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Monetizing Mobile Advertising


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For too long, the advertising industry has focused on display and banner advertising. Mobile advertising today is effectively a port of web-based advertising with mobile smartphones. Most of what is presented in the market today takes away the experience from its user. Thus, the common notion of advertising on the mobile platform has been rendered more annoying by user than informative – certainly not the intended goal for advertisers and marketers.

Therefore, the best way for marketers to communicate through mobile will be through mobile apps. By integrating advertising within apps, consumers will value them for their functionality and don’t find them intrusive. This will also, in turn, enable developers to continue offering free apps with interesting content with a substantial amount of returns. Partnering with app developers will also ensure a professional outlook as to how advertisements are presented within the app that will be less intrusive, but instead, engaging.

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Monetizing Mobile Advertising

  1. 1. Monetizing   Advertising   (Mobile) Prepared by: A.Altaimani, I.Manandhar, J.Loo, J.Gan Edited & Presented by: J. Gan
  2. 2. Agenda •  •  •  •  •  •  Problem/Challenge Porter’s Five Forces Recommendations Our Solution Challenges Ahead Questions Gan, Jeremy 2
  3. 3. Problem  At  Stake •  New media requires new methods of advertising •  Important to recognize the medium in which effective advertising can be utilized to continue this lucrative business Gan, Jeremy 3
  4. 4. Advertising  Trends •  How technology and content is shifting consumers’ experience? •  How do publishers hope to harness/capitalize on those experiences? Gan, Jeremy 4
  5. 5. Why  Mobile  Advertising? •  Over 120,000,000 active smartphones in the US alone •  Over 87% of smartphone users access internet or email on their device – 4.7 of 6 billion mobile users •  Over 48% of organizations have a mobile version of their organization’s official website •  Over 75% of consumers appreciate and prefer the simplified mobile version •  In essence, companies are increasingly mobile Gan, Jeremy 5
  6. 6. Strategic  Issues  To  Be   Analyzed •  Media affects on advertising strategies and consumer behavior: Ø  Advertising built on through interruption, repetition, and brute ubiquity is increasingly ineffective Ø  Consumers seeking escape from it by installing pop-ups blocker on their browsers •  Opt-out of banner ads •  Pay content providers like Pandora to be advertisement-free Gan, Jeremy 6
  7. 7. Opportunities  For  Mobile   Advertising? •  Industry experts predict that mobile will grow far bigger than desktop •  Continuous advancement to video content o  Allow advertisers to provide more engaging content •  “Freemium” model for apps has flourished o  Rely on micro transactions / in-app purchases o  Creates avenue for advertisers to capitalize o  Proven successful over time Gan, Jeremy 7
  8. 8. Porter’s  Five  Forces Gan, Jeremy 8
  9. 9. Image  Source:  Harvard  Business  Review,  January  2008 Gan, Jeremy 9
  10. 10. Rivalry  Among  Existing   Competitors •  Lack of branding loyalty •  Customer acquisition & retention •  Businesses and advertisers new strategies to make campaigns successful •  Conclusion ü  Rivalry Among Existing Competitors is Medium to High Gan, Jeremy 10
  11. 11. Threat  of  New  Entrants •  Entry Barriers Ads viewed as an ‘annoying factor’ Fragmentation of devices and wireless carriers Lack of solid strategy to engage the customers Government policy – consumer privacy Trends to mobile advertising lean toward location based advertising ü  Learning customer behavior and search history ü  Customer might be biased due to brand identity ü  ü  ü  ü  ü  •  Conclusion ü  Threat of New Entrants is Low Gan, Jeremy 11
  12. 12. Threat  of  Substitutes Power of social media Twitter and Facebook (UGC) Growth of mobile devices exceeding PC Rise of mobile websites for businesses More mobile purchase decisions vs. in store Technology allows new channels for forward integration with low switching costs •  Conclusion •  •  •  •  •  ü  Threat of Substitutes is High Gan, Jeremy 12
  13. 13. Power  of  Suppliers •  No threat to raise prices or reduce quality by suppliers as supply of ad campaign content strategies are less compared to the demands •  The advertisers can switch to different content provider/supplier with a very low switching costs as this emergent industry has more channels •  Conclusion ü  Bargaining Power of Suppliers is Low Gan, Jeremy 13
  14. 14. Bargaining  Power  of   Customers •  Customer’s have more control over viewing a mobile ad or skipping it •  Consumer acceptance is scarce due to ‘annoying factor’ •  A few to no switching costs unless they are willing to pay for a premium content •  Agreement between customer and mobile carrier can affect location based advertising or search history •  Conclusion ü  Bargaining Power of Customers is High Gan, Jeremy 14
