In brief: Loads going on at AdMob. On Friday the Federal Trade Commission gives the Google-AdMob deal the green light; earlier this month AdMob marks a new milestone (200 billion ads served);and we learn AdMob’s testing geo-targeted ad serving technology with a U.K. dating service. In an exclusive interview Russell Buckley, AdMob Vice President Global Alliances, discusses the nets & bolts of AdMob targeting, the significance of iPad, the positive outlook for mobile coupons and the future of mobile advertising. PLUS: Some stats you may have missed that confirm the buoyant growth of Android and a Millennial Media report that comes to an entirely different conclusion.
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It’s been a busy month at AdMob, culminating in the news that the Federal Trade Commission – after a six-month investigation into antitrust concerns – ruled 5-0 to clear the Google-AdMob deal. The way is clear for Google to complete its acquisition of AdMob for $750 million and turn up the pressure on strong competitors in the mobile advertising space, including Apple.
It’s early days to judge how the two titans will fight the battle, but this observation (via MarketWatch) from Scott Cleland, president of consulting firm Precursor LLC, suggests Apple and Google will focus on opposite ends of the market. As he sees it: Google will likely dominate the “medium and low-end market” for mobile ads, while Apple is likely to focus more narrowly on the “high end.”
Hmmm… This split could leave the large and lucrative markets of Asia, Africa and India to smart ad networks such as BuzzCity that have correctly chosen a Blue Ocean strategy to focus on the markets where neither Apple nor Google’s Android have an iron grip. (More in an exclusive interview with KF Lai, BuzzCity CEO, in June.)
ANDROID’S AWESOME GROWTH
This view is plausible if we consider the device demographics. Apple remains popular with affluent, technology-savvy demographic, while Android has made its mark with a more mainstream crowd. Interestingly, Android has also made impressive gains. Last week Google announced that it has seen worldwide activations of Android smartphones skyrocket to more than 100,000 a day, up from about 30,000 at the end of 2009. Do the math – as the inimitable Tomi Ahonen did via Twitter (@TomiAhonen)– and this news speaks (literally) volumes. In Q1 Android was selling 24 million and now it’s more like 36 million. That’s “DRAMATIC growth,” according to Tomi.
Another confirmation of Android’s stellar growth comes from the recent AdMob Mobile Metrics Report (March 2010). Based on data collected from its own network AdMob reports advertising traffic on the Android phone has surpassed that on the iPhone. Specifically, Android ad traffic in the U.S. was 46 percent in March; traffic on Apple’s iPhone reached 32 percent. In January, the numbers were practically reversed. Android accounted for 39 percent of ad impressions, and iPhone came in with 47 percent. What’s more, the Android platform has seen significant growth over the last months with traffic growing at a compound monthly growth rate of 32 percent, rising from 72 million requests in March 2009 to 2.0 billion in March 2010.
The fact-packed report further explored the spread of devices (11 devices including the Motorola Droid accounted for 96 percent of traffic) and the traffic share of each version of the Android OS (1.5 Cupcake, 1.6 Donut & 2.x Éclair). The fact that each version has about one-third of the traffic tells us OS fragmentation is not going away any time soon. In fact, GigaOM argues it’s going to get worse.
However, Android impressions in the U.S. lag far behind Apple, according to Mobile Mix – a monthly report published by mobile advertising network Millennial Media tracking mobile device and connected devices (iTouch, iPad, Nintendo DS). Based on campaign and network data collected over billions of monthly ad requests Millennial reports Apple’s iPhone remained the leading OS on the network with a 70 percent share of smartphone impressions in the U.S.
Meantime, Android’s share of impressions increased 3 percent to account for 6 percent of total U.S. smartphone impressions. Still, Android is making gains. In March the OS rose to the number three position. Android ad requests grew a whopping 72 percent (from a low number); Apple ad requests grew 20 percent month over month. RIM remained the number two OS.
ADMOB & GEO-TARGETING
Beyond the stats, AdMob announced that it had started testing geo-targeted ad serving technology with Lovestruck, a location-linked/location-aware dating service, in the U.K. (More via Net Imperative.).
