory but at least the shift is happening with all major ad networks developing their own ‘bidder’ or using a white label solution from a mobile specialist DSP. The reason for using a DSP bidder is to access the inventory in real-time with an additional layer of targeting, as well as increasing the performance of tracked mobile campaigns. Now, a new orthodoxy is emerging based on advertising/agencies operating their own demand side platforms.Inside Mobile Advertising Top 5 trends and insights 2. Key Developments in mobile and advertising technology 6
  7. 7. M&CSAATCHI MOBILE MENU DSP’s are enabling advertisers/agencies to buy ads in real time. They are more effective than working with multiple ad networks because the buyer can identify what kind of consumer they want to target and the system will locate them, place a bid and serve an ad based on that value. It can do this in milliseconds when combined with a ‘real time bidding’ solution (see below). Many advertisers will be familiar with the DSP concept, which took hold in the digital space in the last decade. Its proliferation will be far faster in mobile. However, mobile DSPs do differ from those of digital in one critical way; they lack the cookies which make tracking a user’s previous activity possible. This essential difference has forced DSP providers to come up with alternative methods for delivering this critical data. If an advertiser chooses to increase downloads of a particular app, the DSP system can learn the pattern of traffic that most likely leads to a download. It will then create a profile of that traffic type and automatically adjust the buying strategy to maximise downloads. Even better, because this information is being refined in real time, bids are made on a ‘per impression basis’, rather than a purchase of bulk traffic. In 2013 and further ahead, more and more agencies will have their own DSPs. Advertisers should be aware that only knowledgeable specialist agencies can handle this transition successfully. The arrival of ‘real time bidding’ Demand Side The mobile DSP has the power to transform the efficiency and effectiveness of buying mobile inventory for ads. Platforms really However, it really comes into its own when combined with a real time bidding platform. come into their As apps and mobile sites proliferate, the old system of bidding on inventory and hoping for the best becomes own when outmoded and inefficient. It is far better to have a system in which data on the bids, the available inventory and the behaviour of addressable consumers are crunched together, in real time. This way the system will make combined with a instantaneous bids for each individual impression through big data and smart algorithms which change constantly Real Time Bidding in response to audience changes. Platform.Inside Mobile Advertising Top 5 trends and insights 2. Key Developments in mobile and advertising technology 7
  8. 8. M&CSAATCHI MOBILE MENU For example: A consumer is interested in golf and spends many hours on golf apps or sites. A site that serves ads through RTB would be able to match the profile to this consumer to a selection of golf club manufacturer advertisers and serve an ad for the one prepared to pay the most in that instant. This improves the quality of the impressions purchased, makes mobile ads more efficient and captures data that can make future campaigns more effective by applying demographic and behavioural data to every converted impression. It is also transparent. Buyers know where their budget is being spent, allowing for a more strategic approach. This method is also fairer; if everyone can see how much inventory is worth and how valuable impressions are, then the prices set should settle down according to their true market value. A report by IDC concluded that RTB can improve ad effectiveness by between 20 and 150%. This is why the technology has swept across the digital ad market to the extent that market IDC predicts it will grow 59% a year to RTB can improve be worth $13.9 billion by 2016. It believes mobile RTB is about three years behind, partly because of the issues ad effectiveness around the speed of connectivity on 3G networks. However, 4G will change this scenario. In addition, the fact that most mobile inventory is still sold by specialist intermediaries rather than directly from publishers should make the by between transfer to RTB speedier. 20 AND 150%. 2013 – The year of the tablet The smartphone remains the foundation for growth in mobile advertising and marketing. Its combination of Country smartphone penetration (%) always-on connectivity, hi-res screen and touch UI makes US 51.9 it a highly suitable medium for advertising, in a way the France 51.4 feature phone can never be. Germany 48.4 In most mature markets the penetration of Italy 51.2 smartphones is now over 50%. According to Spain 63.2 Comscore the percentages are as follows: UK 62.3 * Comscore: October 2012 MobiLens reportInside Mobile Advertising Top 5 trends and insights 2. Key Developments in mobile and advertising technology 8
