AdMob Chief Talks about Mobile Advertising

Google's AdMob division head talks about mobile advertising.

76% of Users Prefer Ad-Supported Apps to Paid

Users always have had a complicated relationship with advertising. If you ask them, they typically will say they "don't like ads."

But if you ask them whether they would like access to a desired type of content, for free or at vastly-reduced prices because of the presence of ads, they will tend to opt for the advertising.

That appears to be true for 76 percent of smartphone owners with web access, who say they would rather have access to ad-supported applications for no additional cost, rather than pay for them, Jiwire has found.

see the survey results here

Nissan's First iAd Campaign

Mobile Advertising Growing, But Revenues Still Modest

Mobile advertising will continue to be a modestly-sized segment of the digital media ecosystem as long as different segments of marketers have alternative media vehicles which better meet their business objectives, say researchers at MagnaGlobal. But mobile commerce and mobile marketing are destined to grow.

Global online advertising will rise by 12.4 percent in constant currency terms during 2010, to $61 billion dollars globally. Accounting for actual and expected changes in currencies over the course of 2009 and 2010, online advertising will grow during 2010 by 13 percent in U.S. dollar terms or by 21 percent in Euros.

Paid Search has quickly become the most important component of online advertising, and in 2010 this segment will account for nearly $30 billion, up by 16.5 percent over 2009 totals on a constant currency basis, and about 49 percent of total revenues.

Google is the global leader in paid search, but in the paid search markets of China and Russia, the leading paid search providers are domestic players Baidu and Yandex.

All other online advertising will account for $31 billion, up by 8.7 percent in constant currency terms.

Advertising networks retain their importance to advertisers given their ability to aggregate and monetize vast quantities of inventory in an inexpensive manner. Social networking sites such as Facebook capture a large and growing share of audience time.

These trends should continue over the next five years, and the report expects online advertising to collectively grow by 11.7 percent in 2011 and by an average rate of 11 percent through 2015. At this time the global industry will generate $103 billion dollars in constant dollars.

The ongoing global economic recovery has contributed some modest uplift to the expectations of growth, but secular factors are the primary cause of this rapid and sustained pace of development. Importantly, says the study, industry growth is not directly caused by increasing numbers of consumers online nor by rising levels of time spent online.

Instead, growth is driven by businesses, many of them small, that find online media to be the single most effective platform to accomplish their business goals.

Mobile App Store Downloads 7X Bigger by 2014

Mobile app store downloads will increase by a factor of seven between 2009 and 2014, according to Pyramid Research. In 2010 Pyramid Research projects that 36 percent of paid apps will be downloaded through app stores and 86 percent of free downloads will take place through them.

App stores have become an important element in the mobile value chain in part because a wide range of easily accessible apps has quickly become a prerequisite for handset and platform vendors. Vendors also gain a new revenue stream, a powerful customer loyalty tool, an important gateway to additional revenue streams and an attractive resource for potential operator partnerships.

Advertising revenue is expected to play a big role in allowing developers to create revenue streams from free apps.

Developers will be the biggest winners, not only as they gain a higher portion of revenue but also because competition among stores will greatly improve support, payment terms and transparency.

Most third-party stores and aggregators will lose out over time to vendor and operator-sponsored stores, though Getjar might be the salient example of an exception to the rule.

FTC Opens Probe of Apple Mobile Ad Practices

The U.S. Federal Trade Commission will investigate whether Apple Inc.'s business practices harm competition in the mobile advertising market, Bloomberg reports.

It appears Apple's refusal to allow third-party firms access to analytics, as well as the apparent refusal to allow some competing ad networks access to Apple mobile applications, are contributing to the FTC's concern.

Regulators want to know whether moves by Apple will result in less competition in the growing market for ads on handheld computers and phones. Separately, Apple has barred applications using Adobe Flash, requiring all apps to use HTML5 for video.

This may not be the only antitrust investigation Apple faces. Justice Department lawyers recently contacted companies about Apple's practices in the music business. The Justice Department could forge ahead with that inquiry independent of the FTC's investigation.

The Justice Department is already investigating whether Apple and a range of other tech companies improperly agreed not to poach each other's employees, the Wall Street Journal says.

The starkly higher attention Apple has drawn suggests how Apple's role in several businesses--from content and devices to advertising--seems to have changed recently.

