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Dear Chief Marketing Officers:
Mobile advertising in its current state is a complete boondoggle. Consumers hate it, the metrics are awful, and the ad agency community is doing a disservice to clients by promoting it.
That’s a bold claim considering that mobile advertising is booming right now. Billions of dollars are being sunk into the idea that mobile ads will bring in more sales. Hear me out. I’ve been in the advertising industry for 20 years, starting with print and then transitioning to online advertising in 2000.
Lest you think I’m some smartphone Luddite, I’ve also done quite a lot of smartphone ads in my time. Do you remember Myxer, the website that let you upload a music file and get back a ringtone for your phone? Mobile ads for that were quite popular and I was part of that team. It seemed tailor-made after all. Why not see ads for a service that lets you get ringtones on the very device that used them?
Sadly, Myxer fell into bankruptcy, but I continued working in the mobile advertising space. All of the metrics for mobile advertising looked great. People spend more of their time on the go, and advertisers learned a long time ago to go where the customers are. As a result, mobile advertising is now the third largest advertising medium and is expected to overtake traditional print advertising this year.
Unlike a television where someone can change the channel, a person using a smartphone is interacting with an application they want to use. If the app is useful enough, the user should be willing to put up with a few, or a lot, of ads right? Do you remember Flappy Bird, that incredibly hard and incredibly addictive game that came out on mobile a while ago? The creator of the game was making a lot of money from advertisers, something on the order of $50,000 a day. If advertisers are willing to pay that much to just one app developer, why wouldn’t we get on the bandwagon?
But then I read an article that shocked me. A study claimed that 60% of mobile ad clicks are accidental. The figure stunned me, and a lot of behavior I was seeing in the metrics made a lot of sense. I had a Jerry McGuire moment and realized that the mobile advertising message I was pushing was a lie.
Companies spend billions of dollars on mobile advertising, but is it really serving any more purpose than to line the pockets of mobile ad networks, publishers and ad agencies? With rampant fat fingers, along with other factors like ad blockers and fraud, the clicks clients pay their hard earned money for are just tiny notches in the advertisers’ belts. If the study I read was true, and I have every belief that it is, mobile advertising doesn’t offer any real benefit to the company paying for the exposure.
I had a very sleepless night that night, and thought about possible solutions. Don’t get me wrong, I love advertising. But selling advertising that doesn’t effectively promote the client is selling snake oil. As marketers, isn’t it time that we admit our mistakes and switch to more effective solutions?
The advertising numbers that come out of apps like Flappy Bird are astounding, but the biggest question is: did the companies advertised on Flappy Bird receive a significant boost or benefit from it? Did the exposure accurately translate to engagement and sales?
Many have jumped on the mobile advertising bandwagon, but I’m here to tell you that mobile advertising, as it currently exists, is a wasteful and non-productive activity. It wastes money, it wastes company time, it doesn’t deliver accurate results, and people hate it.
Now I’m not saying that marketers should completely give up on the mobile space. It is my opinion that branded apps are the better way to go about advertising on smartphones and tablets. However, before I can promote that idea I need to explain why mobile ads are such a bad investment.
If you’re a digital marketer, open up your analytics and take a look at your click-through rate. Hopefully it’s a pretty good number and you’re getting a good ROI on your ads. After all, that’s the whole point of any advertisement: get the customer to respond in a way we want.
Now what if I were to say that 60% of those clicks were complete accidents? Still getting a good ROI? And what if on top of that, viewers were getting mad at your brand because it was getting in the way of their smartphone use?
Not looking so hot now, is it?
Yet that is what the research is showing, according to a study done by Retale, a location-based advertising company. The study surveyed 500 people for a week toward the end of January, 2016. 69% said that they had clicked on a mobile advertisement on at least one occasion. 60% of respondents said the reason they clicked on the ad was an accident due to small screen size.