  9. 9. M&CSAATCHI MOBILE MENU Like most analysts, we expect to see these rates continue to grow, whilst the surge in emerging markets will be even more marked. TrendForce, a Taipei-based market watcher, projects 876 million smartphones to be shipped this year, for an annual growth of 24.3%. A continuing trend will be the picking off of individual territories by Android. Google says it is activating 1.3 million devices a day, propelled by the huge support it receives from handset makers in all markets. These include the hungry new Asian OEMs such as ZTE and Huawei and also fascinating new entrants such as Congolese VMK, which describes itself as Africa’s first smartphone maker. By the end of 2013, Google should pass a big milestone as cumulative shipments of Android devices pass 1 billion. Some experts believe Android may account for up to 70% of devices shipped. However, Apple appears to have 52% of mini made the tablet market a little more challenging for Android with the introduction of the 7 inch iPad Mini. The launch tablet was questioned by those who recalled Steve Jobs’ ridicule of the smaller form factor, yet it appears to have been a triumph, with sales expected to reach 12 million in the last quarter of 2012. The good news for Apple and the rest of ‘intenders’ the mobile ecosystem was that most of these sales were to consumers that did not already have a tablet. were new to According to analyst Cowen and Co, 52% of Mini ‘intenders’ were new to the market. the market. With the major competition from iPad coming from seven-inch devices (Nexus, Kindle Fire, Galaxy Tab 2), it seems that the mainstream future of the tablet is the smaller form factor. What is intriguing is how this will affect user behaviour. It is likely that the 7 inch tablet will become a more genuinely mobile device than its larger cousin (which most consumers use in the home). With the advent of services such as voice calls on LinkedIn, we may start to see the 7 inch tablet eat in to traditional telco functions too. All of this is uncensored by perhaps the most significant change from 2012, which was the slowing down of global PC shipments. This is a direct result of the rise of tablets and we expect tablet shipments to rapidly eclipse those of the PC. New numbers from analysts at Canalys note that in Q4 of 2012, 1 in every 3 PCs shipped was actually a tablet (defined as any computing device with screen of 7 inches or more) and that Apple’s iPad accounted for about half of them, or 1 in every 6 PCs shipped.Inside Mobile Advertising Top 5 trends and insights 2. Key Developments in mobile and advertising technology 9
  10. 10. M&CSAATCHI MOBILE MENU At the time of writing, BlackBerry launched its new BB10 OS with two launch models. Likewise, Nokia and Microsoft continue to fight over consumer’s hearts and minds. Whilst there can be little doubt that Google and Apple fight over 1st and 2nd place, the position of 3rd place (predominantly in Europe and the US) is a battle between BlackBerry and Microsoft. The diagram below depicts Global internet device sales. Global Internet Device Sales 3,000,000,000 BI INTELLIGENCE 2,500,000,000 TABLETS 2,000,000,000 WE ARE HERE UNITS 1,500,000,000 1,000,000,000 SMARTPHONES 500,000,000 PERSONAL COMPUTERS 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Gartner, IDC, Strategy Analytics, company filings, BI Intelligence estimates Planners will continue to buy across all formats as long as the correct audience can be reached, irrespective of the operating system. This is the exception, however, when one is promoting apps as not all developers will create apps for 4 operating systems and will likely choose to focus on Google and iOS.Inside Mobile Advertising Top 5 trends and insights 2. Key Developments in mobile and advertising technology 10
  11. 11. M&CSAATCHI MOBILE MENU Global Mobile Platform Share Global Smartphone Platform Share 100% 100% MICROSOFT 90% 90% OTHER OTHER 80% 80% 70% 70% SYMBIAN APPLE 60% APPLE 60% 50% 50% WINDOWS 40% 40% BLACKBERRY BLACKBERRY 30% 30% ANDROID 20% ANDROID 20% 10% 10% 0% 0% Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Source: Gartner, IDC, Strategy Analytics, BI Intelligence Source: Gartner estimates and company filings The rise in responsive site design Much has already been said about responsive web design I the wider media industry, with sites such as the BBC ensuring that their site will render well on different screens; mobile, tablet and desktop. Although brands are rapidly embracing responsive design, it is still not at the forefront of many advertisers considerations. As mentioned previously, the adoption of a mobile-centric web design means that consumers can be targeted and captured at all times of day, to: that advertisers can target and capture consumers at all times of day as the site has the ability to render appropriately to the device it is appearing on. In 2013, brands need to carefully consider how their sites render on all mobile devices and optimize them accordingly to maximize consumer engagement. Whilst consumer attention is still very firmly fixed on apps, advertisers should still pay close attention to their mobile web strategy.Inside Mobile Advertising Top 5 trends and insights 2. Key Developments in mobile and advertising technology 11
