To Win the Ad Game….You Have to Play

Great app advertising panel today at App Nation, San Francisco with myself, David Beauparlant representing the buy side from Microsoft, Orr Orenstein representing the sell side from Photobucket, and Mike Becker the head of the MMA representing the broader industry.

A couple of good takeaways for publishers and advertisers which again taught me that to win the ad game, you have to play it. You cannot phone it in.

First for publishers, Orr at Photobucket is KILLING IT. We’re talking $10-20 CPMs on banners! Why? Because he plans his advertising well and knows his audience. Photobucket is a great example of the New Premium I’ve been recently harping about (see the “New Premium” ) . The first thing he asks when you download his app? Registration which includes age and gender. They also get location through LBS integration. The lesson is simple: If you are an app developer you HAVE to ask for personal data. If you’re a game and you don’t think it fits the game play? Invent a leader board. If you are a utility app and you don’t think people will share that info? What’s stopping you from trying? CPMs too high? You could just ask and provide a skip button if you’re worried about upsetting your users. But ask yourself: would you rather have 100 heavily monetizable users or 1000 that you get bargain CPMs for? Whatever you have to do to get comfortable with asking for personal information: do it. Photobucket is another glaring proof point that the money is there if you program correctly. You cannot phone it in.

On the advertising front David laid out how MS went both fast and deep in creating successful Bing traffic generation campaigns. First on the fast part they bought out the conversion networks (AdMob and Quattro at the time) for a full two weeks. This propelled the Bing app into the top three downloads for that two week period. Expensive (a couple million dollars) but effective. David’s experience makes a strong argument for concentrating your spend to drive downloads. Better to spend $1M in two weeks then spread it out over 12 months.

For long term visibility they went really deep with a few apps whose demographic they coveted, for example, Melodeo. They did a great deal where they gave away free song in exchange for downloading the Bing app.  They also did a co-branded app with Bing branding and Melodeo backend. This not only generated awareness but drove downloads and created a network of new inventory that they were then able to use for other properties. Very smart leverage of short lifecycle apps to drive big business. Publishers and advertisers should take notice.

Peace out…

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Mobile Fragmentation Discussion at Digiday

Had a great discussion today on Mobile fragmentation at Digiday Mobile with Gannon Hall, COO, Kyte, Christine Cook, SVP, Digital Advertising Sales, Martha Stewart Living Omnimedia, Dave Gwozdz, CEO, Mojiva, Alexandre Mars, Head of Mobile for Publicis Groupe and Tom Constabile, New Market Development & Joint Partnerships, Verizon Wireless.

The bottom line is as Rich Wong has now famously stated in his Techcrunch post on mobile is that fragmentation is a fact, get used to it. Christine had a very sophisticated view about fragmentation using device penetration, specifically iPad to reach an audience attractive to Martha Stewart. From her perspective the fragmentation is really preselected segmentation. One doesn’t have to be all things to all people, one just has to identify who is important.

Alexandre Mars was very practical from the agency perspective saying that fragmentation is the reason he generates revenue. Brands needs an agency to manage the creative across platforms and networks. Also he mentioned that brands he works with are more attracted to the sizzle of the latest than the scale of platforms with broad reach, like SMS. This lead me to wonder: “Will mobile always be relegated to the world of the short reach sizzle?” When video reaches ubiquity and scale will a new sizzle takes its place in the brand manager’s media plan? Important to consider: how you maintain the sizzle over time while building the scale.

The last interesting point was the connection between mobile and virality. Fragmentation negates virality because sharing across platforms is necessarily impeded based on the platforms divergent characteristics. What’s interesting is the social sharing on mobile apps may happen on the web with recommendations of services and apps more likely to happen on facebook online than for instance, facebook on mobile. Reminders of what’s cool rather than direct links to app stores. Until some standards are reached across platforms, such social sharing of rich mobile experiences is likely to be a tail of online rather than the dog itself.

A good day and good panleists. Nick Friese, Tameka and the gang at digiday did another outstanding job.

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The New Premium

When I grew up watching “M.A.S.H.” there were three ways for brand advertisers to reach audiences with compelling commercials: ABC, CBS, and NBC. Today there are myriad channels for delivering commercials that I don’t have to enumerate for fear of slipping into the land of convergence clichés. So everything has changed.

Except nothing has changed. Buyers still categorize broadcast and network programming on digital as “premium,” paying more and perpetuating two classes of inventory: premium and non-premium.

