This piece on mobile advertising and marketing ended up running rather long, but it is broken up into three sections for easy viewing:
If you want to go right to the success cases, feel free, but I hope you will find some useful information in all the sections on things to consider before you jump into mobile advertising and marketing.
Creating monetizable events on phones is difficult.
Phones are not easy to make purchases on.
Amazon and Apple have solved this issue to some degree by getting you to enter your payment information via a computer when you setup an account or make purchases, and subsequently it only takes a click or two to make a purchase on your phone. But if you are coming to an entirely new site and are trying to enter all your personal and credit card information, you know how difficult it can be. Small screen size and less than precise input devices increase the friction in purchases to the point that many people give up.
Purchasing on phones is not a habit.
Difficulty alone stops most transactions, but there is also the issue of phones seeming less secure or at a minimum the process is just new. As humans we are creatures of habit. Text messaging and social networks have allowed us to use our phones to communicate with friends and family as well as the broader world. But when we actually want to make a purchase, most of us have the option of forgoing intense research and purchases until we are on a more familiar and capable device. If you want to purchase a new TV online, are you going to use your phone to research the options? Possibly, but most of us will do the research and especially the purchasing on a regular computer . This may change as tablets become more the norm, but mobile is still more of a social, entertaining experience vs the place you go to make purchases. Even when we start using tablets as our primary computer, the mobile element will not be the key element. If you make a purchase on your tablet while sitting on your couch, is that any different then making the same purchase on a notebook computer?
Display ads are not effective on mobile devices.
While many of us are using our phones to access the Internet more than we are using our computers, the ad industry has had considerable difficulty finding ways to effectively advertise on mobile. Take the example of games. Games have done incredibly well on mobile. It is easy for a person to just launch an app and play a game when they have a couple minutes of free time. Display ads are common in ad supported games, but a review of developers discussing mobile ad revenue shows that the money made on mobile ads in minimal. Even beyond games, consumer are used to simply ignoring display ads, and it is likely that the minimal clicks on mobile ads are often misclicks. We are talking about small screens here.
Three examples of mobile struggles.
No industry is more desperate to find new ways to monetization in the digial world than the newspapers. Their monopoly on local coverage has been erroded by social networks and greater access to niche content. While most newspapers have maintained a substantial reach by having a comprehensive Internet pressence, digital ads and services produce less than 20% of what print ads do. Despite the desire to find new revenue models and more people accessing their content on phones, less than 1% of newspaper’s revenue is coming from mobile.
Facebook’s recent IPO filing indicated they have no revenue from mobile. Here you have one of the most successful social networks, that is valued at close to 100 billions dollars, and they get zero revenue from mobile. In the past two week Facebook has gotten agressive about mobile and advertising in general, but their slow movement into this area points to the fact that mobile doesn’t have an easy path to monetizing attention. Since Facebook revenue ultimately comes down to advertising, it is worth noting that while Google might not know as much about us, search usually signals intent in the moment. Intent is much more valuable for lead generation and sales then just knowing what I “Like”. Facebook might get into the search business, but without it, it will be tough for them to compete with Google for some of the most lucrative ad purchasing verticals including on mobile.
Social Ad Networks
My final example is from personal experience. Cross platform ad networks value mobile clicks significantly less than those made from a computer. I run MyLike ads on the @free Twitter account, so I have quite a bit of experience with their network. For several months, MyLikes was paying just 2 cents per mobile click while at the same time paying as high as 35 cents for a click made via a user on a computer. They did this because advertisers, particularly those who were looking for a specific action from their ads, like a sale or a sign-up on a lead form, were unhappy with the performance of mobile users. MyLikes has since stopped the payment differentiation and made all clicks equal. Their justification for changing back to equal pay was the branding benefits of ads.
Where mobile does work.
The idea with mobile is that you can be reached anywhere. Many retail business and services have to get you to leave your house to visit them. If you can be reached while you are already out and about, these businesses have already overcome the first step. For mobile, very basic SMS texts tend to be a powerful way to reach people on their mobile devices. Local businessess, particuarlly restaurants, have had success running SMS text lists. The most effective campaigns combine mobile delivery of messages with discounts and free offers to get customers in the door, make them familiar with local businesses, and get them into new routines.
You might not make the sale with mobile, but it is a good venue to start acquiring potential leads. Sales funnels (how you get from first exposure to actual sale) vary greatly, but if you can get a potential customer to “Like” your Facebook page, follow on Twitter or signup with your email or SMS text list, you have started the process. That connection can lead to multiple touch points, build awareness and give you a venue for a call-to-action. In many cases, you are not going to get these connections with display ads. The “ad blindness” I talked about ealier still applies. There are effective ways to get these connections including providing compelling content, curating your industry, running contests or even paying for in-stream ads. In-stream ads can now be purchased on Twitter as well as Facebook, or if you are looking for a lower cost option, you can work with 3rd party brokers or even publishers. My startup @free has built both our audience as well as our own revenue model on in-stream advertising and sponsorships.
Google continues to be on the cutting edge of what works in advertising, and they are doing it by going back to the future. While restaurants have been successful using SMS coupons and free offers to get people in the door via mobile, this approach doesn’t work as well for less universal services (i.e. everyone eats each day, we don’t need a plumber each day). For most industries, intent is extremely important. Google has solved the issue of actually creating leads and sales on mobile by allowing the call-to-action to be a phone call. Real sales are being generated by this method. Fortune has an excellent article on the subject. Here are a few of the businesses experiencing success with Google mobile ads:
Naturally, the approach has proved popular with firms that have long relied on call centers to generate new business. Take Esurance, the San Francisco-based auto insurance firm that provides services online. The company says that click-to-call ads have improved the efficacy of its marketing campaign some 25%. While it won’t release specifics, it says calls coming from such ads were more likely to result in sales than typical phone inquiries. “So many people want their final transactions to be over the phone,” says Esurance Director of Online Marketing Tolithia Kornweibel.
1-800-Flowers (FLWS) is another example. The company says it’s customers were two or three times more likely to click to make a phone call from a handset than to click on anadvertisement on a desktop computer. Cable provider Comcast (CMCSK) has found the same to be true. Since starting to use mobile ads in June last year, the company says it has seen a surge in mobile sales, with 270% greater click-through rates on mobile than desktop devices. Mobile advertising now drives more than 10% of the company’s online sales, up from virtually nothing last year.
While these examples are for businesses who have call centers, local businesses can also take advantage of the phone call option because the number of potential customers is much smaller and can easily be handled by your existing sales teams or even just taking the calls directly as a small business owner.
Mobile is obviously a substantial growth area, but knowing what technology to use to reach users in a meaningful way is a key consideration in actually making mobile work for your business and industry.