  12. 12. M&CSAATCHI MOBILE MENU 4G will accelerate the rich media mobile ad space. However, not that fast It has been nearly a decade since the first 3G networks launched. There was a great deal of hype followed by some disappointment when the promise of superfast connectivity did not materialise. Now, we are seeing that excitement again with LTE or 4G. This time around, it looks like the technical promises will mostly be fulfilled. If there is any frustration it will most likely be around pricing and coverage. Everything Everywhere launched 4G in the UK in 2012 and tests showed the network to be five times faster than 3G. By May 2013, Vodafone, O2 and 3UK will be able to launch their own 4G services too. However, the pricing is high and most expect this to be an early adopter market, with the vast majority of subscribers unwilling to break long contracts to get 4G. The question for brands is how 4G might affect advertising display banners on mobile and the most obvious conclusion is that it will enable more rich media campaigns – especially on tablets and text ads and bigger smartphones. According to recent Internet Advertising Bureau (IAB) stats, display banners and text ads contributed 23% of all mobile ad revenue in 2012 (the rest was nearly all search). Rich media ads constituted 20% of contributed this spend. Therefore, rich media revenue represents around 4% of the UK mobile ad market. 23 per cent of At present we can assume most of this is via Wi-Fi, but 4G has the power to accelerate the consumption of rich all mobile ad media. Not just because 4G is fast, but also because it is more portable than a fixed Wi-Fi hotspot. Against that, revenue in 2012. there is a risk that consumers on lower monthly bundles will react badly when ads suck up their data allowance. Assuming these wrinkles can be overcome, what kind of rich media executions will we see? Pre-roll video advertising is the obvious start point. It is a proven success in other media and it has obvious potential on mobile where consumers are demonstrably interested in viewing video. Perhaps more exciting are the complex ad products which combine video, audio and interactive elements. When developed using HTML5, these ads can run on a browser, yet deliver extraordinarily rich experiences. The results can blur the boundaries between what is advertising and what is content. A good example is a campaign for Auto traders Ignition iPad interactive magazine. The advert lets users browse, read and purchase the product entirely inside an advert without leaving the site or app in which it is displayed. In future, rich media ads should go a stage further and start to engage with the native features of the phone such as the alarm clock and contacts book.Inside Mobile Advertising Top 5 trends and insights 2. Key Developments in mobile and advertising technology 12
  13. 13. M&CSAATCHI MOBILE MENU This is sensitive stuff; however, with the right execution and for the right advertisers (i.e. those cherished by consumers), it could deepen the connection between brands and ‘fans’. It may take a while, but we believe rich media mobile advertising will become the norm just as it did in digital when broadband replaced dial-up. Ultimately, brands need richer media because direct response cannot really communicate messages. Takeaway • The old inefficiency of blind buying mobile media with little targeting is being replaced with exchanges, mobile DSP’s and real-time bidding. This is still in its infancy and there should be an expectation that campaigns will contain a mix of RTB and pre-planned media • Google is dominating the OS wars on mobile and will continue to fight it out with Apple for first and second place. The newly launched BlackBerry OS10 and handsets means that they will likely fight it out with Microsoft/Nokia for third place • The introduction of smaller form factor, affordable 7 inch tablets at mass market prices (circa £100/$151.62) will likely revolutionise tablet ownership that to date has been the preserve of those who could afford an iPad. This will invariably widen the demographic for tablet access and open up new opportunities for advertisers. 2013 will be the year of the 7 inch tablet • The increasing availability of Wi-Fi in private homes and public places will add to the mobility of the small tablets • Responsive web design is a must for advertisers. They should give consideration to how a sight renders across all devices and screen sizes, and optimise it to increase the effectiveness of campaigns, including PPC and SEO • Ubiquitous Wi-Fi and 4G adoption will increase the opportunities for serving new rich media ad formats to consumers on tablets and handsets Ubiquitous Wi-Fi • New ad formats will blur the line between advertising and content to engage consumers in new ways, as and 4G adoption demonstrated by Auto trader’s new Ignition iPad interactive magazine will increase the • Advertisers will need to experiment with a wide range of creative and formats to find the right mix opportunities.Inside Mobile Advertising Top 5 trends and insights 2. Key Developments in mobile and advertising technology 13
