Mobile to Become a $1 Billion Business in the U.S. Next Year

Apple's IAd Aided Growth in 2010, but Google and AdMob Will Accelerate It, Says EMarketer
by Kunur Patel
Published:October 18,2010


NEW YORK (AdAge.com) -- Mobile is red hot this year, but it still won't be a billion-dollar ad business in the U.S. until 2011, according to new eMarketer estimates.
According to a new report, U.S. mobile advertising spending will reach $743 million this year, up a whopping 79% from $416 million the year prior. Mobile spending will cross the $1 billion mark in 2011 with sustained growth, though at slower rates.

Why has mobile seen such a rush in new ad money? Thank Apple.
"IAd has served as a tremendous catalyst in the industry," said eMarketer mobile analyst Noah Elkin of Apple's rich-media mobile ad unit, which launched this year at a high-profile press conference in Cupertino, Calif.
But it is Google and its recently acquired mobile-ad network, AdMob, that are projected to propel growth.
"Over time the combo of Google and AdMob has the potential to be equally, if not more, significant [than Apple] because of the scale Google brings the medium," Mr. Elkin said.
Last week, Google made a surprise announcement that it's on track to bring in $1 billion in global mobile ad revenue. The company did not break that reporting out by country, though revenue outside the U.S. is likely sizable, because it includes markets where mobile is more prevalent than desktops, such as India. Google's head of mobile ads, Omar Hamoui, the CEO of AdMob before the acquisition, told Ad Age in September about Google's plans to bring its sophistication in online ad serving and infrastructure to mobile.
SMS messaging is still the largest ad format in mobile, projected to hit $327 million this year. However, Apple's iAd, as well as Google's bet on mobile display through AdMob and its growing suite of rich-media units, will soon unseat text messaging as the primary mobile-ad medium. Mobile search and display ads are expected to pass messaging in 2012. Upticks in mobile search and display also coincides with growing smartphone penetration; Nielsen says there will be more internet-enabled phones than basic-feature phones in the U.S. at some point next year. Search and display also rely on faster and more pervasive mobile-internet connectivity.
Within mobile spending, video is the fastest growing ad medium, albeit from a tiny base, and will continue to be through 2014.
"Apple helped show the way with iAd. Obviously they weren't the first, but they are really good at getting the market excited," Mr. Elkin said. "All of that helps advertisers realize they can do a lot more branding on this medium. That's why you're going to see more dollars flowing into richer ad units over the next four to five years."



By jeffgreenhouse | Philadelphia, PA October 18, 2010 06:04:03 pm:
I wonder how they count ads served to iPads. Are they "mobile" ads? With more tablets and larger-format mobile devices (which may start consuming the same IAB units as desktop and laptop computers) the lines will continue to blur. I'm sure there will be debates about the methodology of measurement.

- Jeff Greenhouse
http://www.JeffGreenhouse.com
http://Twitter.com/JeffGreenhouse
By AllyLevin | Baltimore, MD October 18, 2010 06:55:40 pm:
Yes, mobile IS red hot, 100 percent. There are more than 1 billion people using mobile internet today. So I really don't understand why companies won't invest in quality mobile Web sites that you can actually use from your phone! Sites that are meant to be functional from on the go.

I found this link for a software that actually makes the mobile site for you, based on your existing site. Seems like a pretty cool idea - http://webtomobiles.com
By janestone | New York, NY October 19, 2010 10:36:33 am:
There's isn't any mention of the growth of tablets which will obviously play a major role in the significance of mobile advertising. Also, one may expect CPM's to go down as additional mobile devices penetrate the market and inventory becomes more widespread.

Jane Stone
VP Marketing
http://www.designpax.com
By JIM | ARLINGTON HEIGH, IL October 19, 2010 11:42:53 am:
I think it is interesting that cost per action advertising is left out of almost all mobile advertising discussions. While ad revenue may be increasing, the performance segment is skyrocketing in mobile. Instead of just serving an impression, CPA serves up engagement with measurable ROI from ad spend. Companies such as OfferMobi.com are forging a new frontier in mobile ads, tying spend to performance and results. Isn't that what buying ads is all about, measurable results? But no one wants to talk about the effectiveness of ads, only the wow factor.

At the end of the day, advertisers and agencies will be forced to include performance based ads, simply because the CPM rates for apps (which drives a significant portion of impressions industry-wide) are declining. This is pushing more app development companies to work with OfferMobi to serve up demographically matched campaigns that return higher eCPM's. As the app developers catch on, so will mobile site publishers as they see an additional bump in revenues from better targeting of the ads they place on their mobile sites.

Jim Lillig
VP Business Development
www.Offermobi.com
By RudyCCS | San Diego, CA October 19, 2010 02:25:39 pm:
I'm loving the creativity and more intimate brand connection available with mobile platforms. Smaller ad companies are building brands by emphasizing the importance of two-way conversation.

Check out www.textango.com to see a great example of an advertising revolution.
By DanaT3D | New York, NY October 19, 2010 06:02:09 pm:
We have had great success with text message marketing and are always looking for alternative ways to promote our brand and products. It is interesting how this industry is growing so rapidly.
There are a couple of interesting posts here that I am going to follow up on, but would like to know if anyone here has had personal experiences with them,
1. Offermobi
2. designpax-- I understand the value of mobile site, but why this company?
3. textango
By jchamberlin | Lakewood, CO October 20, 2010 11:04:19 am:
Mobile marketing in particular SMS Text campaigns create a conversation with consumers. With SMS Text campaigns marketers are able to re-engage consumers back to the brand.
By Robert | Wayne, PA October 22, 2010 01:24:10 pm:
Many people may look at the bottom chart and believe that mobile messaging is in decline. Quite the contrary. Text message marketing is the lone mature product of the mobile marketing bunch and will always be a lynchpin of your mobile efforts. While it may not be growing as quickly as video, for instance, the size of the pie is growing and therefore the size of the messaging pie is also growing.

