Six years after the launch of the iPhone, and nearly two million apps later, brand advertising accounts for a meager 20 percent of mobile ad dollars. In spite of every lofty forecast of mobile ad dollars predicting an imminent skew towards brand advertising, the share of brand spend has risen from 15 percent to 20 percent in the past five years.
Based purely on the nature of the medium, this makes little sense. Mobile leads all digital consumer media in both usage and engagement -- a dream for the brand advertiser , right? Why then are brands not pushing their agencies to divert dollars into mobile? More importantly, why are agencies, the trusted advisors of brand CMOs, not recommending significantly more mobile spend? Detailed conversations with major global brands and their agencies shed much light on this contradiction. While a number of issues exist, there is one overarching concern that emerges as the biggest blocker of brand dollars in mobile.
The lack of transparency in mobile advertising, resulting in brands not understanding the effectiveness and ROI of their ad spend, is a major concern for large advertisers. Consider a brand, say Lancome, that is seeking to raise awareness of a new women's moisturizer. The campaign strategy is to serve a rich-media click-to-expand banner to women 35 and older, with a goal of getting the target audience to click on the banner. The brand will forward the brief to its agency, who will typically engage a Big Ad Network to execute the campaign. The way things run now, the network will go and perform its private "magic", resulting in a media plan, which will most likely consist of a number of apps (or, less likely, mobile web sites) on which impressions will be delivered. The campaign will then run until the budget is exhausted, perhaps for a period of two to four weeks. At the end of the campaign the network will deliver a report to the agency/brand which will have, effectively, two substantive pieces of information: (a) the number of impressions delivered (say 100,000), and (b) the number of clicks that occurred (say, 500), and of course, the resultant Click-Through-Rate (CTR), 0.5 percent in this case.
For the brand, this is not useful enough. The crucial insight of who the "clickers" are, key to understanding how effectively media dollars were spent, is missing In every other medium, brands are used to precisely understanding how effectively their budget was managed, down to the cost of each impression, click and conversion. In our mock campaign, the brand got 500 clicks. But are those "good" clicks, or "irrelevant" clicks? If 80 percent of the clicks came from women 35 or older, it's one thing, but if 50 percent of the "clickers" were teenaged boys, its another thing altogether. Lancome needs to know that.
More importantly, the brand or its agency has no idea of the ROI of the spend that occurred. This starts right from the fact that big mobile ad networks do not disclose the media plan used for the campaign to the advertiser. For our mock campaign above, the brand, or its agency, will not be privy to the apps (or mobile sites) where impressions were delivered, let alone the exact dollars that were allocated to each property. Nor would they know where the desired action (clicks in this case) occurred. If this were disclosed to them, they could easily figure out how effectively, or ineffectively, their money was spent. This information, when made available in-flight, can also enable campaign optimization, and after the campaign can shed invaluable light on overall ROI of spend. That, in turn, can help advertisers make key judgments regarding sources of supply (a particular source may be good for targeting middle aged men, while another one may be rich in young moms) and even more important, can help distinguish which ad network spent money more effectively. In the case of our fictitious campaign above, if the spend was equally divided across two networks, and the advertiser saw one of them yielding a far higher number of "good" clicks than the other, that would be a great indicator that one was providing much better ROI than the other.
Unfortunately, the big ad networks are not transparent -- mobile being the only medium where such lack of transparency is widespread. Yes the networks do disclose at a high level what "categories" were targeted. In our mock campaign, the network might disclose that 50 percent of impressions were delivered on entertainment apps, 35 percent on lifestyle and 15 percent on games, but that information is not useful in performing the types of necessary spend analyses described above.
Why are the networks not transparent? Perhaps the most important motivation is the fact that networks derive 80 percent of mobile ad revenues from performance campaigns, largely CPI/CPA, driving downloads. The app world is fragmented, app popularities are famously transient, and publishers know that their hot new app has a very short shelf life -- it is essential that it rises up in its native app store ranks as rapidly as possible -- enter the mobile ad network with its ability to spur downloads. In these campaigns transparency is of no consequence -- the iTunes app store does not care where the downloads came from -- as long as there is a strong continuous download momentum, the app rises and maintains strong rank position in its category. Another major reason driving networks away from transparency is simple economics -- they need to "democratize" their inventory. Consider the fact that while there are millions of apps, only a tiny fraction of them actually have a reasonably sized, engaged user base at any given time. Given the "long-tail" nature of their inventory, transparency has the potential of every advertiser competing for the five percent of apps that have great reach, while the remaining 95 percent languish in obscurity. This could create very challenging publisher relationships for the network.
This lack of transparency greatly impedes brand advertising on mobile. Chiradeep Gupta, Manager, Global Media at Unilever, says that "absence of real information on how my brand campaign performed on mobile, and lack of data correlating my spend to eventual campaign success measures is perhaps the biggest gap preventing far greater investment on the mobile medium". My agency colleagues equivocate. Atibhi Mehra, the Head of Mobile for Mindshare (APAC), had this to say: "our goal is to maximize the ROI of our clients' spends. Solutions that reveal and, in turn, help optimize client spend ROI is sorely lacking and a top priority in our minds. The availability, and acceptability, of such solutions will also prompt us to advise our clients to increase their mobile spends".
I end with an issue that is puzzling to me. It is clear that transparency is critical for brands to spend money on mobile. But I am not sure why the brands, and especially their agencies, do not realize that even though the big ad networks do not provide (yet) the required clarity, there exist several transparent platforms on which they can run their campaigns. DSPs such as Pocketmath, Sitescout, Run, offer completely transparent inventory. Companies like Mobilewalla offer turnkey solutions that can plug into any supply source and provide campaign targeting, campaign analysis and spend management solutions that can not only allow brands to fully understand how well their ad dollars did, but also can optimize campaigns mid-flight to minimize media and spend wastage. If the agencies are worried about campaign execution (something the ad networks provide), media 2.0 companies like Full Bottle provide end-to-end services including creative production, media planning and execution on transparent platforms. While the lack of transparency is a big problem in mobile, the ecosystem has evolved to the point where there are alternatives available that allow the execution of fully transparent campaigns. If the big networks are serious about brand business, they will surely come around.