When Volkswagen bought commercial space back in the ’70s during “M.A.S.H.” it cared about four things:

  1. Context — The brand liked the award-winning programming and wanted to be associated with it.
  2. Targeting — It knew it was talking to heads of households watching.
  3. Reach — There was a big audience.
  4. Price — The car maker could get all of the above at a price that drove return on investment.

Today, the same is true. When brand advertisers make their buys they care about the same four things: context, targeting, reach, and price. It’s decidedly more complicated to get those things, but media buyers themselves often engender that complexity by overvaluing the benefit of one variable: context. The momentum of feeling good about a commercial that aired during an episode of “M.A.S.H.” or “The Mary Tyler Moore Show” in the ’70s still trickles down today; we have what is called “premium pricing” for “broadcast-quality” context.

As brand and video advertising starts to gain serious momentum in the mobile industry, we’re seeing the same categorizations that broadcast saw and online has been seeing. But even more pronounced on mobile, where no great Hulu-type brand experience exists with broadcast premium content. Mobile app developers should take note of what this means for their business and monetization.

There are signs that the premium ad inventory bucket on mobile is starting to expand, and expand in a very real way, including what I call the “new premium.”

What is the new premium? It is simply made up of publishers who don’t have, or need, the broadcast-quality imprimatur. They play successfully with two other variables in the brand buyer’s four-sided decision set: targeting and reach.

Take a look, for instance, at the top 25 free iPhone apps at the time of this writing. There are two owned by traditional “premium” broadcasters: MySpace and The Weather Channel. The rest are a mix of utility, social, games, and independent entertainment apps. Even in the entertainment category, there is only one media-company-owned app in the top 25: Star Trek’s Captain Log. Consider also the eMarketer chart below.

Not only are the traditional premium brands not present in a significant way in the app ecosystem, but total attention is shifting away from their areas of strength: broadcast and even online.

What does this mean for advertisers and publishers? None of the venerable broadcast brands have near the usage or interaction level of a fun little app called Type and Talk (the top free app in the iTunes store as of this writing). Yet advertisers remain reluctant to commit the same level of contextual faith in these newly popular channels as they have and do in the traditionally popular channels.

It’s too easy to blame the brand ad buyers for buying narrow context, but that is a publisher cop-out. Advertisers will buy when they are told why they should, and it is the publisher’s job to understand those objectives to get the buy.

The new premium publishers do not have the traditionally exalted context of prime-time entertainment, but they do know their audience very well and they are building reach around that audience. Rather than dismiss buyers of context, new premium publishers have created value by embracing their audience. Place the right brand ad in the right place in front of the right person. They’ve changed the game, and brands are starting to follow.

Many app developers fail to recognize that they have the opportunity, in fact the need, to optimize their targeting and reach. When was the last time you downloaded an app and it asked you your age and gender? If you are an app developer, are you launching your apps to drive downloads or to make money? The answer seems obvious, but it’s surprising how few steps app developers take to ensure their apps are positioned to make money, ready to be part of the new premium.

If users spend five minutes downloading your app over a 3G network, they very likely will spend a couple seconds more to tell you a little about themselves. Take the data. Learn about your audience. Get intimate with them, and your advertisers will reward you. It is not intrusive. In fact, the more you know about your audience, the better you can serve advertisers, meaning the more money you make and potentially the fewer ads you need to show. In the end, you are thrilling users with fewer more-targeted ads. This is the direction the new premium publishers are taking, and advertisers are rewarding them with big buys at high CPMs.

So if you are a publisher, start to know your audience better than anyone else and you can make up for a loss of perceived value of the “context” of your channel. Learn who they are. Apple certainly is by leveraging iTunes data, so shouldn’t you know your audience just as well if not better? New premium publishers know this and are executing on it well. It’s time you joined their ranks.

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The Siren Song of Ad Mediators in Brand Advertising

You’ve all heard the promise and perhaps you’ve fallen pray to the hype and actually implemented a mediator for mobile brand advertising. If so, you are probably rethinking your decision now as the mediator’s promises of the “highest CPMs possible,” have not materialized. And, in fact, while your fill rate has increased your average CPMs keeps dropping precipitously, annoying your mobile users with more ads, and less relevant ads just to keep up to the revenue goals you were originally sold.

What happened?

The mobile advertising mediator said that “when networks compete publishers win!” Seemed to make sense. Then they said they take the highest CPM from a range of bidders. So why are your CPMs one quarter to one third of where they started? And going lower? The answer is the core of the Siren Song of mobile brand advertising mediators: they really choose the best of the lowest common denominator, meaning you lose.

