2013 was the year mobile took over the internet.
Research published early this year by ad network InMobi reported that, worldwide, 60% internet users are going online either solely or mainly via their phones. And a further 28% are splitting their time online equally between their mobile and their PC.
So it was no surprise this week when IAB Europe, the US IAB Mobile Marketing Center of Excellence and IHS Technology published figures showing global advertising revenue for mobile almost doubling last year, to €14.6bn. In Europe spend on mobile ads went from €1.3bn in 2012 to €2.5bn in 2013.
But before we break out the bunting and declare 2013 the year of mobile advertising as well as the year of mobile, it’s worth putting those ad spend numbers in context. According to IAB Europe, spending on online advertising in Europe last year amounted to €27.3bn. So although consumers are spending about half their time online via mobile, advertisers are spending about one-tenth of their budgets on the platform.
This will be a familiar story to anyone who was involved in online advertising in the early part of the last decade. At that time the disparity was between the significant amounts of media time people were spending online, and the tiny proportion of budget advertisers were devoting to the new medium. And it took a long time to close the gap.
2004 All Over Again
As Ross Sleight, strategy director at mobile agency Somo Global, points out, we seem not to have learned from our experiences. Once again advertisers are slow to follow audiences onto new platforms. And just as one of the key elements in the move of advertising money onto the internet ten years ago was making online advertising easier to buy, simplifying the mobile buy will be crucial to the development of the medium.
This was recognised by Anna Bager, vice president and general manager, Mobile Marketing Center of Excellence, IAB, when the figures were released. Mobile campaigns, she said, are becoming “easier to plan, create, buy and measure - in great part due to programmatic strategies”. And report author Daniel Knapp noted that “improvements in marketing technology have enhanced targeting and measurement of mobile advertising”.
But Sleight sounds a note of caution. He warns that the mobile advertising ecosystem is still complex and fragmented, with a baffling number of publishers, ad networks, DSPs and ad formats. And compared to the era of the desktop internet, mobile is further complicated by the split between apps and the mobile web, and the separate tracking systems employed by the two.
“A mobile ad buy is still a very complicated task, in terms of where you buy, how you track the campaigns, how you optimise, how you retarget,” Sleight says. “It’s hard for big media agencies in particular to make those buys. We’ve got to simplify the process for all agencies."
What We're Not Measuring
But there is another issue raised by the IAB figures - whether ad spend is actually the right metric for mobile. There is a body of opinion that we still haven’t worked out what mobile is really good at, and that by concentrating on ad spend, we’re not seeing the whole story.
“Mobile is great for promotions, customer service and loyalty,” Sleight says, “But these don’t show up as ad spend. It feels like we’ve just ported existing measurement methodologies onto mobile without looking at what the medium is good at.
“We’re coming to the conclusion that mobile is very good for consideration. It doesn’t do awareness the way TV does, but we know that people are researching on their mobiles and it’s influencing their propensity to purchase.”
This leads on to the other big problem for companies trying to move ad budgets on to mobile from other media. Apart from driving app downloads, most customer journeys involving mobile are completed elsewhere, either on the desktop or in-store. As a result, mobile results measured on their own look poor. The real value of the medium can only be seen with cross-channel attribution, another massive challenge.
Mobile - Made For Video?
At the same time, mobile advertising is moving fast. Another report published this week showed the precipitous decline of the mobile banner and its replacement by rich media formats, at least in the entertainment sector.
The report, by mobile video advertising company Vdopia, looked at mobile advertising by entertainment brands. It showed banner ads now account for only 4% of mobile ads, down from 14% in six months. The research also found that shorter video ads work better on mobile, a point that seems not to have got through to advertisers yet. According to the report, 10 second ads are most effective, but only account for 3% of advertisers spend, suggesting we’re still a long way from fully understanding mobile formats.
So while mobile ad spend continues to grow, driven by smartphone adoption and the increasing availability of free wifi, the key to its future success lies in making it easier to buy campaigns. Beyond that, the industry needs to understand and explain mobile’s role in customer journeys, and tie it into overall success metrics. Only then will the real value of mobile be revealed.