Mobile Fix: What’s the future of advertising?
Simon Andrews, founder of the full service mobile agency addictive!, rounds up this week’s mobile news.
Building on our thoughts last week on the emerging ecology of native advertising, we enjoyed watching a talk from Fred Wilson and Dave Morgan. They discuss what’s happening in digital generally but get into some detail on how advertising is changing.
At one point Wilson answers a question by stressing that platforms with big audiences can and do monetise with advertising. He reminds us that Facebook is a success (with a huge valuation, $5bn in revenue and good profits) that Twitter is a success and believes Tumblr will be too.
The video is 45 minutes but well worth watching.
We agree that the money will follow eyeballs and ad revenue can fund these new businesses, but exactly what that advertising will look like is not yet clear – particularly on smartphones and tablets.
Many think that it won’t be banners, but we see a place for them. Done properly – relevant creative and smart targeting – they can and do work. Both for response and for branding.
But the idea of brand messages that blend with the surrounding content has to make sense. In traditional media the advertising has adapted to its environment and feels native.
Facebook sponsored messages and sponsored tweets are working well, as they are clearly native. As is paid search on Google. And each of these formats makes the transition to mobile easily.
Does this trend mean the comeback for Branded Content? We launched Big Picture back in 2005 to focus on branded content and branded utility, but this never got much traction then and we spent most of our time on mobile and social.
But as this interesting article points out, Content seems to be king again, and lots of brands want to be part of the content people enjoy, rather than just interrupting it. With technology driving the context and content production costs falling, we see this area growing quickly.
As Real Time Buying disrupts how advertising is bought, we do see that change can happen really quickly – e-marketer suggests RTB will grow from $2bn this year to nearly $8bn by 2016 – 28% of all digital display. The New York Time has a thoughtful piece on The New Algorithm of Web Marketing, including this quote from e-marketer;
“[Publishers were] going to have to double down to prove the value of their inventory as they compete with other, cheaper inventory.”
This innovation doesn’t just change the role of publishers – it can change the role of the media buyer too.
Of course if we don’t use the technology to make advertising work better, people will use technology to make advertising disappear. A new ad blocker service is doing very well on Kickstarter.
But as Fred Wilson points out, it’s a myth that people don’t like advertising. Most people enjoy advertising that is relevant to them and well made. The stuff they hate is untargeted, uncreative ads – so it’s in everyone’s interest to solve this conundrum.
Measuring the effect of ads
Probably the deciding factor in whether or not native ads get real traction is whether they are seen to be effective. Online made life difficult by latching onto click-through as a key metric early on. As clickthroughs declined it has been hard to get the industry to pay attention to all the other research that shows online is really effective. In mobile we risk history repeating itself as click rates get talked up.
Facebook continue to lead the charge on digital ad measurement. Their scale and the data they hold on their customers gives them some huge advantages. We were told of a device manufacturer who was able to see what handsets were being used by the people who saw their ads (aggregated) – and compare that with fresh data a couple of months later. So they had clear data on how many people had changed phones over that period and how many had bought their brand.
Techcrunch has a good look at how the research works – and Business Insider has a linkbait headline saying this will kill Yahoo. On the contrary, any evidence that digital advertising works can only drive more investment in digital – and Yahoo is as likely to benefit from that as anyone. If you want to dig a little deeper into ad measurement Adweek have taken a look at mobile tracking.
A YouTube executive has been talking up the Google view on NewTV and how they see YouTube as a TV platform. The comments on their ad innovation TrueView – where viewers can skip the ad after 5 seconds and the advertiser only pays for viewed ads – are interesting;
“We found TrueView to be effective for advertisers because they now only pay for views. It’s great for consumers because they can choose, and it’s great for content creators because the [revenue] that a content creator takes from a TrueView ad is higher than for a reservable pre-roll. Advertisers are paying for a particular audience or content type.”
Bubble?
The Facebook IPO caused a few people to question the huge valuations being given to startups, and for the first time in a while, some people suggest there is a bubble building up. Foursquare is the latest whipping boy but a number of ecommerce businesses are seeing down rounds – when new investment comes in against a lower valuation than previous investment.
We have wondered why starting a relatively straightforward ecommerce site makes a business so valuable. Especially when Amazon could enter your niche and probably crush you.
And even in London, some are wondering how viable many of the Silicon Roundabout startups are; we heard a smart commentator say there are too many people building useless apps, rather than real businesses.
As we always say, to be successful you need to solve a problem. And a lot of the problems have been solved now. But we do agree with Marc Andreessen when is says we are not in a bubble;
“Tech stocks are trading at a 30-year low when compared to the multiples of industrials…it’s the weirdest bubble when everyone hates everything”
Finally…When talking with brands we always talk about the disruption caused by the web in their sector – which took 15 years to play out – and make the point that mobile disruption will happen much quicker.
Why? Because the installed base is already huge and new behaviours are already becoming embedded. Forrester now make a similar point;
However, mobile has the potential to be more disruptive than the Web. The mobile revolution will inevitably transform your business in the next decade, too – not because mobile will generate massive direct revenues but because it will trigger a more radical transformation toward systems of engagement.