Let me explain. Good brand advertising is concerned with placing a compelling message in front of the right eyeballs at the right time. Advertisers know this and pay a premium for it because it works. Representing inventory directly to advertisers and crafting compelling messages and campaigns along with highly engaging units with great context and targeting is the bread and butter of the brand ad world. Mediation is not good brand advertising, and ultimately bad for mobile publishers who implement it, for three reasons:

1) Mediators work on a “double blind” sale with publishers. This means they aggregate networks who aggregate advertisers. This puts two steps between the advertisers and the inventory. The pitch sounds good, “We just take the highest CPM from all the networks.” But it is dead wrong. Because it is a double blind sale, the only campaigns they access are left over campaigns, or “remnant” campaigns. These are typically low cost campaigns that the advertiser just wants to saturate in any channel. So with mediators, out of the gate, the publisher is artificially constraining their brand inventory to a low cost pool of advertisements. Getting the highest CPM in a low cost pool is getting like dancing with the tallest midget.

2) There is no brand representation of publisher’s brands to the advertisers because the mediators do not have a sales force. Again this degrades the value of the publisher brands. Mediators just throw publishers in a bucket of “Mobile Video.” Advertisers never see or learn about publisher brands and audiences and therefore gain no respect for the context of the brands being sold.

3) Mediators homogenize inventory, creating one class of sale and making a mobile impression look like an online impression. Instead of creating customizable ad units that meet brand objectives with compelling engagement opportunities, the mobile mediators just squirt an “ad” into a “placement.” This further erodes value for the publishers because mobile engagement can be more effective than an online engagement if treated with the proper unit customization and contextual care. We’ve seen mobile video get consistently higher CPMs than online video, but the units and campaigns need customization and mobile specificity. It is worth the effort of marrying objectives to engagement to publisher inventory to get the higher CPMs and value the audience and inventory. That builds value over time.

So in the end mobile mediators may get you a higher fill rate (more of your total inventory sold), but they do so at the expense of your inventory value (it’s sold at a lower price). The end result is advertisers who don’t understand the value of the inventory and publishers with heaps of commoditized lower CPM inventory they had such high hopes for. Unfortunately, once inventory is degraded it is very hard to build the value back up. The vicious cycle is that the publishers then have to rev their apps with more ad placements to hit revenue targets, saturating the user experience with low cost untargeted campaigns. Bleech! This is why Apple launched iAd and why Transpera has taken so much time to craft great video brand advertisements with a network to back it up.

Elevate your Inventory

This is the better way. I call it “Elevating the Inventory.” Instead of hooking up hoses of cheap fill to millions of impressions, craft a content/audience/advertising experience that meets advertiser objectives better and thus makes you, the publisher, more money for fewer ads shown. This is what we do, and it is why we are different.

The rules are simple.

1) Work with one great network that will form deep relationships with you, your brand and your sales team. Think about it. You want a long term relationship, not the cheap one-nighter the mediators promise. Working deeply with a great network ensures you get the right representation of your brands. If you have your own sales team it mitigates channel conflict as there are only a few people out there selling. Respect your inventory, respect your partners, and the advertisers will respect you. That respect means $$$$.

2) Differentiate your inventory. Not every ad unit has to be custom (in fact you don’t want that because debugging is a beeeeeach), but shouldn’t the ad unit placements and interaction models mimic your content interaction model? Shouldn’t the inventory have engagement that is relevant for the campaign being run? Resist homogeneity of units and your users and advertisers will flourish.

3) Get intimate with your audience. There is nothing more disrespectful than pushing untargeted, interruption based media like pre-rolls and interstitials to 100% fill rate at a low CPM. Learn about your audience. Get registration data. Know your users and you can respect them. If you know that your user is a twenty four year old female you can push her one well targeted ad for a $40 CPM vs. if you don’t know who is watching and have to push her/him ten untargeted ads at a $4 CPM. Why wouldn’t you do the former? Take the care to sell well around your curated environment to an audience you are intimate with. This elevates the value of your inventory and the consumer/advertising experience, while also building value in your company because you have a deeper relationship with the folks that love you, that give you their time out of their day.

The good news is with the right deal making, you as a publisher have a remarkable opportunity to build a serious business around advertising. A business that you love, your free users respect and advertisers love you for.
Remember if it sounds too good to be true, it most certainly is. Don’t fall pray to the mobile mediator’s siren song. It will wash you up on the rocks.

Elevate your inventory!

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