  14. 14. M&CSAATCHI MOBILE MENU 3. The changing face of mobile advertising The increasing importance of local – especially in retail Mobile devices have a major advantage over most other connected devices; they are able to give location-specific data. This means that ads can be served to customers in a much more targeted fashion, such as in a particular location where a store may be holding a sale, or to show a trailer near a cinema. The ability to target by location opens up huge possibilities for advertisers, especially retailers. The below diagram demonstrates the volume of consumer items purchased via smartphone. Purchases via a smartphone- internet users aged 16+ who personally own a smartphone 25% 20% 20% 15% 16% 15% 13% 10% 12% 12% 12% 11% 10% 10% 10% 9% 9% 9% 8% 5% 5% 0% S TS S CE S Ds AN LD S TIC EMA ON WN VIDEO S S NT OD IES ES GOCAL OD VEL E TS LO C EVETO FO Y PH OR TIC VEL CE OK AD OD OK AD ON A WNMUSI KE /DV AP EHO AN TH KE EAW ATI ER SF TS LO MM RA eBO TRA RI BO CIN UR CLO CD OC CT KE PLI CO AY/T RE US IVE TAK MY INS ELE TIC GR TU HO DO AL DO LID FEA HO AC Source: GMI/MintelInside Mobile Advertising Top 5 trends and insights 3. The changing face of mobile advertising 14
  15. 15. M&CSAATCHI MOBILE MENU The combination of location awareness with real-time bidding opens up a new era of granularity when targeting consumers. This must be tempered by the fact that the volume of local inventory will be small for the foreseeable At the time of future, but it will also result in more valuable customers. writing around The importance of search on mobile in relation to locality should not be under-estimated. At the time of writing, 47% of around 47% of consumers use their smartphone to search for local information, such as a store they want to visit. 46% look up a store’s mobile site and 42% check inventory prior to visiting a store. consumers use The increasing rise of customers searching on their devices when they are on the move will increase the need for their smartphone brands to ensure that they have mobile optimised websites. Still, too many brands are investing heavily in both to search for PPC and SEO with not enough thought given to the fact that customers will may well be sent to a non-mobile local optimised page. It is unfortunately still too common to see consumers taken to the desktop version of a retailers website. Brands must continue to invest in their mobile strategy and consider carefully where customers are information. coming from so that they do not lose them after they have clicked through via a search. Conversely, brands should also consider widening their PPC and SEO spend to mobile and to drive consumers to mobile optimised sites once they have been developed. More direct selling from publishers amid an explosion of mobile inventory It is ideal that the surge of interest in mobile advertising is being matched by the boom in available inventory. Some of this is the inevitable consequence of the explosion in smartphone ownership and app consumption. At the end of 2012, there were over 1.5 million apps available for Android and iOS devices, while app market watcher Flurry estimates that consumers average 65 app downloads per device, which is a lot of new inventory.Inside Mobile Advertising Top 5 trends and insights 3. The changing face of mobile advertisingi 15
  16. 16. M&CSAATCHI MOBILE MENU Add to this the fact that, on average, a user spends more time on a mobile session than on a fixed web session, Flurry data indicates the average app session is 4.2 minutes, compared to the average web session length on a It’s estimated website of just under 1 minute. What’s more, sellers are devising imaginative new ad slots to boost the available that the mobile inventory even more. We have seen examples such as advertising when a video stream is buffering, or ads in the notification bar on iOS and Android. All of which may explain why, as stated earlier, Berg Insight estimated the advertising mobile advertising market to be worth €19.7 billion in 2017. That is 15.5% of the total online advertising market or market is worth 4.4% of the total global ad spend for all media. 19.7 billion in Interestingly, the escalation of the market is bringing with it new power players on the publishing side. Whilst 2017 – 15.5% of Google and Facebook still command large sections of the audience, more recently firms such as Pandora and the total online have also made their presence felt. Some of these giants have begun to employ their own mobile sales people, which is a significant indication of the maturity of the market. Yet, on the more ‘traditional’ advertising mobile-only side, the market continues to thrive. In the early days of mobile advertising, gaming played a powerful market. role. It still does, with publishers such as Gree and constantly rolling out new and popular titles, each with multiple advertising opportunities. The rapid rise of social media, especially Facebook Until recently, Facebook’s ‘problem with mobile’ has been well documented. The social giant’s audience is migrating to the small screen, but the ad revenue was not – or at least not to the same extent. In 2012, Facebook declared its intention to redress this, tweaking its internal structure to become a “mobile first” company. It then launched promoted posts which appear in users’ News Feeds, and is now making $500,000 / £329,771.80 a day from this approach.Inside Mobile Advertising Top 5 trends and insights 3. The changing face of mobile advertising 16