  15. 15. Recommendations Gan, Jeremy 15
  16. 16. Mobile  Website  vs.  Mobile   App •  Mobile websites are not as marketable •  82% of users mobile minutes are spent on app o  As opposed to 18% spent on mobile web browser •  “There’s an app for that” •  Example: o  Amazon Gan, Jeremy 16
  17. 17. Example:  Amazon Gan, Jeremy 17
  18. 18. Gan, Jeremy 18
  19. 19. Challenges  At  Stake •  No solid / de facto model for advertisers •  Still at “trial & error” phase •  Consumers deemed mobile advertisement as “annoying” •  “Fat Finger Effect” o  90% of accessed mobile advertisement are accidental due to limited real estate Gan, Jeremy 19
  20. 20. On  the  Bright  Side… •  Fastest growing sector o  Continuously expanding as the industry mature •  Even without a proven ROI, mobile marketing budget continues to increase o  Over 61% of organizations believe it is important for growth and future success Gan, Jeremy 20
  21. 21. Expected  Mobile  Ad   Spending Gan, Jeremy 21
  22. 22. Main  Challenge •  Remove stigma of mobile ads being “annoying” o  Research on mobile ads trend show that consumer love being rewarded for their effort •  Found in research o  Hulu: View full length ads before content viewing to avoid interruption o  93% consumer said having opportunity to choose a “reward” in exchange for their time was important •  Example model: Mobile gaming industry o  Monopoly Hotel Gan, Jeremy 22
  23. 23. Where  Do  We  Fit? Gan, Jeremy 23
  24. 24. “Reward-­‐‑Centric” •  Real tangible reward OR gifts of virtual currency •  Take Monopoly Hotel as an example o  Separation of gold and cash •  Cash can be obtained easily through persistence •  Gold requires in-app purchase o  Options to acquire gold to purchase nicer/better rooms •  Real $$$ for in game gold •  Watch ads for rewards o  i.e.: 5 gold for a full length Toyota Camry ads Gan, Jeremy 24
  25. 25. Example  #2 Gan, Jeremy 25
  26. 26. Gan, Jeremy 26
  27. 27. Example  #3 Gan, Jeremy 27
  28. 28. Gan, Jeremy 28
  29. 29. Gan, Jeremy 29
  30. 30. “Reward-­‐‑Centric”  cont… •  Extracting this model could be applicable to all apps •  Connecting users with some form of rewards o  Real tangible rewards or gifts of virtual currency o  Creates trust between users and advertisers o  Take away “annoying” feeling Gan, Jeremy 30
  31. 31. Our  Solution Gan, Jeremy 31
  32. 32. THE  Model •  “Peace cannot be kept by force; it can only be achieved by understanding.” – Albert Einstein •  Our solution? Gan, Jeremy 32
  33. 33. THE  Model  cont. •  Use pop-up format o  Provide options to skip – engage user’s input •  Video format for rich-content •  Provide some form of “reward” upon completion of full-length ad viewing •  Powered by location-based technology Gan, Jeremy 33
  34. 34. Operations  In  Real-­‐‑ Time Gan, Jeremy 34
  35. 35. Gan, Jeremy 35
  36. 36. Example Gan, Jeremy 36
  37. 37. Imagine  This… •  A Walgreens ad appear advertising Popchips •  User choose to view full-length advertisement •  Reward: $0.50 digital coupon for Popchips at participating Walgreens •  Provide a reason for consumer to purchase/try Popchips •  Consumer making a trip to Walgreens will purchase other items as well Gan, Jeremy 37
  38. 38. Advertising  Central Gan, Jeremy 38
  39. 39. Gan, Jeremy 39
  40. 40. What  Sets  Us  Apart? •  •  •  •  •  Raise: buy and sell gift cards Groupon: buying coupons Belly: loyalty program Kiip: virtual achievement – only gamers Tapjoy: tedious, long steps, junk mails •  Us: bringing sexy back to video commercial o  Let us help you reward your user through rich media Gan, Jeremy 40
  41. 41. Why  We  Think  We  Stand   A  Chance? •  Commercial continue to be a very lucrative market o  Superbowl ads is a living testimony •  Marriage between emerging with existing •  People love video contents because it’s captivating o  Youtube, Hulu, Dailymotion, Youku •  Create lasting impressions o  Virality through the spread of social media •  Quick and easy way to reward users Gan, Jeremy 41
  42. 42. Challenges  Ahead •  What is the real advantage for advertisers? •  How to regulate competitors advertisement through location based technology? •  There are no tangible promises for clients •  Who is the ultimate gainer anyways? o  Walgreens or Popchips? •  How to convince app developer to commit? Gan, Jeremy 42
  43. 43. Developer’s  End •  Seamless integration of the model to apps •  Require powerful bidding tools for local businesses o  Smarter ads optimization •  Advance reports to measure ROI o  How many people are really utilizing these rewards? Gan, Jeremy 43
  44. 44. Conclusion •  Good advertising yields positive shift in demand for products and services and advertising elasticity of demand. Based on our model, we think that Mobile Advertising can make this positive shift happen Gan, Jeremy 44
  45. 45. Questions? Gan, Jeremy 45