Apple recently surpassed Microsoft Corp.'s market value, a sign of its growing power in the technology industry.

Apple also controls around 70 percent of online music sales and has more of the overall music market than Wal-Mart Stores Inc., according to market research NPD Group. Apple's MP3 player market share is well over 70 percent, and its share of mobile phones is growing steadily, not to mention the explosive debut of its iPad tablet device.

The fear seems to be that Apple could be headed for such outsized domination of high-end mobile phones, a possible new tablet device category, and mobile advertising, now viewed as a key revenue source for mobile applications.

Some antitrust enforcers say that if they wait until a tech company has cornered a market, before moving to limit its power, it may be too late. The technology sector has powerful "network effects" that, some say grant outsize advantages to first movers and make it particularly difficult for competitors to break in, regulators say.

"The Commission has reason to believe that Apple quickly will become a strong mobile advertising network competitor," the FTC said last month. "Apple not only has extensive relationships with application developers and users, but also is able to offer targeted ads…by leveraging proprietary user data gleaned from users of Apple mobile devices."

It added that Apple's ownership of the iPhone software development tools, and its control over the developers' license agreement, "gives Apple the unique ability to define how competition among ad networks on the iPhone will occur and evolve."

Will Apple Get 48% of All U.S. Mobile Advertising by End of 2010?

Apple CEO Steve Jobs predicts the Apple iAd network will get 48 percent of spending on mobile advertising in the United States from July through December of 2010.

That's a stunning prediction, given that total U.S. mobile advertising for 2010 is estimated to be about $593 million. Apple has about six months to get that done, starting from zero. Well, not zero.

Apple says it already has gotten commitments for about $60 milliion from  Nissan, Citi, Unilever, AT&T, Chanel, GE, Liberty Mutual, State Farm, Geico, Campbells, Sears, JC Penny, Target, Best Buy, Direct TV, TBS, and Disney.

Mobile Ads Up to 5X More Effective Than Online, Study Finds

Mobile ad campaign norms are four-and-a-half to five times more effective than online norms on measures of unaided awareness, aided awareness, ad awareness, message association, brand favorability and purchase intent, according to InsightExpress.

InsightExpress also says mobile media outperforms online media in ability to drive purchase intent (170 percent increase) and brand favorability (85 percent increase).

Twitter Bans 3rd-Party Ads

Twitter has is banning third-party advertisements on its site, in a move to control its monetization of the micro-blogging service, and perhaps also to protect users from perceived ad spamming.

The Twitter "Promoted Tweets" platform poses some risks of user annoyance, but might arguably provoke much more irritation if the appropriateness of the promoted messages is not controlled.

As mobile advertising starts to become a more important and bigger revenue stream, control of inventory is going to become a bigger issue, as it always does for ad-supported media.

Twitter Gets Serious About Getting Paid - PCWorld

Google Plans Battle for Tablet Dominance

To the extent that tablet devices are able to carve out a new consumer electronics niche, or perhaps even if all they do is create a new segment within the netbook or notebook product category, they also will create a new canvas for mobile advertisers.

If, as many expect, tablets emerge as content consumption devices, they will feature rich content. And rich content traditionally has meant new advertising venues.

For tablets, including the device Google and others are working on, that will mean a chance to grow a new rich media advertising venue. Historically, media and advertising have grown hand in hand.

It isn't so much the devices, though that is quite important for Apple. For many other contenders, it is the growth of a new advertising medium that likely is most significant about tablets.
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30% to 50% of All Advertising Will be Digital Within 8 Years, Google Exec Argues

"I personally expect in the next five to eight years 30 percent to 50 percent of advertising will be digital," says Nikesh Arora, Google's president of global sales, referring to online direct marketing, advertising and branding campaigns.


While Arora admits it is a bold claim, he backs up his forecast by pointing out that in the U.S. 10 percent of advertising is already digital and in the United Kingdom it is 20 percent.

In fact, late last year the U.K.'s Internet Advertising Bureau announced that online ad spending had risen above television for the first time.

Video will tip the balance, says Arora. If so, Apple's bet on creating a content-consumption tablet device might be precisely on target. The issue there is whether the iPad will be for video consumption what the iPod was to music consumption.

"I think mobile is a fantastic opportunity," says Arora.

