It’s been less than six years since Apple released the iPhone. In that short time, we’ve seen smartphones revolutionize the way we go about our daily lives. Many are wedded to their smartphones; leaving one at home seems unfathomable. But despite all of the time we spend on our smartphones, mobile advertising trails online advertising. CPMs for mobile are a fraction of what they are on the Web.
Next Tuesday, I’ll be facilitating a panel on mobile advertising at VentureBeat’s Mobile Summit in Sausalito, Calif. In advance of that, I reached out to some of the leading brands in mobile to get their perspective on where mobile ads are headed.
One company that’s turned its business on its head in recent years is Pandora. In 2009, 88% of Pandora listening came from the desktop. Now, Pandora does 1.5 billion hours a month of streaming, and mobile accounts for 80% of those listening hours, according to Dominic Paschel, vice president at Pandora.
Because Pandora has to pay for the songs it streams, “monetization wasn’t a nice to have,” Paschel said. In 2012, the company did $256 million in mobile revenue.
Pandora has been experimenting with new ad creatives unique to mobile devices, such as click-to-add to calendar for NBC’s The Voice, click-to-call for State Farm, and click-to-order for Pizza Hut. Pandora also sells radio-style ads. (Though that isn’t an opportunity for most companies engaged in mobile.) Rebutting a common complaint, Paschel said advertisers have been willing to try new formats on mobile.
The Weather Channel
Alex Linde, VP of digital and mobile apps at The Weather Channel, said mobile is a critical piece in the future of the company. “Each screen has its place — TV for entertainment, science and severe weather, Weather.com and other online resources for research and planning,. But if it is not already, then mobile will be the place you look for a weather forecast,” Linde said.
One of the big concerns with mobile advertising is whether brand advertisers will come on board or it will be the domain of direct response advertisers.
“There are still too many buyers focused on clicks,” Linde said. “A coordinated effort across the ecosystem to help the agency connect mobile ad serving and tracking with measurement and attribution across screens will finally allow the true ROI of mobile to be recognized.”
But The Weather Channel has already been successful with brand advertisers.
“The majority of our mobile revenue comes from the brands,” Linde said. “We see a strong interest from companies that know their business is impacted by the weather — insurance, autos, travel, [quick-serve restaurants], etc. but more and more our advertisers understand the strength of our audience.”
Brands are themselves launching mobile apps to augment their in-store experiences. “Mobile is increasingly important to Sephora overall — as a means to shop on the go, assist in your Sephora store shopping experience, and provide quick moments of inspiration while standing in the coffee line,” said Bridget Dolan, VP of Digital Marketing of Sephora. The company has 1,300 stores selling beauty products in 27 countries. “We know that our clients are increasingly visiting us from their mobile devices — over 40% of Sephora.com traffic is from a touch device, and more than 50% of our emails are opened on mobile phones.”
“We consider mobile differently than desktop because you need to make it simple and fast for the customer to get to the product she wants to buy or find the information she is looking for when she is on mobile,” Dolan said. “We really built our Sephora To Go app for iPhone and our mobile site with utility at the forefront — making it easy for her to purchase with a few taps, storing her Beauty Insider loyalty card so she doesn’t need to carry it in her wallet, giving her easy access to her past purchases and Beauty Insider rewards, and even allowing her to scan any product in our store to see ratings and reviews.”
The company also advertises in mobile search and Facebook, but treats them differently from desktop advertising. “We spend a lot of time and energy optimizing campaigns for paid search by device to ensure top rank and relevant creative and calls to action,” Dolan said. “We had also seen success with Facebook mobile advertising to grow our fan base on Facebook.”
As mobile devices proliferate and take on different forms, it’s also important to take that into account. ”Tablets are unique from mobile in that they are used at different times with different shopping mindsets,” Dolan said. “Tablet is more lean back with ‘couch commerce’ and mobile is much more lean forward with shorter bursts of activity. To treat them similarly is to not put yourself in the customer’s mindset when she is using each device type.”
Trulia, which provides real estate search, has seen similar differentiation. “iPads and tablets have more screen real estate which enables more innovative ad integrations,” said Lee Clancy, VP of Consumer Products for Trulia. “For example, we have done a lot of leading-edge ‘mapvertising’ campaigns, which allow advertisers to have a branded presence on our maps, such as displaying specialized map markers showing where Chase banks are located in relation to a specific property or neighborhood, or allowing home searchers to see quickly which homes on a map are Verizon FIOS-enabled areas.”
Unlike many companies that are struggling with mobile monetization, Trulia is finding that it works well. “Trulia’s main advertiser segment is real estate professionals, and the good news is that we’re finding mobile advertising works very well for agents,” Clancy said. “They are seeing tremendous ROI, due to the ‘transaction-ready’ nature of our consumer audience (i.e., consumers who are looking to buy a home within the next 3-6 months) and the inherently mobile nature of touring properties for both agents and consumers. In fact, Trulia is one of but a handful of companies that are actually seeing higher monetization on our mobile products vs. our web product.”
My own take is that mobile is an extremely compelling platform. Sensors such as GPS and gyroscopes allow marketers to learn more about the consumer’s immediate need than ever before. Smartphones are nearly always on us, meaning they’re instantly available — especially when we’re making purchase decisions. Mobile is a way to capture and inform consumers at the bottom of the purchase funnel. Instant access to infinite stores of data can provide the kind of information you could only get from the best-trained salespeople.
One key to success in mobile is understanding how consumer behavior is different in mobile environments and adapting to it.
“Mobile ads really need to be designed from the ground-up as mobile,” Clancy said. “We cannot simply shrink web banner ads and plunk them onto the mobile screen and expect that it will be valuable for advertisers or consumers.”
Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org; and tweets at @rakeshlobster.
[Top image credit: Kostenko Maxim/Shutterstock]