Field of Dreams II: The Mobile Advertising Story
Similar to the web in '97, mobile advertising scares a lot of publishers. Many look at mobile as a potentially disruptive, cannibalizing medium. Others simply ignore it to focus on their print, broadcast or online properties. The down economy has delayed mobile advertising's growth, but that's largely a cover, an excuse. The reality is many publishers (and agencies) don't want to deal with another platform, and so they give it away as a value-add or outsource all sales to mobile ad networks. For large media companies, this is a colossal blunder.
Web advertising is a $23 billion industry. Those traditional publishers who embraced it early and with the proper resources captured a disproportionate slice of the market (e.g. Time Inc). The same dynamics will play out in mobile. Publishers can't ask consumers to stop spending so much time on their iPhones and pick up the print magazines or newspapers. Rather than fear what's new; content providers need to embrace it and offer marketers a suite of ad products appropriate for the medium.
Worse than neglecting mobile advertising is outsourcing sales to mobile ad networks.
The Problem with Mobile Ad Networks
While ad networks provide a short-term solution, in the mobile world they often break their sacred covenant with the publisher: "Thou shalt not cherry pick my site at below market rates." Agencies place buys with ad networks because they can buy premium at remnant pricing. If this was going on in desktop, there would be a full-out war of publishers and networks. But because mobile is still 'emerging', nobody seems to care.
Premium publishers should care, because mobile has emerged. Mobile web traffic has doubled over the past year and continues to grow at a rapid pace. Yet mobile ad networks are driving down CPMs lower and lower. According to IAB and Bain Capital, the average CPMs on ad networks ranged from 60 cents to $1.10, prices that are only 6% to 11% what publishers could get from selling inventory directly. And CPMs for ad-network-sold ads are dropping, some by as much as 50% year-over-year, says a recent study from Pubmatic, which tracks pricing among long tail ad networks.
Don't get me wrong, mobile ad networks play a valuable role and many have done an admirable job jumpstarting the mobile ad marketplace. However, our interaction with premium publishers tells us that they just aren't happy with mobile ad networks. Premium publishers need a premium approach to mobile advertising. The irony is that all of this channel conflict and inventory deflation is completely unnecessary! Many large media companies could sell most if not all of their mobile inventory on a monthly basis with just a little bit of focus. Publishers simply need to follow this blueprint:
Taking Control of Your Inventory
• Premium publishers need to require their sales team to sell mobile as part of every desktop buy
• They need to empower their sales team with the same resources they have on the wired web -- research, collateral, innovative ad forms, sales development and ad operations support
• Mobile inventory needs to be easy to buy and measure - which means full integration with DART and Atlas for campaign tagging, management, and tracking
• Avoid the mobile ad networks; at least in the early going while Publishers determine their steady-state sell-through rate • If mobile networks are employed, impose and police restrictions so they are not devaluing inventory
Selling mobile should be easy for digital salespeople. Simply look down your list of top advertisers, pick those who are most appropriate for the medium, and go pitch mobile as an incremental component to a desktop buy. And don't be afraid to partner with mobile vendors. There are many who will help you put a compelling ad package and microsite together (without representing your inventory) so you can sell more to your media buyer and achieve the all-important 'cool factor.'
Those publishers who ignore mobile or prematurely outsource to networks are mortgaging their future growth. The time is now to step up to the plate, be a media company, and sell mobile to your customers. Or in the words of that creepy whispering voice from the Iowa cornfield...Go the distance...