Published by Ad Ops on the 25th Oct 2010

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Google Unleashes Ad Display Automation Tools

Google's long-term plan to automate the advertising supply chain will lead the Mountain View, Calif. tech company on Tuesday to release two tools aimed at removing costs from serving up display ads across the Google Display Network.

The tools -- Display Campaign Optimizer and Contextual Targeting Tool--are geared toward helping advertisers reach performance goals on the Google Display Network, simplify the entire system to buy and sell display ads, and open the entire ecosystem through innovation.

Display Campaign Optimizer manages targeted bids to generate more conversions such as sales or leads by finding the correct sites that drive performance. It does this within milliseconds. The tool, based on machine learning technology, determines what works and what doesn't in real time and adjusts accordingly.

For campaigns with higher conversion rates the learning period is shorter, but if the company only sells one item per month it's challenging for the system to learn, according to Brad Bender, product management director for the Google Display Network.

Google employs brilliant engineers who like to solve complex problems. Think of the technology similar to the "self-driving car for advertising," Bender says. "It's auto-optimization that drives performance for advertisers in a way that works."

Advertisers tell Google the campaign's parameters, and based on the average conversion rate for a month in the specific vertical, the machine learning technology could determine the correct bids and placement. "Typically, the campaign is in a learning mode during the first week," Bender says. "The CPA could vary during that week. Once the system has enough data to shift the targeting and bidding, we start to see the CPA move."

Campaigns generating many conversions and impressions take less time to fill the data bucket required by the machine learning technology built into the tool. The lower the impression volume, the longer it takes.

Looking across the Web to connect with consumers who care about the environment to offer discounts, Seventh Generation, which sells eco-friendly home and baby products, found that Google's Display Campaign Optimizer delivered 60% of the coupon downloads with a cost per acquisition of 20% below their target quickly.

"If we can make display advertising more effective, we have the ability to grow the entire display pie for advertisers, publishers and users," Bender says.

The advertising industry could take a lesson from manufacturing when it comes to squeezing cost from automation. Rather than cutting costs for the delivery of raw materials through the supply chain, the advertising industry would eliminate costs to serve up ads online.

While automation in the manufacturing supply chain stretches back to the 1970s, the amount of cost savings driven by technology early on starts at about 5% annually, according to Kevin O'Marah, group vice president of supply chain at Gartner Research. "If you take automation and supply chain, and apply the broad principal to any other domain starting from scratch, you should be looking for between 5% and 10% savings in the first and second year," he says. "Depending on the deficiencies in the supply chain, it will taper off into a diminishing returns profile over three to five years."

Automation in the supply chain is about reducing unnecessary tasks and streamlining processes with technology to cut costs and eliminate waste. O'Marah says the savings could potentially become greater in the advertising supply chain.

A fully automated solution may not work for all campaigns. Advertisers should not have to sacrifice control to gain efficiencies and boost performance.

While the Display Campaign Optimizer automates the bidding and determining what works, the Contextual Targeting Tool automates the task of determining the keywords to target the words that work, so advertisers can boost performance by building campaigns in minutes rather than hours. The tool lets advertisers build hundreds of ad groups in minutes for companies that sell yoga gear, for example, to quickly scale campaign performance.

Companies can input a product the company sells like "yoga matt" in quotes into the tool to automatically generate hundreds of keyword lists. The management tasks would historically take hours.

The tool will roll out in phases and become available to all advertisers in the coming months.

Administrative costs remain daunting for the overall ad industry as it continues to serve up more advertisements to reach the increase in consumers flocking online. For every dollar spent, it costs between 26 cents and 28 cents in overhead to support the delivery of an ad, according to Bender, quoting industry stats. "There are opportunities that can make the process more efficient," he says.


MediaPost

Viewers More Engaged With Original Web Video Than TV

Despite the continued success of big-budget TV programming, consumers now place considerable value on original online content, according to new research from Web TV network creator Next New Networks and YouTube, and research/consulting firm Frank N. Magid Associates.

Polled between May and June of this year, 54% of respondents who reported watching Web original videos deemed them to be just as -- if not more -- entertaining than what they viewed on traditional television.

While they consider online video entertaining, those surveyed regarded this content as its own category and not directly comparable to what is available on television.

They define these types of videos as original, having fewer boundaries, and adaptable to individual viewing schedules, according to the joint report.

"The study uncovered strong consumer appeal of Web original programming as compared to traditional television shows," said Mike Vorhaus, managing director of Frank Magid Associates. "The findings confirm what many have believed for some time now: there is incredible content and talent available on the Web."

Overall, 60% of respondents reported watching original Web video content weekly, while 58% saw Web originals as providing quality entertainment whenever they want it.

Over one-quarter of viewers found Web original content to be more entertaining than traditional television, while viewers are 2.5 times more likely to be fully engaged in online video than their counterparts who watch traditional television programming.

The research also found that more than half of viewers read comments from other viewers, while 41% rate the videos they watch.

Also of note, 37% of Web original viewers simultaneously surf the Web -- compared to 60% of TV viewsers; 28% simultaneously talk to others -- compared to 52% of TV.

What's more, three-quarters of viewers said they use email, social networking sites, or conversation to tell others about their favorite Web originals.

About 40% of viewers report sharing original videos with others; 37% email video links to friends; 36% post the video to Facebook or MySpace; and 10% share the link via Twitter.

mediapost

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