In other words, their thumbs were too big for the screen and they tapped the wrong area. But it gets worse. Often those small screen sizes also interfere with viewability. There’s only a tiny amount of space for an advertiser to push an ad on a smartphone, or even a tablet, compared to a traditional desktop or laptop. To counteract that, mobile advertisers have come up with several ways to take over the screen. For instance, they could make the ad extra big and force users to scroll. Or they could swipe a screen over that fills the entire screen.
Users hate these tactics. According to a study done by Dartmouth that looked at why mobile users don’t click on ads, the top reason was that the screen was too small (72%). This is above being too busy to deal with ads (70%). It appears mobile users don’t want to squint to read text.
What’s the percentage of people who are actually clicking on ads because they like the ad or the brand behind it? It’s abysmal. The Retale study indicates that only 16% of people click on ads because they “like the company, product or service being promoted” and only 13% because they liked the ad.
Clearly something needs to change. If these numbers hold water, then mobile marketers have been working under a cloud and wasting a whole lot of cash. If the majority of people aren’t clicking on ads deliberately then it casts a lot of doubt about the ROI on mobile ad spend.
Yet this is just one dimension of the problems that mobile ads have. There is a significant portion of the population that don’t want to see ads at all.
Ad Blocking on the Rise
According to a Global Web Index study, up to 70% of mobile users across all demographics are either blocking ads or interested in blocking them.
The use of adblockers on desktop browsers has been a thorn in the side of internet marketers for quite a while. But their use on mobile browsers have been far less. Even on desktops, the use of adblockers is used primarily by people of a technical bent that know how to install plugins. No major browser comes in with adblocking capability out of the box.
However, Apple has upended this trend. When it released iOS9, its built-in browser had ad-blocking capability. Many ad executives are worried that this may be a sea change in public perception over adblocking, especially given the devotion of Apple fans. If it suddenly becomes “cool” to block ads on your phone, or the practice is at least given sanction by your phone manufacturer, then we may see a boom of blocking in the coming months.
People see their smartphone experiences as extensions of themselves, and when their experience is jolted too far they react negatively. Both iOS and Android do have traditional ad blockers in their online stores that can reach across browsers and stop ads from being seen. AdBlock Mobile is available for both iOS and Android. While built for browsers, it can reach across some apps and block ads from being seen, though not all of them. Notably, pages served up from Facebook and Twitter were often able to slip ads through. “We think about 30% of all the web traffic we’re seeing is coming from referrals within apps like Facebook and Twitter,” said Harry Kargman, founder and CEO of mobile ad company Kargo.
Ghostery is another plugin that is common in the ad blocking community, though its uses are troublesome on a different level. Ghostery prevents pages from running scripts. These include not just scripts that serve ads, but also tracking cookies, scripts that read tracking cookies, and even simple scripts that collect data for analytics. A user that’s protected with both of these might not even register as a visitor.
The vast majority of mobile phone use happens in apps, not in native browsers. Apps account for about seven out of every eight minutes of media consumption on mobile devices, according to ComScore’s U.S. Mobile App Report. Around 90% of the time people are in an app. Many of those apps use an internal browser based off the native one to serve ads, and they may choose not to load up any plugins. If app developers start to use Safari natively in their apps rather than a custom browser, even this trick may no longer work to get ads in front of eyeballs.
Mobile customers who use ad blockers differ from desktop customers in one crucial respect. There is a financial incentive for mobile customers to control their data usage. Outside of egregious limits (think those who pirate lots of movies), most ISPs don’t put a data cap on traditional computers. They can use as much data as they want.
Mobile users, on the other hand, are keenly watched for every byte of data usage and get charged handsomely if they go over their cap. This seems reasonable until you understand that they’re also getting charged for every ad that comes through as well. As ads have gotten fancier with video, audio, and more backend code for tracking, not to mentioned the increased numbers, ads are becoming a significant part of many people’s data bills.
