Posts Tagged ‘Serge Elkiner’

The short and turbulent tale of mobile advertising

Wednesday, September 2nd, 2015

It was really American Idol that launched the short and turbulent history of Mobile Advertising. In 2001, American Idol partnered with AT&T to become the first American television show to allow viewers to vote for their favorite contestants by sending text messages to a shortcode. Fueled by the show’s runaway success, this taught American consumers that text messages could be used to interact with TV shows. It was the first time millions of consumers used their phones for a national promotion.

Around the same time, we witnessed the birth of mobile applications. In a pre-iPhone area, these Symbian-powered apps ran only on Motorola and Nokia phones. They were barely adequate and extremely cumbersome to program, as they required the development of dozens of different iterations tailored to each phone version.  However, a few companies were very successful in engaging consumers through clever carrier distribution. First and foremost was LA-based Jamdat, which went public and ultimately sold to Electronic Arts.

At that time, mobile display advertising was still in its infancy, but a few companies started to experiment with mobile banners. Admob on the West Coast, and m-Qube, Third Screen Media, Ipsh! and YellowPepper on the East Coast.  Today, many alumni of these early companies continue to push the ecosystem forward as entrepreneurs, executives, and venture capitalists.

The Carrier Distribution Era

There was a short period of hyper growth when carriers allowed content companies to bill for their services by sending or receiving text messages. Unfortunately, a few companies exploited these systems, and billed consumers for bogus content or signed them up for subscriptions. Although this trend maintained momentum for some time, the carriers ultimately decided to shut down these systems, which is why content providers do not enjoy carrier-billing options today.

The iPhone Revolution

The launch of the iPhone changed everything! When the app store opened a year later, it was clear that mobile computing would never be the same. Admob, which had originally focused on mobile web display, quickly jumped on the app bandwagon and Boston-based Quattro gained traction by helping publishers create mobile websites and apps in return for exclusive monetization rights. Google ended up snatching up Admob, which continues to flourish under the Google umbrella and Apple purchased Quattro, which became the foundation for iAds.

The Emergence of RTB

Around 2010 it became clear that large publishers needed multiple networks to fill their exponentially growing inventory. At first, supply side platforms (SSPs) tried to call multiple ad networks in a sequence of events often called a “daisy chain” (or yield management). However, it became clear that the best yield could only be achieved by a simultaneous ad call to multiple buyers. Enter Real Time Bidding (RTB): an inventory auction in which hundreds of electric buyers (DSPs) simultaneously raise their hand with a specific price in mind. The efficiency and transparency of RTB fundamentally changed the advertising industry. Coincidently, mobile is an ideal environment for RTB because SDK footprints provide a fraud-free signal with a nice “data exhaust”. In particular, geofence-driven buying can be elegantly executed in an auction environment, and currently provides tremendous growth for programmatic mobile ads. By the winter of 2011, Admeld, one of the RTB pioneers, was sold to Google and mobile in-app display advertising in the US had grown to be a more than $2 billion industry, growing at 50+ percent year-over-year.

Facebook launched mobile ads into this environment in 2012, changing the trajectory of the market to unprecedented levels. Facebook “stumbled” across an ad unit that completely reinvented the mobile ecosystem. Advertisers embraced FB’s audience data, and consumers accepted the new in-feed format. While there is some controversy around their attribution measurement, by most accounts Facebook is one of the most successful mobile app monetization platforms to date.

A Democratic Future

I believe that we have now reached the end of the app store dominated distribution era. The app developers of tomorrow will also be discovered in Google’s advanced search results, social media links, or via deep linking.

The future for mobile advertising is more democratic on the distribution side, but will also be dominated by a few large marketplaces. Some of which will choose to hide their impressions and data behind walled gardens.  These platforms will become smarter and advertisers will have to concede data and intelligence to reach consumers behind ever taller barricades.

These walled gardens will be fueled by immense amounts of consumer data. The proliferation of connected devices will create a real-time snapshot of how we spend our time and money. The combination of GPS signals, location history, beacons, and point-of-sale data will help brands better understand the customer decision journey, close the purchase loop from initial engagement to final purchase, and gain customer loyalty. In short, our personal data exhaust will be enormous and the next generation of consumer is willingly giving up these data points to their favorite social platforms.

With innovations like augmented and virtual reality, media consumption will fundamentally change as we enter a world of immersive entertainment. We will need to rethink how to engage tomorrow’s consumers. The next decade will bring a new breed of young audiences that expect smart, interactive ads that move with them wherever they go.

One thing is certain: the cards have been reshuffled over the last 18 months, and while the ecosystem is going through some turbulent and challenging times, the future will bring another wave of growth and entrepreneurial opportunity. I certainly have some ideas up my sleeve, and I remain excited and bullish about the ecosystem’s future.

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