Why isn't mobile the most successful advertising platform? It should be. Mobile ads can be targeted, are delivered to a device that is "always on" and with the user, and can be personalized across numerous dimensions, including location and usage history. But as of 2012, the mobile advertising market was only $3.4 billion in the United States (2.6 percent of the total advertising market). Paradoxically, for such a personal, targeted message delivery platform, cost per thousand impressions (CPMs) on mobile are dramatically lower than for other traditional media. Yet even with those low CPM rates, 40.2 percent of U.S. marketers have no plans to utilize mobile in 2013 . What can be done to help the mobile advertising environment reach its potential? The answer may lie across four categories.
- Improved media measurement: The mobile advertising industry has not yet landed on consistent, effective KPIs, ways to measure performance for ad spend, or mechanisms for attribution. Current metrics (e.g., CTR, CPM, and CPC) borrowed from decades-old desktop Web browsing are a weak proxy for success; deeper measures that include conversion and ROI are needed. Establishing a creative unit metric and cookies to track mobile user interactions that are compatible across all platforms would enable advertisers to consider mobile as an effective ad channel.
- Reducing fragmentation and complexity: The mobile industry is fragmented across a variety of players, and as a result, there are few one-stop shops where brands can go to buy holistic, far-reaching campaigns. As a result, booking challenges exist across multiple ad networks, each with different technology systems that do not communicate well with each other. Simplifying the landscape so that brands don't need to work with numerous parties in the value chain to design, buy, and place an ad on mobile will reduce barriers that are preventing advertisers from considering new digital advertising options.
- Enhanced user experience: Mobile users generally dislike advertising intruding on their personal space -- and there is no device more personal than a mobile one. To increase effectiveness, the industry needs to identify a seamless way to incorporate advertising into users' everyday activities and explore new use cases that are palatable to consumers. With limited real estate and user attention, ads must present their messages with fewer words and in less time, while still communicating the value. Innovation in mobile ads is also an area for improvement as formats are not yet distinct from the desktop version.
- Industry inertia: Traditional advertising is "how we've always done it" and moving to newer, emerging platforms poses a challenge. Companies need to embrace and sponsor this already ongoing paradigm shift so that advertisers and brands view mobile less as a risk and more as an effective channel. Brands are cautious about trying something new, and senior marketing management is often reluctant to dive head first into new technologies without seeing a clear path to traditional ROI. Helping advertisers organize themselves to harness mobile -- often responsibility for mobile ambiguously sits between multiple internal functions -- will help in faster adoption.
The complexity of mobile advertising makes industry-wide change difficult. Advertisers see the potential of mobile: hyper-location marketing, seamless integration in cross-screen campaigns, and instant feedback and engagement from users. Mobile is at the same crossroads that online desktop advertising faced nearly a decade ago -- only this time, mobile has even more potential to unlock. 2013 marks the first year US adults will spend more time using digital media than watching TV -- with mobile eclipsing online as the dominant digital medium .
Just as the industry came together and new standards emerged to solidify and grow the online desktop advertising industry, we believe that the mobile advertising industry, from advertisers to agencies, can act on these four categories to evolve advertising and realize the potential of the mobile platform.