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Web Apps Will Catch Mobile Apps, Study Suggests

Count Global Intelligence Alliance as among the analysts who believe Web applications will be a viable competitor to app store programs over time, and that content distribution is likely to be a direct beneficiary of the trend towards using Web browsers to serve up mobile apps.

The same might be said for subscription-based mobile services such as news and weather as well.

Despite conventional wisdom, by 2013 HTML5 will enable Web-based apps to provide user experinces that rival that of mobile apps, GIA argues. But there are other reasons to believe Web-based apps will prove attractive. Web apps offer an architectural advantage, namely cross-device launches.  Mobile apps have to be adapted for each operating system, and often for discrete devices as well.

The Web also arguably is a better platform for subscription-basedservices such as communications, news, weather, financial services, retail and shopping, where user analytics are important. But GIA notes that smaller providers and pay-per-download services might well find the mobile apps route profitable, as such an approach can be directly tied to a clear revenue model.

But Web-based mobile apps will take a couple of years to develop. Right now, respondents surveyed by GIA say user adoption is about twice as high when using a mobile app approach. Some 47 percent of respondents reported that user adoption was higher when using a mobile app approach, compared to about 23 percent of respondents who said a Web approach produced higher end user adoption.

Web apps, on the other hand, are a bit more "sticky" than native apps, respondents report. About 27 percent of survey respondents said user activity peaked at initial download and then steadily declined. Only 15 percent of Web app developers said that was the case.

Likewise, about 23 percent of respondents indicated that user activity kept growing after download, compared to about 33 percent of Web apps users. Of course, that might be a statistical artifact produced by the different use cases.

To the extent that a mobile app provides access to "static" content, usage would decline over time, in much the same way that any user's viewing of a new movie will be highest at download and then drop off. Compare that to a cable TV subscription or news feed, that might be used on a continuing basis because the actual content is dynamic, rather than static.

The survey also found that end user session lengths tended to be longer for native apps, compared to Web apps. About half the respondents say native apps produce longer sessions. Only 20 percent of developers say Web apps produce long sessions. Of course, much depends on the type of application.

Many interactive or transactional apps will tend to last longer than many content delivery apps, if only because the transactional app will require time-consuming search and research. A user investigating air travel or lodging in a distant city might need to spend quite a bit of time conducting research, compared to a user playing a game or downloading a specific bit of content.

About 53 percent of native app developers reported that this approach cost more than creating a Web app, compared to 17 percent of respondents who said the Web app cost more than a native app to create.

About 43 percent of developers reported that maintenance and update of native apps cost more than a Web app approach.  About 24 percent of respondents indicated that a Web app approach was more costly to maintain and update.

About 60 percent of developers reported that a Web app approach was faster than a native app development approach.

Apple's iAd Shooting for the High End in More Ways than One

The conventional wisdom likely is that the new Apple iAd network is going to be positive for mobile advertising, showcasing what can be done with rich media on an easy-to-use device with a large screen.

But iAd might have another effect: driving up ad pricing double to triple current rates. That might be welcome for ad sellers, but not for buyers.

Since Apple never likes anything but the "premium" position in any market where it competes, that might not be too surprising.

According contentSutra, iAd cost per thousand impressions will be highly variable in terms of cost, but in some cases could wind up being triple what marketers are used to paying for banners, and double the price of a video ad on mobile (click on the image for a larger view).

In other cases, a very successful campaign that generates an unusual number of clicks could wind up being more than seven times what an advertiser had anticipated.

Keep in mind that Apple is setting the minimum annual spend at $1 million for brands to use its iAd platform. To put that in perspective, consider that Jaguar and Land Rover in 2009 spent about  $1.6 million in aggregate for mobile marketing.

Some advertisers might decide they like the iAd formats, and start shifting lots more money into mobile advertising. Others will push back against the price and take a wait-and-see attitude. Either way, iAd is going to have complex impact. It likely will spur larger mobile advertising commitments from some buyers more concerned with cutting edge than return on investment. Most will watch and see what happens, at least in terms of the high-end, showcase content Apple wants to show it can produce.

Apple Calls the Tune, Again

Apple might not yet have remade the notebook or netbook business, and might not have conclusively proved there is an undiscovered new consumer electronics niche for tablet devices, but it has caused Microsoft to kill its existing slate project, known as "Courier."

Microsoft’s Courier originally was conceived as the tablet of the future, Microsoft’s answer to Apple’s iPad, with two screens. Apple might disagree that the iPad is a "big iPod Touch," but Microsoft apparently has concluded that a two-screen device with a book style form factor is not what the market will want.