This could be the reason why Apple put an ad blocker into its phone. It makes money on the sale of the product and through purchase of apps, but it is also dependent on wireless carriers to move the data back and forth. If ad bandwidth pushes up the price of mobile browsing so that people can’t use apps without paying extra, fewer people are going to buy smartphones. That’s a danger to Apple’s bottom line, so it makes perfect sense that the company would integrate ad blocking technology.
Ad Viewability Programmatic Mobile Fraud
There’s a third layer of problems with mobile ads that also needs to be addressed before we look at a possible solution. That is the matter of ad viewability. Ad viewability is a metric that measures how much of an ad a person needs to see before it registers in the mind. Viewability is one reason why you see so many ads stuck in the middle of content rather than at the bottom. It forces users to see the ads before they can get the rest of the content. Small screens and ad blockers interfere with these tactics.
The reason this is important is that advertisers currently don’t have a standard for what constitutes an impression on a video or an image. Is seeing just the top two line of pixels enough for an impression? How many seconds of video need to pass? This has deep implication on the revenue generated through mobile advertising. The Media Ratings Council has released some standards, but they haven’t been universally accepted yet.
But there is another side to viewability. As ads have gotten more complex, fraudsters have found ways to exploit ads to bilk advertisers out of quite a lot of money. In fact, non-human traffic may account for billions in mobile ad fraud, and may even eclipse desktop fraud.
Forensiq and AppLift did a recent study on mobile fraud and what they found was shocking. They studied 60 million programmatic ad impressions over a thirty-day period. The impressions were divided into three types: valid, high risk, and suspect. High risk impressions meant that fraud was very likely, while suspect impressions meant that it was possible they were fake, but they couldn’t confirm.
34% of those 60 million impressions fell into the two fraud categories. High risk impressions were measured at 12%, while suspect impressions were measured at 22%. Notably, it made no difference whether the impressions were on Android or iOS devices. Criminals are following the money and polluting the ad pool.
The most common route for fraud was through CPM ads, since these do not require user interaction. Nevertheless, about a quarter of the fraudulent impressions were from CPC. The three main tactics were these:
- Stacking multiple ads on the same screen real estate so only the ad on top is seen while all the other advertisers are charged. This can also be done through an app hijack that takes over an app, even a closed one, and forces the phone to “view” the ad. People who get attacked this way often have very high mobile bills. One device they studied had 700 fraudulent ads loaded per hour!
- Using bots to simulate clicks on ads. This fraud tactic has been around a long time in the desktop world. It can also be done by using annoying ad tactics that force the user to click on the ad in order to get back to their content.
- Install fraud. This is where criminals force downloads of apps that never reach the consumer.
All told, invalid traffic accounts for a loss of $4.6 billion across online marketing, and 28% of that invalid traffic comes from mobile according to IAB.
Until all of these issues are worked out, it makes very little sense to continue with mobile ads. But I did mention at the start of this article that I’d promote a different solution to the problem of effective mobile advertising: branded apps.
Branded Apps Are The Solution
While mobile advertising is getting quite a lot of money, the app world is getting far more money. Right now, apps are bringing in about $50 billion a year, but App Annie is predicting that by 2020, that number is expected to expand to $101 billion.
Branded apps have a lot of advantages over mobile ads. If you have a loyalty program, a coupon program, a newsletter, or some other method where you communicate with your customers, it can be rolled into a branded app.
Go Social and Tap Influencers to Drive Installs
Promoting a branded app is easier than you might think. If you’re already using Facebook or Instagram in your current mobile advertising efforts, an app install campaign works great on these platforms. Ads to install new apps do not disrupt the user experience on these platforms.
App install campaigns allows advertisers to take advantage of influencer marketing. In any social media space, only a small handful of people are the true movers and shakers within it. If you can create a branded app that appeals to the small band of consumers who are already actively promoting on your behalf on social media, you can get quite a lot of reach for a lot less effort.
