The Fall And Rise Of Mobile-Local Advertising

by Victor Wong, Aug 3, 2012, 7:00 AM

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Back in 2010, I served as co-chairman of the Interactive Advertising Bureau’s Local Committee and co-wrote the guide on local targeting. The primary challenges the mobile ad industry faced at the time included the lack of neighborhood-level geotargeting, fragmented ad inventory sources, and few ad unit standards. More recently, as my ad tech company PaperG began re-exploring the landscape for mobile-local advertising, I was surprised to see the very same challenges, but with one major addition -- privacy. Thankfully, however, some promising solutions are on the horizon.

Targeting

In 2010, AdMob and many of the early players in mobile advertising claimed to have a solution for hyperlocal targeting, including the ability to zero in on potential buyers at the neighborhood level via latitude/longitude coordinates provided by smartphones. However, once targeting providers were asked detailed questions, the best they could do was city-level targeting at any real scale, since most phones didn’t have GPS capabilities at that time. At worst, targeting providers would return latitude and longitude coordinates that were imprecise because, in fact, they just described the center of a ZIP code or DMA.

Today, mobile ad inventory is more plentiful than ever thanks to the proliferation of smartphones, but the proportion of inventory with latitude/longitude accuracy remains limited. The reason: some smartphones restrict access to GPS capabilities to only those apps that need it for purposes other than advertising. As a result, there are still few ways of achieving hyperlocal targeting, but the ways that do exist can be highly accurate.

Inventory sources

If it was hard to execute a mobile media buy in 2010, it is arguably much harder in 2012 given the flood of apps and mobile Web site versions that exist today in the market. The rise of real-time buying for mobile, where ad placement can be done programmatically without faxing insertion orders back and forth, has alleviated this problem. Mobile RTB exchanges aggregate all of the fragmented media inventory and enable a more centralized buying solution. Unfortunately, thus far, there are no mobile RTB exchanges comparable in size and scale to online RTB exchanges like Google and RightMedia. However, the rise of mobile RTB demand-side platforms -- which can place ad buys on multiple mobile RTB exchanges -- can solve this problem.

Ad unit standards

Perhaps the one area that has demonstrably improved on every level is ad unit standardization. There is still fragmentation as a result of varied mobile device screen sizes, but this will not change anytime in the near future. There are two separate standard-setting bodies: the Mobile Marketing Association and the Interactive Advertising Bureau. Nonetheless, for the most part some dominant ad sizes have emerged, bringing real standardization within reach. Finally, thanks to Steve Jobs, HTML5 is the only standard that mobile ad creators have to consider.

Privacy

Mobile advertising has flourished as these problems are resolved, but a major new challenge has emerged -- privacy. Handset makers increasingly build in privacy restrictions on their phones that make it difficult to identify unique users to target with appropriate ads.

With that information withheld, location has grown in value for targeting since it provides the advertiser with actionable information about the consumer, without revealing the consumer personally. This includes demographic information, the rough likelihood of spending money, and proximity to offline points of sale.

I wouldn't be surprised if in two years, locally targeted advertising becomes the majority of mobile advertising as the industry seeks a privacy-friendly alternative to Web tracking that can still reach the right demographics.

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