I used the news as a springboard to connect with AdMob for an update on the tests and a look at the overall importance of location-awareness in mobile advertising. My personal thanks to Matt Watson over at Speed Communications for arranging a briefing with Russell Buckley, AdMob Vice President Global Alliances. (BTW: Russell’s own venture ZagMe, which delivered consumers special offers from stores in the mall where they were shopping, was a little too far ahead of its time to be a success. Russell’s white paper on the experience and key learnings remains a must-read treatise on the do’s and don’ts of location-based advertising. You can get a copy by emailing him at Russell AT mobhappy DOT com.)
AdMob’s campaign with Lovestruck is aimed at allowing the company to serve iPhone and iPod Touch users in London with ads from Lovestruck based on their location. Lovestruck, which is available for users in major cities including London, New York, Dublin, Tokyo, Hong Kong and Sydney, targets users based on their real-time location, alerting them to other people in their vicinity looking for love. The site is available as an iPhone app and as free-to-download app in the Android Market.
The test with Lovestruck isn’t the first foray by AdMob into location-linked mobile advertising, but it could be the most ambitious.
INTERVIEW WITH RUSSELL BUCKLEY
MSG: Let’s start off with targeting. How does AdMob target for location?
RUSSELL: We do it in three ways. First, we do it by the IP address of the phone, which is usually dictated by the mobile operator who applies the IP address to that phone session. It allows us to identify the country of the user and it is sometimes even more granular than that, depending on the operator. Second, we do it by Wi-Fi. A lot of iPhone and Android sessions, both the mobile Web and in-application advertising, is done over Wi-Fi. In fact, it’s more than half. By working out where the Wi-Fi IP is, you have a much more granular way of targeting location down to the nearest urban area. You can even go deeper than that, but we don’t really need to go deeper than that right now because most advertisers interested in mobile advertising are primarily concerned with reaching a lot of people. So, if you go too granular, say down to Oxford Street in London, you won’t get enough people to serve the ads to. Thirdly, the publisher can give us some data as well about where the person happens to be and we can use this to target ads we serve. That depends on the publisher and whether or not the consumer’s registered with them.
MSG: Let’s move to the tests with Lovestruck. The press release was rather vague, but I think we have established this is by no means a world-first. AdMob has conducted similar targeting tests elsewhere…
RUSSELL: Yes, we have been doing it in the U.S. and this marks the first time we are testing this technology in Europe. We’ve always been able to target by geography – the country – and by handset and handset capability. What we’ve now launched is a more granular approach to targeting, allowing us to target by urban area. And we also target by the publisher-type as well. We can target a particular demographic [such as youth] by restricting the ad to appear only on certain publishers’ sites. In instances where publishers have registered users, we can add that user information – such as gender and age – to improve targeting even more.
MSG: In Europe we’re just seeing the arrival of the iPad. Does this represent an opportunity for AdMob? After all, you just recently expanded AdWhirl to support serving ads on the iPad. But is this just more fragmentation at the end of the day?
RUSSELL: We tend to be platform-agnostic and we tend to invest our focus and time and energy when a platform starts to emerge. We first saw that happen with the iPhone two years ago and we invested time and effort into that platform, developing special formats which played to the iPhone’s strength. More recently we’ve seen that happen with Android, and again we’ve developed special ad units to cater to that.
We’re already serving ads on the iPad because if you’ve got an application which is available on the iPad, it’ll only be serving ads on there. But we’re not really seeing significant volume or uptake at the moment. But I think it’s early days and it is only in the U.S. at the moment, so we’ll just have to wait and see. The device and platform diversity doesn’t really present us with too much of a problem. We tend to focus on the platforms that are dealing in volume and when a platform emerges, which has significant volumes, we’ll invest in it.
MSG: You developed new ad formats to take advantage of the iPhone features and capabilities. More recently, you also showed you could link ads to social media, allowing user to click through to a brand’s Twitter page, for example. What formats and innovation are next? Or does the focus need to be on getting plain-vanilla display right?
RUSSELL: We’re innovating on a constant basis. The example you mentioned where you can click through to a Twitter page is client-led: So, if an advertiser asks to do that, it’s pretty straightforward. The innovation is what we are doing with the formats. We have done a campaign with Reebok, where the actual banner ad unfurls when you scroll over it, increasing in size by a factor of four. When you click on it, you go through to a landing page where you do a range of things, include see the nearest store offering Reebok and see a branding video.