Also, you have a lot more control over who sees your message because app install campaigns are often placed only on the company’s own social media pages. Traditional mobile ads are often rebrokered over and over again across multiple networks. This leads to a lot of wasted effort and annoyed consumers who are tired of seeing your ad everywhere they go.
I highly recommend connecting with my friends at Hawke Media to execute an effective influencer marketing program or social media campaign to drive app downloads.
Invest in TV Commercials Not YouTube
But what if you really want to go over the top and buy a paid advertisement for your app? That’s what some companies are doing and it’s paying off well, especially in the games space. Mobile games are one of the hottest niches right now. Mobile MMO producer Machine Zone just spent $5 million for a 30 second Super Bowl ad promoting its new game, Mobile Strike. And it did the same thing last year with a different game to the tune of $4.5 million
These ads are particularly telling of the problems we talked about earlier. Why would a mobile MMO campaign advertise on television? On average, mobile game publishers need to spend around $4.23 to bring in a single player using online methods. That’s a huge amount, and it’s largely due to the inefficiencies in the mobile ad market.
Branded Apps Are the Essence of Permission-Based Marketing
Branded apps offer numerous solutions to the problems I addressed earlier. An app icon sitting on a phone with your brand on it is like an ad that never really goes away. And unlike a normal ad, the user agreed to put it on their phone. Considering that people spend more than two hours a day on their phones, that’s a lot of opportunities for people to see your brand. And while many people fat-finger ads often, app icons are spaced broadly enough that if people want to interact with the app, they can do it with no problem.
Branded apps also don’t have to worry about being blocked. If a customer doesn’t want to see the information, they just uninstall the app. Can’t win them all. But if they do find your business and the app useful, then they’ll willingly submit themselves to all kinds of ads about the business. Branded apps are essentially an open line of communication between you and your customers. The key to a good branded app is to provide customers information, improved customer service, and/or loyalty bonuses through the app. This makes people want to use it.
Ad viewability isn’t a problem either, and if your app is secure you won’t have to worry about fraudulent transactions. If people expect to see ads when they load up your app, and want to see them because they want a good deal or want to know the latest products, then you don’t have to worry about how much they’ll see. They’ll want to scroll.
Building an app is more difficult than building ads, though, and smart marketers will do their research before pitching app ideals. AppsFlyer’s State of App Marketing Report covered conversion rate and retention rate data by vertical and by channel for apps. The whole thing is worth reading. Here are some of their findings:
- The top categories for ad conversion rates are transportation, news, lifestyle, and finance. The reason for this is that these are all intent-driven. Ad clickers know what to expect, and thus a high conversion rate occurs.
- In contrast, strict shopping apps aren’t converting as well. If a customer has to install an app to get a deal, many of them bounce away. Thus, if you are building a shopping app, it needs to do more than be a coupon delivery vehicle.
- Gaming apps are very popular, but it is also very hard to maintain retention. There are just too many different games.
- Retention for Android is highest among music apps; on iOS it is highest on social networking apps. However, there are significant gaps between platforms in certain verticals. This must be taken into account.
What this suggests is that brands will have to take the time to develop a smart branded app that their customers will want to retain. Coupons and other sales shouldn’t be dependent on having the app. The app has to provide something useful beyond being a billboard or a deal pusher if you want people to keep it around. If you use your app to turn your brand into an interesting news channel (think blog) or somehow promoting the brand as a lifestyle choice (think Apple), then your customers will have something worth retaining.
Marketers are wasting billions of dollars on bad clicks and fraudulent impressions, blocked ads, and poorly-viewed ones. It’s time to make a shift. There are too many cards stacked against the mobile ad, just like you hardly see anyone suggesting old-school banner advertising or pop-ups anymore on the web.
CMOs of the world, cease all mobile advertising effective today and build a better experience through branded apps.
Scotty Moore is a digital and mobile media startup consultant based in Los Angeles.
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