Perhaps the bigger deal, perhaps obvious in retrospect, is that although the device would have been "touch" capable, it somehow fails to offer an experience similar to the iPad. Make that one more case of Apple disrupting the conventional wisdom about user experience and user interface. And it apparently hopes to do the same in the mobile advertising businesss.

Apple never likes to play at the low end of any business, so we should not be surprised to see Apple taking that tack as it attempts to show what its iAd network can do on devices such as the iPad, iPhone and iPod Touch.

Apple also is famously "controlling" about the "user experience," so you should not be surprised to hear that Apple is making "initial demands for greater control over advertisers' marketing campaigns."

According to the Wall Street Journal, Apple is looking for placements priced about an order of magnitude (10 times) higher than is typical.

If you recall the demo Apple put together for its iAd announcment, you can understand why: Apple is aiming for content-rich campaigns that may involve branded characters and expensive production.

Apple Inc. aims to charge close to $1 million for ads on its mobile devices this year and perhaps even more--as much as $10 million--to be among the first participants.

Ad executives say they are used to paying between $100,000 and $200,000 for similar mobile deals.

Obviously, Apple is attempting to pull off a couple "hero" campaigns that likely cannot be replicated too widely in the future because most campaigns will not be able to afford the high rates.

One example Apple has been showing advertisers is an ad for Nike's Air Jordan basketball shoe.

When a user is in an application, an animated banner ad appears on the border of the screen, along with an iAd logo. If the user taps on the ad, it expands across the screen, displaying a video, an interactive store locator and exclusive offers at local stores, among other features.

Apple is planning to charge advertisers a penny each time a consumer sees a banner ad, ad executives say. When a user taps on the banner and the ad pops up, Apple will charge $2. Under large ad buys, such as the $1 million package, costs would rack up to reach $1 million with the various views and taps.

Marketers will be able to target ads to groups of users based on consumers' download preferences from its iTunes store, according to ad executives. For instance, a marketer could choose to show its ads to people who have downloaded financial applications or reggaeton music, horror movies or comedy TV shows.

Marketers also will be able to target ads to users in a general location like a city, although they cannot target ads to individual consumers or access personal details.

Apple is seeking high quality ads from big-name marketers for the launch, ad executives say. The ads will go through an approval process, and Apple will build the ads itself during the first couple of months to make sure they work well and attain a certain aesthetic and functionality, ad executives say. Eventually, Apple plans to create a developer kit so that agencies will be able to design and create the ads themselves.

The process is causing tension among some ad directors, who are hesitant to give up control. Welcome to Apple's world.

Alcatel-Lucent Gets into Mobile Advertising Business

Alcatel-Lucent has created a white-label direct marketing platform called  "Optism" that is designed to help mobile operators create “media inventory” and provide advertisers with easy access to highly-targeted audiences.

Optism is not an ad network so much as an enabler of ad networks, since it is the mobile service providers who actually will retail the services, but Optism does create a permission and preference-based mobile marketing capability aggregated across multiple mobile operators.

Optism features a media arm that brokers relationships between mobile operators and advertisers, greatly simplifying the media selling process for aggregated operator inventory.

You might wonder whether Alcatel-Lucent now is competing with Google or Apple. It says it isn't, since Optism primarily aims to create direct marketing campaigns taking advantage of mobile communication features, such as text messaging.

It's an interesting approach to creating business-to-business revenue streams that are not directly dependent on end-user subscriptions. Available as a hosted and white-labled solution, Optism might be able to get economies of scale no single mobile operator could.


watch the video

iPad Users Watch a Lot of Video

Data from MeFeedia suggests the Apple iPad, on the market for just a few weeks, already is the fifth most-used mobile device, trailing the  iPhone, iPod Touch, SymbianOS, and Android in terms of unique users.

Based on its user data, MeFeedia says iPad users consume three times as many videos as PC-based Web users, up from the 2.5 times at launch. It appears iPad users also spend four times as much time watching videos as PC-based Web users.

Also, iPad users seem to consume five times as many videos as iPhone users do, MeFeedia says.

One might suggest that a lack of distractions accounts for the longer engagement time with video. One might also suggest the early adopters are more likely than the typical user to be heavy consumers of
media, games and video. It might also be the case that users are in an experimental phase, playing with the device to figure out what they can do with it, which might boost engagement on any number of levels.