  17. 17. M&CSAATCHI MOBILE MENU Facebook’s earnings in Q4 2012, (announced in late January 2013), painted an increasingly robust picture of mobile in its overall earnings. Facebook reported $680 million mobile Monthly Active Users (MAUs), and more mobile Daily Active Users (DAUs) than web DAUs in December. Mobile also accounted for around 23% of Facebook’s $1.33 billion of advertising revenues in Q4, which represents $305 million of mobile ads sold in the quarter. Instagram was used to share more than 600 million photos to Facebook on New Year’s Day alone, and cited recent comScore stats suggest that Facebook accounts for 23% of all time spent on mobile apps in the US, with Instagram accounting for another 3%. CEO Cheryl Sandberg also noted that Facebook’s mobile App-Install ads for mobile app developers are now being used by more than 20% of the 100 Top Grossing iOS apps to attract new users. The big gambit for 2013 will be the roll-out of Facebook’s own mobile ad network. This will give networks the ability to serve ads placed with Facebook (and based on the social giant’s user data) on third party sites and apps. When The big gambit a Facebook user visits an app or site where the ad exchange has an agreement with Facebook, the exchange will for 2013 will be check if there is a bid set to target them. If there is, an ad will be displayed and Facebook will receive a cut. the roll-out of In theory this is an extremely exciting move, given the wealth of data Facebook can accumulate based on its users Facebook’s own behaviour. But, it is the true value of this data that is in question. At present, for example, sponsored stories are mobile ad first distributed to users who have chosen to be fans of an advertiser’s Facebook page. Fine. Thereafter, the ad is displayed to that fan’s network of friends, whether they liked the advertiser’s page or not. network. Observers have questioned the value of this, pointing out that people don’t necessarily shop for the same items as their friends. Overall, positive results have been seen through advertising via Facebook’s app, and this is wholly expected to improve as they invest more into the targeting capabilities that are derived from a wealth of customer insight.Inside Mobile Advertising Top 5 trends and insights 3. The changing face of mobile advertising 17
  18. 18. M&CSAATCHI MOBILE MENU New types of advertising – campaigns go native Mobile advertising has come a long way since the days of SMS and MMS. Brands have seen excellent results from the newer forms of mobile advertising including banner campaigns. However, with the medium becoming more sophisticated and brands realising the potential of the channel, we need to look beyond the standard formats and explore innovative ways of branding on mobile. There is a trend towards native advertising ads that follow the format and style of the channel in which they appear – blogs, videos, apps and so on. The best example of this is the sponsored story on Facebook, which according to TBG Digital, achieved an average click-through rate which was 53% higher than for display adverts in Q2 2012. Some commentators have called this shift a fundamental break with the past, concluding that it gives advertisers something they have never had before – the right to interrupt. On reflection, this is not entirely true. On TV, the infomercial blurs the boundaries between content and advertising, as does product placement in the cinema. Whatever its novelty, such advertising does have its challenges. Since Twitter is More so than a banner, a native ad campaign needs to be refreshed regularly to keep it relevant and novel. Careful so much about attention must be paid to tone and content to ensure it fits with the editorial content around it. A misreading of the ‘of the moment’ audience can lead to embarrassing backfiring results. One of the defining features of the format is that users can interact with the ads by sharing them and posting comments. Clearly, this can go either way. Possibly, Twitter trends, Promoted Products represent the highest risk in this regard. Since Twitter is so much about ‘of the moment’ trends, advertisers need advertisers need to carefully match their campaigns with current issues. This can make it hard to reach a mass audience even with a skillful execution. to carefully Equally serious is the issue of measurement. When serving a variety of different native ad formats, the click (which match their is the starting point of all display measurement) ceases to be as fundamental. People can read a sponsored post campaigns with and respond well to it without necessarily taking a direct action. current issues.Inside Mobile Advertising Top 5 trends and insights 3. The changing face of mobile advertising 18
