Yesterday, I had the distinct honor to present and moderate a PAN-IIT event on “Mobile Advertising – Technical Challenges and Business Opportunities” at Google’s Kirkland offices.
I will get into the panel discussion in a minute. First, would like to join everyone in paying our sincerest condolences and prayers to the families of Prof. G.V.Loganathan and rest of the folks who were lost in the tragic Virginia-Tech incident. Prof. Loganathan was a fellow IIT alum and colleague and friend of many in the community.
Mobile Advertising Panel Discussion
Our illustrious panel included:
- Brendan Benzing – VP, Products and Marketing, Infospace
- Jai Jaisimha – VP, Engineering, Medio Systems
- Kosar Jaff – Engineering Manager, Google
- Victor Melfi – EVP and CSO, VoiceBox Technologies
(Bios here)
Decades of experience in Mobile, Internet, and Advertising.
I started the discussion by giving a broad overview of the mobile advertising industry and some of the things that we should be thinking about. In random order, they are:
Mobile Advertising means different things to different people: Depending on a company’s focus, mobile advertising means different things to different companies. There are over a dozen different channels or strategies at our disposal in this framework, for instance –
- ¨Messaging – SMS/MMS
- ¨WAP/XHTML – on-deck/off-deck
- ¨Search – Mobile, Media, Local
- ¨Video – Unicast, Multicast
- ¨Audio – Streaming, Podcast
- ¨Downloadables – Games, Applications (BREW/JAVA) – Interstitials/In-app
- ¨Community
- ¨Directory Assistance/ Call Inst.
- ¨Code based – Barcode, QRcode, Images
- ¨ActiveScreen
- ¨Bluetooth, NFC, WiFi, others
No one provider offers capabilities across a majority of them, you could argue that there is no need but from an advertiser’s perspective, the situation demands aggregation and simplicity.
Forecasts: I put up a graphic that included the US mobile advertising forecasts from several leading analysts and asked the audience to guess the timeframe for the same. The original figure is below –
(Source: eMarketer, 2001)
This is a reminder that a) it is hard to forecast when you are starting from zero and b) we should learn our lessons from history. 2006/7 forecasts stand at
(Source: eMarketer, 2006)
(Data Source: Informa, 2006)
(Data Source: ABI Research, 2007)
It is not a question of whether these forecasts will prove to be accurate in 4-5 years time, but what will it take to make these forecasts real. Can we learn from the last time around and apply the lessons to this cycle?
Japanese Mobile Advertising market: Clearly, Japan has had more experience with Mobile Advertising than rest of the markets. In 2006, the average revenue/user/year stood at around $4. For US, this figure was less than $1.
Mobile Advertising value chains: As I mentioned above, mobile advertising means different things to different people and hence there are different value chains in place though they are merging rapidly.
Measurement: It is critical for the success of the industry to have measurement tools in place. I discussed Ogilvy’s Lenova campaign that generated 188% lift in brand awareness and 156% lift in product recall.
Mobile Advertising Framework: Finally, I presented my view of the technical advertising framework that is needed to make the experience work for the user
Panel Discussion
We had a packed house and a very engaged audience. We had influential engineers, VCs, biz dev, mobile enthusiasts in the mix. I asked the panelists to summarize their view of the Mobile Advertising space and what they saw as some of the challenges going in. (paraphrasing of their comments is mine)
Everyone was bullish on the segment, however they cautioned that it will take time, as the “reach” is not there yet. Jai mentioned the oft-quoted 15% penetration for browsing in the US as a limitation of “reach”. Kosar discussed Google’s initiatives in Japan where they are doing a lot of testing to hone in on the “user experience”. Victor talked about the challenges of “user interface” and that voice represents a good solution to cut through the archaic menu hierarchy to find things. He is not worried about the supply and demand but the brokerage in the middle. Brendan talked about the “ecosystem friction” wherein we have too many players for advertisers to deal with and an aggregated or simplified view is needed for the advertisers to jump in with both feet. Coming from the broadcast and Internet marketing background at TW/AOL, Brendan thought measurement authority like Nielsen is a must.
Kosar described the concept of “signals” that Google uses to discern “intent” and how mobile presents a great experimentation field to test some search techniques and algorithms that can also be applied to online search at a later date. The reason being low threshold for wrong results on mobile.
On the question of targeting, Brendan and Jai mentioned the use of demographic data available from the carrier to make search results (and advertising) better. Kosar said that Google’s focus is on tailoring experiences for device capabilities and cannot always rely on user preferences on mobile devices since they are not always available. They want to make sure an ad shows up where user expects it to show up. Google is concerned for both the user and the advertiser. Victor used to the run probably the biggest direct marketing research org in the world at Reader’s Digest and he thought that the targeting is actually much easier in mobile due “declared intent”.
There was some discussion on the meaning of mobile advertising and how promotions and marketing are part of the same mix. Jai said that recommendation is another form of advertising which appears non-intrusive and is actually useful for the consumers. Amazon gets a good chunk of their revenues from recommendation clicks. I myself find them quite useful and end up buying dozens of books this way every year.
Victor thought that the “promotions” piece (tied to local search) is actually going to be a much more lucrative business than the banner ads or even media search related advertising.
Kosar reiterated Google’s philosophy – “focus on the best products and experiences, and monetization opportunities will emerge naturally both for users and advertisers”.
There was active participation from the audience as well.
Katie Thompson from Trilogy (a prominent VC firm in PNW) wondered about the ad saturation levels we might be reaching and how do we address that and if agencies are worried about that aspect.
Mohan Venkataramana, President of IITPNW chapter and a veteran in the industry saw history repeating itself w.r.t. advertisements and evolution of the mobile industry.
There was general agreement that industry needs to focus on user’s needs rather than CPC and CPMs at this stage in the game. And that user privacy issues should stay at the forefront.
Another one lamented that first the carriers need to fix the voice quality, reduce data rate plans, and make things usable before consumers are going to tolerate ads.
Someone narrowed things down to two key aspects a) location and b) relevant targeting.
There were questions about the Japanese market and if it is different from the US and if that’s the reason advertising will take longer in the US. A lot of people misunderstand the Japanese (and Korean) market. I was advisor to the senior management team of NTT DoCoMo when they were active in the US and we used to laugh about the misconceptions and the myths that perpetuated in the US market. We dealt with this issue in quite a bit of detail in our previous book (co-authored with Dr. Nakamura, SVP, DoCoMo).
We could have gone on for the rest of the night but had to wrap things up. Mobile Advertising is a broad topic and it is hard to cover all aspects of it in 90 minutes, but touched on quite a number of items and honed in on a couple.
Thanks to our hosts Google for space and food, the panelists for an illuminating evening and spirited discussion, and the participants for making it a lively exchange.