Mobile Ad Revenue Doubles: Are You In Yet?

2011 was a banner year for internet advertising in the US, with a record-breaking $31 billion dollars in revenue. Of that total; the fastest growing segment was  mobile. While only making up 5.2% of the total; mobile’s $1.6 billion dollar share was more than double what it was in 2010.

That growth could be seen as confirmation of mobile marketers’ long-held contention that mobile advertising has monster growth potential, and can be enormously beneficial to advertisers. With as much as 87% of the world’s population using mobile phones; the audience for advertising via mobile devices is unquestionably huge. But some advertisers are still reluctant to buy mobile advertising.

Here’s why, based on my experience in mobile marketing and digital advertising sales.

One of the biggest advantages internet advertising has over traditional forms of advertising such as broadcasting, print, outdoor, event, and point-of purchase; is that it can be tracked and measured with pinpoint accuracy. Advertisers can find out not only how many people were exposed to their ads; but how many actually interacted with them by clicking for more information, and in some cases can track that interaction all the way through to a completed purchase.

As a result; advertisers are used to seeing big numbers, along the lines of “2 million impressions”,  “35,000 clicks”, or “13 million votes”, etc. But when it comes to mobile; the numbers are often much smaller, making the relative cost per impression much greater.

What mobile marketers contend though, is that even though there may be fewer mobile interactions to track; there is great additional value in getting commercial messaging directly into the palms of consumers’ hands. Exactly quantifying that additional benefit can be hard to do though, and as a result; advertisers often push back on paying for something they fear will not give them an adequate return on investment.

According to mobiThinking.com, although there are 5.9 billion mobile subscribers worldwide; only 1.2 billion of them use the mobile web. As a result; the overwhelming majority of mobile users cannot see and interact with the types of visual advertising you normally see on the internet. So, the big opportunity for advertisers worldwide is still in native mobile phone applications such as SMS (text messaging).

But how do you get those ads to US consumers, when Federal law prohibits sending unsolicited texts to mobile subscribers? Ay, there’s the rub.

To avoid violating the law, advertisers need to convince mobile consumers to voluntarily opt-in for their messaging. As a result, they have to invite consumers  through some means other than their mobile phones, such as broadcast, print, on-site, or event-based advertising. It’s that extra step, extra cost, and uncertain outcome that makes some advertisers leery of adding mobile to their advertising mix.

Advertisers want to know up front how many mobile ad impressions they’re going to get, and they can do that for online advertising just by paying for a specific number. But they can’t do that for SMS-based mobile advertising, because consumers get to choose whether or not they want to receive it.

If there is an additional opportunity to get consumers to opt-in for repeat messaging–something advertisers really value; they also want to know how many people are going to be in their repeat messaging database. When you tell them “that depends on how enticing you make the offer”; savvy advertisers–generally really large brands–totally get it, and they are willing to make a leap of faith.

But smaller advertisers, local brands, or media buyers who are entirely numbers-driven often find it harder to gamble on an outcome they think might be too risky, or too costly. They sometimes counter with arguments such as “but we’ve always used print coupons, and we can count them when they come through the door”.

Explanations such as “when you use mobile; there is no printing cost”, or “the only people who will get your offer are people who have actually shown prior interest by opting in for messaging”; often fall on deaf ears. But that isn’t just because they are old-fashioned, recalcitrant, or short-sighted.

It’s all about the Benjamins.

Broadcast, print, and other forms of traditional advertising can be very expensive, and when given the choice to use mobile advertising that must be driven by ads on other forms of media; advertisers often opt for the less expensive, relatively more hassle-free option of internet advertising only.

That they may be  missing out on a potential gold-mine in mobile may be entirely true; but in the minds of many advertisers; it still comes down to how much money they have to lay out up front.

To counter that objection; it’s best to have some case studies on hand showing actual results of similar mobile campaigns for other clients in the same type of business. Pointing out the phenomenal success of TV shows such as American Idol and The Voice could be helpful. Those are two great examples of how the push of a broadcast call-to-action can create the tremendous pull that draws an interested audience to cast millions of votes via text messaging.

Of course, an advertiser won’t likely get that level of interaction, unless they run a really, really, big, multi-media campaign with a really compelling consumer offer.  So, managing the advertiser’s expectations on the level of interactions is necessary. Using those big TV shows as examples, is more about illustrating the concept of how a text campaign powered by broadcast works, as opposed to an example of a typical level of consumer interaction.

Remember the famous line from Kevin Costner’s “Field Of Dreams” movie; “If you build it, he will come”?  Well, that’s not true with mobile campaigns. It’s more like; “If you build your mobile campaign with a really compelling offer, and push it with media that reaches your target audience with enough power and frequency; they will participate”.

You can also use social media it to help spread the word about your campaign, and publicize your mobile call to action. Using it in addition to traditional media is a great strategy, but it’s unlikely that using it instead of traditional media will deliver great results.

One reason is that if people are seeing a text call to action online, they don’t need to text, because they can just click on a banner ad or link to participate. Why pull out your mobile phone when you can just click your mouse? If you have created ads for the web, by the way; make sure they’re optimized for delivery on mobile devices as well, and include mobile web ad placement in your campaign strategy.

Another reason not to rely on social media exclusively; is that  traditional media is still an incredibly powerful influence in people’s lives, and harnessing that power is to an advertiser’s advantage. Everyone has favorite radio and TV shows and favorite on-air personalities with whom they identify. When someone’s favorite radio morning show personality tells them to “text in to win”; they’re much  more likely to do so than if they just read about it somewhere, or heard it on the street.

Does that cost a lot of money? Well, it depends on your definition of “a lot”. Broadcast ads aren’t cheap, but broadcasters are always–always–ready to make a deal. Spend money on paid ads, and you may get additional no-charge promotional mentions. Everything is negotiable. Just ask.

The bottom line is that you get what you pay for; and if what you want is the power to draw people’s attention to your product or service, then you might have to open your wallet a little wider in order to reach millions of potentially interested consumers.

But SMS isn’t the only game in town. If an advertiser doesn’t want to purchase broadcast, print, or other types of media to drive mobile interaction via text messaging; they can buy ads served on the mobile web instead. While it’s true that twice as many people worldwide use non web-enabled “feature phones” than smart phones; smart phones actually now make up a slim majority of mobile phones used here in the US (53%).

In addition, since 25% of all US mobile users access the web exclusively via mobile; it makes sense for advertisers to adopt a mobile advertising strategy that allows them to communicate with those consumers.

According to a recent Mashable.com article; increasingly popular mobile advertising strategies include banner ads, visual QR codes (images that can be scanned from mobile phones like bar codes, and can be used like coupons for special offers, etc.), visual search via the Google Goggles app, and music discovery services/apps such as Shazam.

So, while convincing advertisers to make the leap to mobile can still an uphill battle; the fact that mobile ad revenues more than doubled from $610 million in 2010 to $1.6 billion in 2011 shows that momentum is building. Mobile Marketers have long been saying “the sky’s the limit” when it comes to the potential for mobile ad revenue. Now, armed with stats showing last year’s very robust growth; they have even more reason to believe.