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The Billions In Mobile Ad Money Nobody Can Grab
jfruh writes "Here's a pressing mystery: despite users spending an increasing amount on their mobile phones, mobiile advertising only produces 20% of the revenues per page that web advertising does. This seems like a big opportunity for somebody, but a whole complex of reasons might mean that it isn't just a matter of someone being smart enough to do mobile ads right. The whole advertising industry, which in many ways still resembles the Mad Men-era old boy's network, simply may not be equipped to cope."
I saw an ad once that interested me, but I didn't click on it simply because it would have exited the app I was in and switched to a web browser. If my phone had the equivalent of a taskbar that allows you to quickly and easily switch between open programs, then I probably would have clicked it. Of course, that was one ad in the seven months I've owned a smartphone.
My own theory is that the whole "personalized ads" concept is bullshit, at least when it's taken as far as it is now.
Someone who knows me EXACTLY (which seems to be what they're trying to do) would recommend to me pretty much just the things I already buy, and would buy anyways. I don't think I've *ever* clicked on an ad and bought what they were selling. Even if they could read my mind, all they would really be doing is giving me the link I'd be clicking on in a few seconds *anyways*.
In fact, it seems to do the exact opposite. I bought an SSD recently, and ever since my GMail has been showing nothing but ads for SSDs. Way to completely miss your chance - I probably won't need another for months, at the earliest. Or when I bought a laptop, for the next few weeks it was showing ads for Alienware laptops.
And then sometimes it gets things just completely, absolutely wrong. I swear that at one point, my Droid was *convinced* that I was a gay black man with AIDS. Wrong on all counts save that yes, I am male. I don't even know how it came up with that - there is literally nothing I've done that would support that idea. Needless to say, the "gay thug dating" and "HIV testing" ads had a zero chance of getting money from me (although it did get quite a few laughs).
So maybe the problem is that the entire framework of economic/advertising theories they're working on are *wrong*. Like when all the physicists' theories about the luminiferous ether had to be thrown out when it was demonstrated that no such thing existed. I would not be surprised if, decades from now, we look back at all this tracking and personalized advertising the way we currently look back at the "radiation" fad of the 50's - a lot of really bad ideas that we now know are completely wrong.
Yes... annoyed customers are not happy customers. But that doesn't mean you can make good mobile ads.
When ads first hit the desktop, there were insanely annoying. Pop-ups everywhere, blinkers... then some like Google figured it out.
The same rules apply on the phone as they do to the web. Your ads must not be annoying and if possible, they must be useful.
Every Google search is a potential ad. Heck, there are times, I don't know where to buy something or don't know about competitors... and Google does the ads for it. Now, they need to get better at that.. .even on the desktop.
Just recently my umbrella failed me due to excessive winds. I was in the market for a new one. Perfect opportunity for Google to present me with good ads and sales for my region. Wasn't very useful though...Why is Google showing me ads for WIND mobile? But the potential is there. I did eventually click on some gustbuster link... I'm guessing google gets some money from that.
The same goes for mobile use. They can figure out a way... especially for searches and localization. Targeted advertising has huge potential even if they don't do much personal information. Just what you searched for and your location could be huge.
There's even money for the mobile device makers... and not just Google. As you say due to real-estate, it might be hard to just show ads. So maybe instead of Gmail going through your mail for ads, your OS (iphone, android. Windows phone...) does some analysis and can provide you with notifications in a their app / os in a mobile optimized way.
Annoyed customers are not paying customers.
Hulu could stand to learn from this. In general their ads are just what they are, but they always have that "Is this ad relevant to you?" thing up in the corner. There's some ads that I dislike, so much, I actually take the effort to click no on. Surprisingly I then continue to see those ads over and over again. This generally just annoys me to the point where I would never, ever, purchase whatever product that is, or from whatever company is advertising.
Ironically the advertisers could get a much bigger bank for their buck by not wasting money showing a particular ad to people who have already said that the ad doesn't interest them.
The whole ad industry and it's suppliers (Google, FB etc) are run by marketers. The fundamental theory that drives marketing is that the more you advertise, the better you sell (up to a point of marginal returns). No one has seriously looked at this approach to marketing in a long time. The result is that the billions spent on TV/Radio/Newspaper are moving to online advertising. While online advertising offers improved feedback, it basically is push advertising - shoving something in front of you in the hope that you will bite. Well, think for yourself, does that work for you? I, mostly, am supremely annoyed by push ads and I think the age of push ads will quickly die. In the future, marketers will have to engage more personally with buyers and require more humans to interact with buyers to form some sort of trust. The age of holding (and hiding behind) a big megaphone and blasting your message will quickly come to an end.
I will begin by positing the following: That it's pretty obvious that the less removed the advertisee is from the product, the more impulse-driven the advertising becomes.
This is clearly illustrated in the following:
-TV commercials (most removed) that try to get you to remember a name for the next time you need to say, buy life insurance.
-Internet ads (on a PC, getting warmer) that want you to click and enter some CC info while distracting you from what you were doing.
-Targeted internet ads (such as from a store that already has your info suggesting other products) where you can basically "one-click" your way to poverty.
-Finally product labels (in a store, knowing you already are there, in that aisle, for the purpose of buying a product) which try to out-shine the next guy with colors and swooping patterns.
And there's clearly a well-established economics set up for the last two, considering the click-through payments that online retailers will give to advertising partners, as well as grocery stores putting their own generic brand in some of the most visible spots next to well-known brands.
Now we take a look at mobile devices and what do we see?
As far as immediacy goes, they rest somewhere between generic internet ads and the more targeted ads. But why is there such a price parity?
Think about filling out a full billing or credit card address form, one letter at a time, with hilarious auto-correct.
Think about punching your full credit card info into any mobile app.
And finally, keep in mind that certain products (iTunes) which do offer features (all payment info stored centrally) to exploit such impulsiveness tend to do fairly well revenue wise.
If you think about the two bolded concepts of immediacy and impulsiveness, it's pretty easy to see that the issue of the mobile space is not so much that it's an "old-boy's" network with a failure to adapt, but that a lack (even if perceived) of any trustworthy impulsive payment method is what moves its effectiveness as an advertising channel from that of click-to-buy to something more comparable to a TV jingle.
To write a summary about the failure of mobile ads based on an analysis epitomized by a fucking TV show on the other hand, makes it seem that the whole ITWorld crew in many ways still resembles the Mad Men-era old boy's network, and simply may not be equipped to cope. ;)