  19. 19. M&CSAATCHI MOBILE MENU Takeaway • The availability of mobile inventory continues apace with much greater smartphone adoption • Campaigns based around locality will come more and more to the fore, especially for retailers • Advertisers should know their brand’s mobile touch points – then research, prioritize & start testing. They should also ensure that they are mobile optimized • Brands need to include mobile search and local in their mobile strategy • Social networks will invest in deeper insight in order to offer sophisticated targeting capabilities. This is predominantly via Twitter and Facebook, but sites such as Google+ and Pinterest will also be monitored for new opportunities • ‘Native’ campaigns will blur the boundary between editorial and content. Such types of advertising are a potential minefield as they need to ideally complement the context they appear in and complement the editorial they sit withInside Mobile Advertising Top 5 trends and insights 3. The changing face of mobile advertising 19
  20. 20. M&CSAATCHI MOBILE MENU 4. Campaign Tracking and measurement Mobile as the glue between formats, how do we measure it? Every new format at first disrupts and eventually finds its place among incumbent platforms. After 4 years of the smartphone, there seems little doubt that mobile’s place is right at the centre of the new digital universe. Because of its portability (it goes everywhere with a user) and uniquely personal qualities, it is valued more highly than other devices. The rise of ‘dual screening’ is one unexpected consequence of this, with mobile used to augment and enhance the TV viewing experience. Another is the emergence of the QR code, which can enrich the poster or even product packaging with an extra level of interactivity. All of this is making mobile the digital glue for traditional campaigns on other channels. The challenge is how to track the same user across multiple formats. Clearly a solution is needed – especially for hotel and travel brands whose users are highly mobile. In some cases, the problem is solved by the sign-in process. If all platforms require a Google and/or Facebook sign-in, then the issue goes away. However, this is not always possible. Some publishers are working on their own fixes. This year, for example, Sky will enable a degree of mobile targeting relating to what people watch on TV. There are start-ups dedicating themselves to the problem too. Drawbridge, for instance, crunches anonymous data via statistical methods to track users across different devices. It does this by examining cookie data which comes from a device’s browser into an ad exchange and using an algorithm to analyse the odds that they come from the same person. Drawbridge say there is no privacy issue as there is no direct fingerprinting of individuals. Instead it ‘triangulates’ the user behaviour until it concludes various data points are probably the same user. Solutions such as Drawbridge’s will be assessed closely as the mobile advertising sector wrestles with wider privacy questions. This is an issue that prompted Apple to forbid the use of the UDID (Unique Device Identifier) to identify users. UDID is a unique serial number in iOS that is linked to a handset. It cannot identify a user directly, but once linked to an item of Personally Identifiable Information (PII), it can. Apple replaced the UDID it in 2012 with the IFA (Identifier for Advertisers). This cannot identify an individual. Instead, it records patterns of activity to deliver more targeted ads. However, it can be switched off by users.Inside Mobile Advertising Top 5 trends and insights 4. Campaign Tracking and measurement 20
  21. 21. M&CSAATCHI MOBILE MENU It is incumbent on the mobile advertising industry to reassure consumers about privacy and persuade them that targeted advertising is safe, and can enhance their browsing and app experience. Tackling click-fraud and accidental clicks with double opt-in ads Every advertiser wants to know that their investment is being maximised. However, the combination of unscrupulous publishers and misplaced end-user fingers, can unfortunately combine to give a false set of results from a campaign. How serious is the problem? A report by a recent industry report in 2012 suggested, worryingly, that 40% of all clicks on mobile ads are either fraudulent or accidental. It found that over half were clicks from ‘botnets’, while the rest were the result of publishers telling servers to report clicks that were never made. The remaining 60% were far more innocent but equally irksome – arising from the fat-fingered mistyping of touchscreen users. Happily, there are technical and commercial reasons to be hopeful that the impact of these wasted clicks will be minimised. Some exchanges charge only for unique clicks (usually monitored over 24 hours) and this ensures any bot-generated clicks are not counted. But increasingly, they are going further and introducing new technology to combat accidental touchscreen clicks using ‘double opt-in’. Google recently introduced efforts to mitigate erroneous clicks so that when people clicked on in-app ads, they would be promoted to click again on a button labelled ‘visit site’. This safeguard reduced overall clicks but it was Google recently also found that users who clicked through were of a higher value as they were genuinely interested in the advert. introduced Google stated that “Implementing confirmed clicks is an important step that we think will benefit users, advertisers, publishers, and the mobile ecosystem overall.” efforts to mitigate erroneous clicks.Inside Mobile Advertising Top 5 trends and insights 4. Campaign Tracking and measurement 21
