Mobile Advertising is the FUTURE

Matthew T. June 6, 2012 0

Once again, thank you Mary Meeker for doing the hard work of compiling the stats, and reaffirming our belief in the future of the mobile internet!

Mary Meeker, partner of VC firm Kleiner Perkins, is well known for periodically giving presentations which send the tech world in a tizzy. Her full presentation, given at the D10 Conference 30th May 2012, can be read at: 

http://www.scribd.com/doc/95259089/KPCB-Internet-Trends-2012

The full presentation is a great read for anyone interested in the future of the internet, and how the internet is going to change everything in our lives.  However, being the self-absorbed little ferrets that we are, we’re going to focus on some of the points that relate most directly to Ferret Card.

The Good:

The great news is that the opportunity for mobile advertising is absolutely huge. Based on a comparison of time spent in media vs. advertising spend, the implication is that the mobile advertising market should be 10 TIMES as big as it is now!

And that is based on current figures… the mobile internet is rapidly growing, now accounting for 10% of global internet traffic.

At this point, there really should be no doubt that the mobile internet represents a huge shift in how we access information, spend our time, and entertain ourselves.

The Bad:

The bad news is that mobile advertising monetisation currently sucks.

eCPM refers to the cost for an ad to appear 1000 times (or 1000 sets of eyeballs), regardless of whether the user clicked or interacted with the ad in any way. Ads sold on a CPM model are always much cheaper than CPC (“cost per click”) ads, for which an advertiser only pays when the user clicks on the ad.

The above statistics therefore show that it is 5 times cheaper to advertise on mobile than on the desktop internet. It only costs $0.75 for your ad to be seen 1000 times, as compared to $3.50 on the desktop internet.

So what’s the implication here? Is mobile advertising a dead end? Is there no value in mobile advertising? Is there a massive excess of mobile advertising inventory over mobile advertising demand?

The Ugly:

For the benefit of those who are familiar only with iPhone, I present to you the reason that mobile advertising rates are far cheaper than desktop internet:

 

What the hell is that?!?!?

Current methods of in-app mobile advertising are WRONG in so many ways:

It’s intrusive: Get out of our way, there are eggs that need saving

It’s small: Not enough space to get a proper message across, and yet the ads are already taking up a higher percentage of screen space than they should. Most of us don’t mind a few ads on desktop internet websites, but not something as in-your-face as this!

There’s no value: Really, was I going to click on an ad in the middle of my game? It’s useless for the player, and useless for the developer. Mobile click through rates are rightly terrible because of this, and this is reflected in the cheaper prices.

It sucks bandwidth: If you’re on a mobile data plan, you’re effectively paying to see these ads!

There’s little targeting: How do these ads know who I am, and what I am interested in? This is very different from the desktop internet, on which companies have had years to come up with effective targeting solutions (examples being Google or Facebook, or online advertising firms who know how to place ads on websites to achieve the highest possible click-through rates).

The Future

At Ferret Card, it is our strong belief that the key to mobile advertising is not to simply replicate what worked for desktop internet advertising. Mobile is a completely different medium, with different benefits and challenges.

Ferret Card’s entire business model is based on the idea that users don’t mind ads that are:

Not intrusive: Ferret Card users will only see our Specials when they access Ferret Card app or website. We aren’t trying to shove Ferret Card down people’s throats while they are trying to play Angry Birds. Users who are checking out Ferret Card are already mentally “in the zone” to check out specials, rewards, or new businesses. This is one of the motivations for logging in to Ferret Card: to actively seek out great specials and great local businesses.

Giving something of value: Ferret Card’s advertising model is based on Specials, which are effectively mobile coupons. Every special must be either a discount or freebie. This is something which is of value to the user, and not just an annoying banner ad.

Targeted: The worst ad I ever saw in Angry Birds was for a dating service. What made them think I was looking for a soul mate in the middle of committing porcine genocide? What made them think I was even single, or even of dating age? The answer of course is that they didn’t know anything about me, but were just trying their luck due to the cheap eCPM they were likely paying to deliver those ads. Targeting ads takes a bit more work, and will cost more to reach a specific audience, but will always have a MUCH better response rate. These are ads which are far more likely to be of interest to me, and which I may actually take notice of.

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