Should those sorts of findings be confirmed as the device gets wider distribution past the early adopters, it would be safe to say that at least one of the iPad use modes is as a multimedia content device, in the same general class as an e-book reader, but with a focus on multimedia.

Should that be the case, the iPad might legitimately emerge as a showcase for video-based mobile advertising.

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Mobile Ad Spending Isn't Hype, But is Dwarfed by Online Spending

Everyone would agree that 2009 was not the best of years for advertising spending. But spending might not reach 2008 levels until 2012 or 2013.

Advertising might not reach pre-recession levels until mid-decade. There is at least some thinking advertising might not even reach pre-recession levels during the current decade.

Mobile advertising, Apple and Google expect, will grow fastest, from a low base. But online Web advertising still will be two orders of magnitude bigger than mobile advertising by 2014, Yankee Group predicts.

Mobile Advertising, Commerce to Explode with Strong Smartphone Growth

Research and Markets forecasts that U.S. mobile Internet users will rise to 158 million in 2015, while smartphone owners will rise to 194 million in the same year. That is fairly significant growth, given the current estimate of about 46 million U.S. smartphones in use, suggesting more than a tripling and nearly a quadrupling of the user base in the next five years.

As a result, the firm believes revenues from mobile advertising will grow about 37 percent at a compound annual growth rate, while mobile commerce grows at 65 percent compound rate between now and 2015.

"Most Mobile Ads Suck," Says Steve Jobs

You can count on one thing whenever Apple does something new: it will always say the old way of doing things "sucks." And that's what Steve Jobs, Apple CEO, says about most mobile advertising, in introducing  iAd, a new mobile advertising platform that will be built in to the new iPhone operating system, iPhone OS 4.0.  In typical Steve Jobs fashion, the Apple CEO said "we think most of this kind of advertising sucks." 


Apple tends to reshape just about every market it enters, so its entry into mobile advertising has to be noted. Just as signficantly, iAd is expected to provide a monetization vehicle for many developers of free apps for the Apple App Store, driving the apps business, not just marketing. 


"When you look at ads on a phone, it's not like a desktop," says Jobs. "On a desktop, search is where it's at." 


"But on mobile devices, that hasn't happened," says Jobs. "Search is not happening on phones; people are using apps."


"And this is where the opportunity is to deliver advertising is," he argues.


"The average user spends over 30 minutes every day using apps on their phone," he says. "If we said we wanted to put an ad up every three minutes, that's 10 ads per device per day." Assuming 100 million devices in the user base, that's one billion ad opportunities per day, Jobs noted.


"This is a pretty serious opportunity, but we want to do more than that," says Jobs. "We want to change the quality of the ads too."


"What we want to do with iAds is deliver interaction and emotion," says Jobs, and he undoubtedly is thinking about video and audio. Apple will keep 40 percent of ad revenue, and give developers whose apps host the ads 60 percent of ad revenue.

Google Adds "Nearby" Function for Search

Location has become an important part of the way we search, the Google Blog says, in something of an understatement.

"Simply put, location changes everything," Wired technology writer Mat Honan has said. That might be an exaggeration, but one intuitively can sense the potential to change behavior in the real world, if people easily can ascertain what is around them.

The key for marketers is to understand what kinds of information people want when they're tied to a certain place. One analogy might be that search solved the "what is" problem. Social networking provides a "who" context filter. Location awareness changes the "where" context.

In the early going, people are going to experiment with retail location offers. just as in the early days of the World Wide Web companies put up brochures online. But as the Web moved from static to active, interactive and real-time applications, so will the use of "location" features.

One might say the shift is from manually searching for "what is around me" to having that information show up automatically, without having to ask. Promotions and advertising will be important, but so will new applications that relate to where a person is, right now.

That might mean on-the-spot offers for travelers waiting to board a flight, missed connection options, or seat upgrade information.

"If you're a foodie looking for restaurant details, food blogs or the closest farmer's market, location can be vital to helping you find the right information," Google says. "Starting today, we've added the ability to refine your searches with the 'Nearby' tool in the 'Search Options' panel.

The search process also has been revised, Google says. If "Minneapolis" is the query, results will be returned for "St. Paul" or "Twin Cities," as well as "Minneapolis."