  22. 22. M&CSAATCHI MOBILE MENU Meanwhile, the move away from CPMs to new commercial models based on performance or lifetime value is also limiting the damage done. If an advertiser only pays on the basis of clicks that lead to a download or subscription for example, then the single unintentional click becomes irrelevant. Privacy concerns Like the UDID, IFA is unique to a device and enable advertisers to track mobile media conversion – even cross-app data for better targeting techniques. IFA does not contain Personally Identifiable Information (PII) as users can opt out: it is able to limit advertising tracking at any time, which helps to address privacy concerns. For users who do opt out, IFA allocates a different value to the device to prevent tracking. Should they opt-in to targeted advertising, the device will only start tracking once the iOS user gives their permission. Another significant improvement over UDID is that when a phone is reset or sold to a new user, the IFA resets all information to provide a clean slate. As a further nod to addressing consumer privacy concerns, the latest version of Apple’s mobile operating system (iOS 6.1) which was released on January 27th 2013, now contains a reset button in the device settings which enables the user to clear the IFA value, much the same way that users can clear their cookies from their desktop browser. Takeaway Concerns of click-fraud are • Mobile response can be a great way of marrying together formats from bus shelters to television and magazines but it needs to have effective measurement. That means tracking one user across multiple platforms, which is being countered technically complex. One possible solution for the future is a single sign-in by the user, via Facebook or other with double social networks opt-ins as well • Concerns of click-fraud are being countered with double opt-ins as well as exchanges only counting unique clicks over a fixed time period. Efforts to overcome wastage and click fraud will only increase in the coming months as exchanges • Issues over privacy and ad tracking are also being overcome with PII (personally identifiable information) not only counting being tracked unique clicks.Inside Mobile Advertising Top 5 trends and insights 4. Campaign Tracking and measurement 22
  23. 23. M&CSAATCHI MOBILE MENU 5. The importance of being local It can be a cliché, but an understanding of local nuances is nowhere more important than in the communications business. You cannot use an agency in the UK to service the US and Africa. The markets are just too different. You cannot use an agency in the UK to service the Lets look at some of these local variations US and Africa. South Africans were early into mobile internet – and they love BlackBerry The markets are Operators in South Africa were early into the mobile data market, and priced their tariffs affordably from the start. just too This propelled a market which was ahead of ‘mature’ markets in many ways and remains a sophisticated territory in different. its home continent. Our figures say 7.9 million South Africans access the internet via mobile, and that 18% own a smartphone. Within the latter group, BlackBerry dominates. At the end of 2012, Vodacom had 2.3 million BlackBerry users on its network, compared with 450,000 Android users and 250,000 iPhone users. Cost has much to do with it. For R59 per month, BlackBerry users get unlimited web browsing, e-mail and BBM. The progressive nature of the South African mobile market has thrown up some innovative services. These include the mobile messaging ad ‘Please Call Me’, which gives users the option to send an ad-funded text when they have no credit and want someone to call them. Then there’s Mxit – a mobile social network that swept across South Africa and has 10 million users. Because of the vibrancy of the market, there are a number of specialist networks and sales houses active in the region. They include Shinka, Buzz City, Ydigital, Ad Dynamo, Habari Media, Thumbtribe and Advine.Inside Mobile Advertising Top 5 trends and insights 5. The importance of being local 23
