• by Steve Smith , Staff Writer @popeyesm, November 11, 2008

At our "iPhoning It In" panel during the recent OMMA Mobile conference, Jason Spero, vice president of marketing for mobile ad network AdMob, stridently declared that developers and brands did not need prominent iPhone App Store placement to make their content discoverable. Ads running on other apps can push a highly motivated audience to your content, he argued. We didn't get to explore the model in detail during the session, so I followed up with Jason. It turns out that one of AdMob's own engineers, Josh Snyder, developed a simple Twister-like touch-screen game, "Knots," that languished in the App Store until AdMob put some media behind it.

Mobile Insider: What are the challenges of merchandising within iTunes?

 Jason Spero: We get that question a lot from developers right now. The state of play is that there are more and more apps going into the store every day. There are categories for browsing and it is searchable, but a lot of the clever innovative apps are having trouble being discovered. One way to put content together with users is to try to get your apps featured with Apple, take advantage of the things the device does well, and lobby for that. But obviously that is available to very few people. So we are trying to give them a cost-effective way to drive discoverability, whether it is a game from an individual developer, a corporate entity, or, increasingly, brands and agencies with branded applications.

MI: What are the available units?

 Spero: We offer both performance and brand ad formats for the iPhone. Our performance ad unit allows you to link directly from an ad to the download page in the App Store. So you can see a call to action, a simple text and image ad, that would run either in a Web environment or another app. When clicked, that ad directs the user to the download page for an application.

We built an ad format to help app developers promote their apps. In this case, Josh had an idea for a very simple game called ‘Knots.' He saw very, very little profit, especially after he was out of the new areas of the App Store because no one was tripping over his app. About a week and a half into his tenure in the store we began spending some money, about $500-$600 a day for a week and a half. And we promoted it to the point of it being the #38 most popular app. The ads are paid for on a cost per click basis, which is key. In this case he was probably paying 18-to-22-cents a click. Driving his app to the 38^th position got it on Apple's radar, and it was subsequently featured by Apple. So there was a primary and a secondary effect of his spend. And he got sufficient downloads that it is now a very profitable venture for Josh and AdMob.

 
MI: How so for him? Is he in turn making money off of AdMob ads running in ‘Knots'?

Spero: He was certainly losing in the promotion. It is ad-supported; he shows ads on the Game Over page. And even though we stopped spending as of Sept. 23, he is earning between $500 and $750 a day, still with no spend. So he has got this annuity stream now that he has people addicted to his app. But the ‘Knots' example is, I think, a good proxy for a brand that wants to put a branded application into the App Store as well. And one of the questions they are asking us is how to promote downloads. So we have been sharing the ‘Knots' example as a decent proxy for how you can drive downloads on a performance basis.

MI: What kind of volume does the iPhone ad network see now?

Spero: We are running ads in about 60 iPhone apps that are live in the store, like  UrbanSpoon, Tap Tap Revenge and BubbleWrap. We're also running ads on Safari Web pages, so we have more than a thousand sites with meaningful iPhone traffic. Initially this was Safari traffic in the U.S. but we have seen an explosion as Apple has taken this device to market in other countries. We are seeing a rapid deployment of games and apps that frankly take advantage of the application environment and would be hard to do in a Safari environment. We are serving CPC ads in the ballpark of about 20 cents per click in the U.S. CPM ads are $15-$20 in the U.S. And we are serving more than 10 million ads a day on the iPhone. That number has exploded since July when they launched the 3G, but certainly since Sept. 1.

MI: And that is across downloadable apps and Web apps?

Spero: We have a bit more than half of our traffic in apps, but we see a healthy balance of both and we see advertisers interested buying across both environments.

MI: What kind of targeting is available?

 Spero: We can help target along channels, so they can target entertainment vs. news, sports vs. games. In addition, we're working with brands to allow them to target demographic groups based on demographics we know about the individual apps. We are doing primary research to understand the demographic profiles of each site and app in our network.

MI: Is there enough scale yet in the iPhone traffic to merit much targeting?

Spero: We have reached a scale where we work with people who want to reach high net worth individuals or reach females or males to get to that level of granularity and still be able to deliver decent reach. But the application advertisers target our entire iPhone network right now. The cheapest CPC comes when it is un-targeted, so a lot of the performance media has been run-of-the-country with country-level targeting. We see competition for inventory. We establish a 10-cent minimum. We are sold out on the 10 million per day. And it has been bidded up to about 18 to 20 cents in the U.S. 

MI: Finally, what do we know about the function of creative in selling apps? If we are evolving a distribution system here and potentially in Android and BlackBerry, where ad-supported apps are advertising other ad-supported apps, I am curious if you have any learning about the kind of messaging that does and doesn't work?    

Spero: When people are trying to promote an app, whether it is ‘Spore' from Electronic Arts or not, in both cases we are running a simple banner with calls to action: text inside the banner. AdMob developed what we think are some innovative formats for the iPhone where we have an icon on the right side of the ad that indicates the type of ad it is. We have an icon specifically indicating it is a download. We have hypothesized that it results in more qualified traffic because the advertiser is paying on a CPC basis so they only want qualified clicks interested in doing a download.

So our sales team and self-serve interface has a lot of tips for best practices for calls to action. We are really excited about the touch screen, where we can actually see where within the ad the user's finger makes contact with the ad. We are starting to assemble some data about whether they are clicking on the action verb or on the brand. We hope to have some mathematical proofs about how people engage with text copy within ads.

What I can tell you now in a very unscientific way is that call to action is very important. A simple image without text underneath it results in a CTR of about half as great. If our average CTR is probably between 1.5% and 2.5%, having a very clear call to action, whether you are Land Rover or Electronic Arts, will have a dramatic positive effect.