VentureBeat produces half a dozen events each year, every one focused on a different sector within the technology industry — but one of my favorites is the Mobile Summit.

The annual Mobile Summit, which we held last week, brings about 180 mobile industry executives to the lovely Cavallo Point Resort in Sausalito, Calif., just across the Golden Gate Bridge from San Francisco. The venue offers gorgeous views of the bridge, the bay, and the city across the water.

But mostly, it is a chance for this select group of executives, entrepreneurs, and venture capitalists to network and to problem-solve.

A lot of the action happens at “boardroom sessions” that bring together up to 20 people at a time to talk in a focused, extended way about specific issues within the industry.

The Summit this year — our fourth such event — focused on the mobile advertising industry. That was a deliberate choice given how rapidly this sector has grown in the past year. Spurred in large part by Facebook’s rapid and remarkably successful move to make money off its mobile users, the industry at large has realized that there is a lot of money to be made through advertising to people on their smartphones and tablets.

But the advertising market in mobile is a lot more challenging than the desktop Web advertising market, for several reasons.

Mobile is a different world

Tracking people across different mobile apps and devices is difficult. On the Web, advertisers have learned that it’s easy to drop a cookie on someone’s browser and then use that to identify the person in order to deliver future advertisements to them. Advertising networks may not know your name, but they know a lot about what you’ve done online recently — and that explains why, after you do a little searching for eyeglasses, grills, or underwear, suddenly the ads you see — on seemingly every site you visit — are filled with offers for eyeglasses, grills, or underwear.

That kind of “retargeting,” as it’s known in the web world, is surprisingly effective, so advertisers are willing to pay a lot for it. In the mobile world, however, it doesn’t work as well. Apple’s mobile version of Safari doesn’t support cookies. And if you’re using apps, there’s no consistent way to track what you’re doing anyway: Each app uses its own method for keeping track of its customers and doesn’t share that data with anyone else.

As a result, if you use Amazon’s app on your phone to search for swim goggles, then tweet about your search using the Twitter app, then open up Safari to do some more searching, advertisers have no way to tell that the person visiting websites on Safari is the same person that was just in the apps searching and tweeting for the same thing. They don’t even have access to data that would indicate that these three sessions came from the same device.

From the ordinary consumer’s point of view, this sounds like a bit of a relief, frankly. So advertisers can’t direct ads at me based on everything I’ve been doing — so what? It’s their problem.

But from the advertisers’ point of view, it’s incredibly frustrating. It’s also led to a lot of attempts to get around the limitations of user tracking on mobile devices. One of the companies aiming to solve the mobile retargeting problem, AdRoll, just picked up a $70 investment.

A second issue has to do with tracking the effectiveness of mobile ads. Unlike in the desktop web world, mobile doesn’t have a widespread, consistent way to verify that ads — which may appear on mobile sites or in mobile apps and games — are actually appearing where they are supposed to appear.

And it’s surprisingly difficult to tell whether the ads are even working. Say your company purchases an ad campaign that’s designed to convince people to install your new app. How do you know the campaign inspired any given app download?

What we learned

Discussions in the Summit’s closed, invite-only boardroom sessions tackled such issues as mobile local commerce, ad formats, and targeted advertising. Some of the highlights:

  • Small businesses have access to the same kinds of software tech as enterprises, so your local sub shop now has a better shot of competing with Subway.
  • Consumers have far more control than ever, which means companies need to take personalization a lot more seriously. They also need to devote a lot of effort to figuring out why consumers would care about advertisers’ messages — it’s harder than ever to stand out.
  • Native ads — sponsor messages that appear within the stream of content on publisher sites, social networks, games, and elsewhere — are quite effective. But there’s little standardization on how these ads appear, which makes them more challenging for buyers.
  • Banner ads — those little 320×50- or 320×250-pixel images you see all over the mobile web and mobile apps — are the vast majority of the mobile ad business right now, representing something like 200 billion impressions (views) monthly. But advertisers crave more because the banners are not very effective.
  • Infrastructure is going to be increasingly important as advertisers move toward video ads, which are one of the most effective formats in mobile. Your customers aren’t going to be very happy if you’re trying to deliver video ads to them in HD and their cell networks aren’t up to the task.
  • Wearables could provide tons of data to advertisers to help them target ads more effectively and appropriately. For instance, a wearable device might act as a signal that retail outlets can use to tell when you are actually in a store.
  • Since targeting doesn’t work with 100 percent accuracy in mobile, advertisers might need to be satisfied with probabilistic targeting that works with 80 percent or 90 percent accuracy. That’s going to be a big advantage for advertisers and ad networks that can do effective, real-time data analysis.

A complex and confusing market

Of course, a lot more is going on in mobile advertising. The complexity of the market has given rise to dozens — even hundreds — of networks, brokers, and analytics companies, all of which aim to help customers place their advertisements more effectively across the many available platforms and publishers.

Part of the promise of these brokers is that conducting an effective mobile ad campaign is simply too resource-intensive, if you want to manage it yourself.

In order to do that, some of these networks “rebroker” ad buys to other networks. The result is that there can be as many as half a dozen middlemen between an ad buyer and the publisher on whose site or app the ad actually appears.

As VentureBeat’s Richard Reilly has been reporting, with so many levels of brokering going on, it’s difficult to get very much insight into where advertising spending is going. Buyers may not have any idea where their ads appear, or what results they are deliver.

That leaves a lot of room for shenanigans. One such example came to light a couple weeks ago when VentureBeat reported that Supercell, a successful mobile gaming company that purchases a lot of ads, had blocked one ad partner, Appia, for rebrokering its ads.

While some companies don’t mind if companies like Appia turn to other brokers to fulfill ad placements, Supercell did — and in fact, it had put terms in its insertion orders to limit re-brokering. When it discovered Appia was doing that, Supercell blacklisted Appia from future ad buys.

One dramatic moment at the Mobile Summit happened on the first day, when Appia’s founder, Jud Bowman, stood up to defend his company from the allegations. He subsequently gave an interview to VentureBeat, laying out his case: It wasn’t Appia itself, but another unscrupulous partner, further down the line, that had gone astray.

Such is the complexity of the mobile ad market that the defense is perfectly plausible, even if it may be unsatisfying to the original buyer, Supercell.

For that reason, companies like HasOffers play a particularly important role, as they provide data to ad buyers so the buyers can see how their ads are actually performing. HasOffers, which was itself in the news earlier this year after Facebook decided to stop working with it, came up in several conversations at the Summit. Many companies, it appears, are looking for exactly the kind of accountability that HasOffers promises.

In short, analytics and user tracking seem to be the top concerns for mobile advertisers today. Meanwhile, new ad formats, wearables, and infrastructure issues loom in the wings for all players.

Come what may, it’s clear that the mobile ad economy is just getting started. If the discussions at the Mobile Summit were any indication, we’re going to see a lot of changes in the year to come.

Check out our slideshow of Mobile Summit highlights for more top moments from the event, and see this writeup of the Summit by Nanigans’ Dan Slagen.

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