  24. 24. M&CSAATCHI MOBILE MENU In India Opera is the mobile internet The Opera mobile browser has proved popular with all types of users because it simplifies web browsing and can compress pages by up to 90% (making the web faster and data bills cheaper). It was a hit on the Apple App Store. However, in India, it has become so successful that it is, for millions of users, synonymous with the mobile internet. Operators such as Airtel have accelerated this process by making Opera the default browser on their handsets. Brands should be aware of the opportunities that this presents. For example, Opera offers a link to its own curated app store, which attracts 13 million Indian users every month. In 2012, this was driving 500,000 daily app downloads. Another quirk of the Indian market is its devotion to Nokia. The Finnish OEM remains extremely popular in a feature phone oriented market, which according to CyberMedia research, still sells 19 feature phones for every one smartphone. And Nokia averages around 23% market share overall. Nokia has pushed its affordable Symbian Asha range hard in India and sales are holding up well against a charge from Android. Another quirk of the Indian market is its devotion to Nokia.Inside Mobile Advertising Top 5 trends and insights 5. The importance of being local 24
  25. 25. M&CSAATCHI MOBILE MENU Traditional agencies are holding back the Australian market High smartphone and tablet penetration suggest the consumers are ready for mobile ads, but to date advertisers have been slow thanks to high prices, a lack of real tracking and the dominance of traditional agencies with limited understanding of mobile. Our figures suggest just one in five brands has a mobile optimized web site. There are a small number of local ad networks such as Snakk Media, Big Mobile, Appsnac, MMN and Mobile Embrace. The rest are global networks which purchase from a worldwide network, which sometimes makes inventory attribution difficult. Increasingly, the bigger publishers are starting to appoint partners to sell their inventory on an exclusive basis. For example, InMobi has exclusive rights to sell Ninemsn, while Big Mobile has rights to sell News Ltd as well as Yahoo!. Some, like EA Games, have begun to sell direct. Takeaway • It no longer suffices to plan global campaigns from a single geographical location • Brands need to engage planning agencies with significant local presence in all the major markets to deliver truly local advertising for maximum ROI • Local nuances are becoming very apparent – from the dominance of BlackBerry in Africa to the dominance of the Opera browser in India coupled with the continued loyalty to NokiaInside Mobile Advertising Top 5 trends and insights 5. The importance of being local 25
  26. 26. M&CSAATCHI MOBILE MENU Conclusion For many brands, mobile advertising complicates matters. After the disruption wrought by digital on a tried and tested industry, here is yet another platform to figure-out. As outlined in this piece, the deeper you dive into the medium, the more there is to consider: DSPs, real time bidding, rich media formats, tracking systems and much more. However, the opportunity should now be obvious through the frenzied adoption of smartphones and tablets. Google alone is activating 1.3 million Android devices per day and is turning mobile phones from devices that simply make voice calls to machines that convey entertainment, information and user insight. This revolution will make mobile the next great advertising medium. Berg Insight estimates a market worth $23.6 billion by 2016 and it is not alone in its audacious view. You need to be ready The best way to prepare is by working with specialists who understand the fundamental language of great advertising, but are also fully immersed in the mechanics of mobile. The reality is that mobile is the most rapidly evolving advertising medium and brands need to stay closely aligned with partners who truly understand the space and will invest in new technologies such as demand-side platform to keep abreast of the latest developments. More than that, a partner agency will have a global perspective. These trusted agencies will know that there is a world of difference between what works in the US and Asia Pac, South Africa and Australasia or indeed the northwest of England. They will offer a ‘local’ approach on an international scale, with regional offices which modify and adapt campaigns to fit the domestic audience. Most of all, they will turn complexity into brutal simplicity so that you can stop worrying about the detail and focus instead on achieving your business and marketing objectives.Inside Mobile Advertising Top 5 trends and insights Conclusion 26
  27. 27. M&CSAATCHI MOBILE MENU CONTACT To find out more about how mobile innovation can boost your business and to discover more about M&C Saatchi Mobile, please do not hesitate to get in touch with our team at any of our offices around the world. M&C Saatchi Mobile – London M&C Saatchi Mobile – New York 36 Golden Square, London, 250 Park Avenue South, 10th Floor W1F 9EE New York UK NY 10003, USA T: +44 207 543 4600 T: +1 646 619 2809 E: E: M&C Saatchi Mobile – LA M&C Saatchi Mobile – Sydney 2032 Broadway, 99 Macquarie Street Santa Monica, Sydney, NSW 2000 CA 90404, USA Australia T: +310 401 6070 T: +61 (2) 9019 6000 E: E: M&C Saatchi Mobile – Cape Town M&C Saatchi Mobile – Johannesburg 4th Floor,The Hudson Upper Grayston Office Park 30 Hudson Street, De Waterkant Block D, Unit 1, 152 Ann Crescent Cape Town, 8001 Sandton, Grayston, Gauteng, 2196 T: +27 21 421 1024 T: +27 11 263 3900 E: E: sa@mcsaatchimobile.comInside Mobile Advertising Top 5 trends and insights CONTACT 27