It’s about being innovative on the on the landing pages. In fact, at least 50 percent of the importance of the mobile advertising campaign is in the landing page. The banner is important too, because that’s how you start the conversation with the consumer. But, if the conversation is to go anywhere meaningful, then you’ve got to take them somewhere to continue that conversation and introduce the call to action – whether that’s a click-to-call, or a click to download and app, or a click through to the fan page on Facebook.
By way of background, AdMob launched a new Android SDK at the end of March, allowing advertisers to run rich-media ads inside Android apps. Reebok is the first AdMob advertiser to extend their rich-media mobile campaign to both the Android and iPhone platforms. Reebok’s new rich media ads distributed via AdMob all link to a landing page that includes videos, photos and a store locator, among other features. The campaign – which runs until June – is aimed the male 18-34 demographic and will appear in apps in the sports, news and music categories.
MSG: You are testing technology to serve ads based on location. And, as the Godfather of Mobile Marketing, the excitement everywhere about location-linked advertising is nothing new. Are we talking about a commercial opportunity or are we getting carried away with the hype?
RUSSELL: We’ve passed the technology challenge and it’s back to the advertiser to get a grip on the business challenges. So, if you’re a restaurant chain in a country like the U.K., and you’ve got 600 restaurants up and down the country, you will only want to promote those restaurants on an individual basis when they’re empty or not full. The question is: how do you manage that process? Do you let the managers of the stores become the arbiters of when to run a mobile marketing campaign at any time? They’re not really trained marketing people, so is that a good thing? And how to you organize it?
Equally, you don’t want to send people into a restaurant when it’s really busy because it’s rather unwelcoming. And then there are the problems around creating a meaningful location-based offering that includes local stores and ‘Mom & Pop’ shops. No one has found an effective way of reaching those people with mobile marketing. I was talking to one of the managers at a directory publisher in the U.K. and he said they only actually sell – take money for mobile — from about one percent of the businesses that are in their listings. So, even with their sales force, their history and their brand, directory publishers haven’t been able to effectively monetize the local merchants.
MSG: Those are the challenges. What are the opportunities?
RUSSELL: Overall, big brands are starting to look at location advertising and take it seriously. They are focused on location-based advertising combined with couponing.
MSG: We have some numbers from eMarketer that tell us – no surprise – that women like coupons. Is this the opportunity on the horizon?
RUSSELL: Yes. Traditionally, the fast moving consumer goods section has been a big user of coupons. But they haven’t been able to really reach their potential using PC-based advertising. There you can send consumers to the website, but they have to print out the coupon. In the old days, we used to say ‘Advertising loads the gun and sales promotion pulls the trigger.’ Couponing is a technique of sales promotion, so PC-advertising is great at loading the gun but you can’t pull that trigger because you can’t send a coupon and trigger a call to action. Mobile advertising can.
We’ve started to do some early thinking with brands about this. We’ve come across people that are hung up on barcodes. But barcodes aren’t really scalable when it comes to redemption. There’s a company we’re working with that has the worldwide patent on a chip and PIN mechanism.
MSG: And what is the user scenario and experience the company provides?
RUSSELL: Say you see an ad for Coke, as an example. You click on a banner, engage with the brand via the website and — if you want a coupon or a free sample or whatever — you then click and an SMS is delivered to your phone containing a PIN number. You can take that to any participating retailer and use their chip and pin machine – just put in the chip and PIN, and it will automatically deduct the money from the cost of the purchase. I think this is a very neat and potentially a very powerful way of running a coupon campaign on a scalable basis.
MSG: What’s next in mobile marketing and advertising? You are testing location targeting – and there are some who say the ability to link ads and location will be table stakes soon. So where is the differentiation and where is the excitement? There is some excitement around Augmented Reality. Is that a part of it?
RUSSELL: I think Augmented Reality is interesting. But it’s going to be a while before it actually enters the mainstream. If I went out and walked around Nice, where I am right now, there isn’t really much to look at. So, pretty soon I’m going to get bored.
Yes, I think location is going to be important. But, if I have to say where the marketing is really going to be, then the hot market is in coupons.