I think I found the ad in an entertainment app on my iPhone. I am a sucker for local mobile implementations. If Google's extension of the AdSense-like banners into mobile apps is enjoying a high click-through rate, then blame me. It is still a surprise and a great tease to see "Delaware" pop up in the targeted ad copy, and I have to follow the trail...in this case down a rabbit hole.
The streaming media that this particular ad dropped me into was a 20-minute affair that had all of the production values of a hostage video. The doctor sat in a corner under a single light, voice echoing to the camera-mounted mike. For a second I thought my iPhone had been hijacked by some pirate TV station. Rather than a heartening example of local mobile advertising at work, it was more a sign of how far local mobile has to go, and how downright creepy and weird things get when you throw Google algorithms at a personal device.
Most of us are accustomed to poorly targeted dross around our Web pages, if only because it becomes invisible. In an otherwise nicely sculpted iPhone app, targeting misfires like my abducted doctor video just make things feel a bit broken.
In fact, now that I am on the hunt for effective local mobile advertising, the Google banners have become an unwitting source of entertainment. Various publishers seem to have different policies for turning local on or off. I find few if any local ads in the Pandora app, for instance, but my otherwise excellent i.TV app is lousy with them. The biggest problem with the Google local ads is that they are not truly mobilized, even when they are finely targeted. One banner for solar energy was spot-on in locating me in New Castle County in Delaware and even dropping me into that localized page for the energy vendor. The localization was good but the topic targeting was strange. Why am I getting these ads in a TV grid app?
The larger problem, of course, is that the landing page is not optimized for mobile. Not only does the site require a lot of panning and zooming, but the advertiser has none of the obvious call links, etc. that recognize the user's off-desktop context. Another ad for a local merchant sent me to a landing page that was all Flash - entirely broken in iPhone world. This actually happens much more than you would think, and not only in Google ads. I have had in-app banners from several networks send me to Flash hell.
Perhaps I am shooting fish in a barrel by mocking these ads. Yes, it is early days and I gather advertisers can just check a box (or forget to uncheck one) and find their Google buy spread to mobile. But the end-user experience is more often poor than it is particularly good.
The problem isn't just with my local plastic surgeon who is just testing the local ad waters. Even among marketers who should know better, the mobile ad strategy can be short-sighted. Nationwide Insurance is pushing its branded app via Google banners, and it pushes me to an App Store page that shows me how many people are complaining about the two-star app. In this case the mobile campaign appears to be seamlessly crafted to push mobile content within a mobile ad. And yet the unique qualities of that new environment haven't been factored in entirely.
Native to the app economy is a feedback loop from users that could undermine the marketing efforts. It makes you wonder if it really does the industry any good to advise marketers to "test the waters" -- when that also means that you don't have to think through the user experience.
Google has the distinct advantage at least of having a growing base of local advertisers. Enterprising shopkeeps like my local doctor likely will experiment with crafting their own ads and pushing them into a massive ad system that will capture Web visitors as well as mobile users. But even that model is patchwork, catch-as-catch-can and slow-growing.
I have been watching the local ad market "about to explode" online for over a decade now. Capturing that massive mom and pop local services market continues to be tough. Newspapers, business directories, and even weird Amway-like schemes have been thrown at this problem of getting your plumber to advertising digitally. No one really broke the code on the Web, so what makes any of the mobile companies think they have something new?
Which makes me skeptical of some of the ambitions of upstart media like Foursquare or Yelp or Loopt, among many others. It still is not clear to me how local merchants come on board. Not only do small service providers have to grasp the mechanism of local search or social media advertising, but they have to be convinced that it works. Of course all of the mobile recommendation, couponing and social networking apps are trying to get into the local ad markets. Without feet on the ground, they have to rely on pulling marketers into the same sorts of automated ordering systems that deter merchants from a local Google buy.
I can see how many of these apps are delivering much richer local content than the online search engines and directories that preceded them. In fact, I consult some of the apps regularly. But I am still not seeing how they attract, execute and scale local advertising effectively and efficiently. Google can now reach Newark, Del. with a lot of crappy ads. Arguably, a Yelp or Foursquare has better content and might even attract a cool marketing offer here or there. I still don't see how the basic code to selling local ads in any comprehensive way gets cracked.
I agree that a profitable revenue model for a free local ad supported mobile app doesn't exist. There is a reason why 75% of the apps on App Store and 60% on the Android Market are paid apps.
As Pinch Media pointed out in their fascinating <a href="http://bit.ly/1bizqZ">presentation</a> that a paid app makes about 70 cents an app (assuming an average of 99cents an app minus Apple's 30% cut). Based on current usage patterns, for a free application to make more money than a paid app, they would need to generate on an average 70 cents in advertising revenue across 80 usage sessions.
If you are generating one ad per session then you need a CPM of $8.75. That doesn't seem reasonable for most local vendors. If you want to stick around the 50 cents CPM then your app will need to serve at least 18 ads per session. Given the economics the only way you can even come close to the revenue model of a paid app is if you can create a compelling app that has very high stickiness and engages the user for a prolonged session.
App publishers need also be worried that a jumpy video ad that is imprecisely targeted can hinder the overall engagement and potentially disengage the user from the app entirely.
Let me give you a glimpse of the future, albeit through the myopic lens of our humble business model.
Let's assume you are a local vendor. A restaurant, massage parlor, clothes boutique.
In the mobile-digital world, technology offers you the opportunity to leverage existing geo-targeted search technology that delivers your brand message, via mobile video, to someone searching for your particular product within a small local geographic area.
Let's say your company happens to get a SmartPhone-based search inquiry by a motivated potential customer. Real revenue knocking on your door.
Unfortunately, your mobile-based marketing video sucks. But your competitor's video is cool and stylish. In this shootout, best video wins.
Welcome to the new world of advertising. It's not about big name directors and broadcast-based commercials produced with mega-budgets. It's about grassroots brand messages produced relevantly, and affordably.
The way we see it, this is how to employ the legions of young, out-of-work creatives who have recently been fired by big ad agencies.
By offering real video value. Value on a micro-scale. Value that big ad agencies can't compete with.
Here's how it works. These creative make inexpensive ($5,000-$10,000) streaming mobile videos for small local brands using the latest digital shooting and editing technologies. Strategically powerful, stylishly-relevant videos that really make a compelling difference.
Now you have a product that has value. Any time a creative resource can communicate a tangible brand difference to a consumer, you have real value.
Look for this model to blossom in the next 5 years.
But that's just the way we see it.
mobile targeting can't compensate for doing a bad job delivering a relevent message. Did this ad make you more or less likely to go to that doctor?